Tuesday, July 5, 2022
Perfil

ECONOMY | 02-06-2022 20:41

Capital controls on tech firms, employees relaxed to halt ‘brain drain’

Accumulation of Central Bank reserves is one of the key aims in changing regulations for the capital of software companies. Hi-tech sector has sounded alarms over number of formal jobs lost this year by employees seeking ‘dollarised’ salaries.

Argentina’s government has announced that it will grant companies in the information technology sector more access to exchange markets in order to increase their exports from last year. 

The new measure contemplates "sector access to exchange markets for half their export growth as long as this is earmarked exclusively for up to 20 percent of the salaries paid."

IT businessmen were given details about the new state of play this week from the horse’s mouth – or rather the three main horses of the economic sphere.

"Today we were received by [Economy Minister Martín] Guzmán, [Productive Development Minister Matías] Kulfas and the Central Bank governor [Miguel Pesce] to inform us of the norm, although we do not know the instrumental aspects yet," Argencon Executive Director Luis Galeazzi explained in dialogue with Perfil on Thursday.

The information technology and knowledge economy sectors in Argentina last year suffered what experts described as a “brain drain,” with a fall in its exports estimated by Argencon at US$1.8 billion amid a "hostile climate" for business. Employees are vacating formal employment in favour of working off the books for foreign companies via "earning in crypto-currencies and exchanging them into blue (parallel) dollars," said Galeazzi.

"This addresses a central problem of our activity which is retaining talent," he said, in relation to the relaxation of capital controls for these companies.

"Not having dollars, these companies cannot compete with the offers of pay in dollars coming from outside so that employees resort to the informal market, resulting in an exodus from the formal economy which was estimated at US$1.8 billion, a central issue damaging the capacity of companies to maintain their working capital," argued Galeazzi.

 

Development

The measure aims at "promoting the development of the sector and its exports, boosting new projects, retaining Argentine talent and favouring the accumulation of reserves," according to the government.

The measure will be made operational via a communication from the monetary authorities permitting the sector access to exchange markets for half their export growth as long as this is earmarked exclusively for up to 20 percent of the salaries paid, 

Furthermore, independent workers in the sector will be able to earn up to US$1,000 monthly abroad without the obligation to cash them at the official exchange rate.

Guzmán underlined that this initiative aims at benefitting the IT sector and improving “Argentina’s learning capacity” and highlighted that the state has redefined the use of public funds to invest more in science, technology and education, describing the IT sector as “very important for adding value, creating jobs and bringing in foreign currency.”

Kulfas indicated that the measures announced by the government “are important for lending more dynamism to the exports of the very dynamic IT sector. We have a growth plan to permit this sector to expand by 1,000 formal jobs every month, also a key to retaining talent in a global context where there is huge competition for skilled human resources. Argentina has that potential and we must be able to develop it in its full dimension.”

Pesce gave details of the measure to his business audience, pointing out that the government has decided “to advance with companies exporting very valuable services because they create jobs and use an important resource like human capital.”

The Central Bank governor also said that exports “are growing strongly by around 25 percent in the first third of the year, making for an auspicious perspective.”

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Lorena Rodríguez

Lorena Rodríguez

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