Argentina Inc
Economy
Argentina's Subsidy Policy Raises the Specter of Nationalization
From Universia-Knowledge@Wharton
Beyond the political uproar caused by the loss of control of the Argentinean parliament by the Kirchners in the legislative elections held last Sunday, some economic indicators are beginning to worry experts — increasing informal employment, declining demand for labor, increased state subsidies and a growing number of companies that are in crisis and risk being privatized.
More than 77,000 workers in various industries receive a monthly salary of US$160 through Argentine government subsidies. The goal is to prevent those people from losing their jobs. The more than 53,000 companies affected by this program are bankrupt. So far this year, the government of Cristina Fernández de Kirchner has spent some US$48 million on the program, known as REPRO (the Federal Productive Reconversion Program) and created in 2002 by then-president Eduardo Duhalde amid the deepest social and economic crisis in the history of Argentina. At the time, the government of Fernando de la Rua had fallen, bank deposits had been confiscated and the Argentine currency had been devalued.
Although the current crisis is not as serious as that one, employment is one of the indicators beginning to suffer the consequences of the deterioration in the local and global economy. Through the subsidies authorized by REPRO, the administration of Fernández de Kirchner avoided a half-point rise in unemployment, now at 8.4%, according to INDEC, the National Institute of Statistics and Census. The official figures don't include any social spending plans. According to critics of INDEC, the government has intervened under the supervision of Commerce Secretary Guillermo Moreno and changed the methodology for measuring unemployment. INDEC's credibility has been further challenged by private reports that predict unemployment of about 10% by the end of the year. >>> Go to Full Story >>>