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ECONOMY | 21-02-2024 16:03

Strikes pile up in Argentina amid sting of Javier Milei’s shock therapy

Rail service, healthcare and schools all face disruption; Unions pushing back against government austerity measures.

Labour disruptions are gaining steam in Argentina as unions dig in their heels against austerity measures imposed by President Javier Milei that are denting wages and pensions. 

A 24-hour strike of the nation’s train service started Wednesday, while healthcare workers plan to walk off job Thursday and government employees won’t clock in on February 26. Some smaller teachers’ unions have also announced work stoppages. 

Milei’s spokesman denounced the rail strike at his daily briefing, saying that more than one million commuters were affected.

“This isn’t a measure against the national government,” Manuel Adorni told reporters in Buenos Aires. “This is against the people.” 

Argentina’s powerful unions were quick to denounce the libertarian president’s policies, with the CGT umbrella union group staging a general strike on January 24. Thousands filled the streets in the earliest demonstration of its kind against a new president in recent history.

In response, the government announced a 27 percent increase to social security by March, though that doesn’t fully compensate for accumulated losses against inflation. 

With consumer prices rising 254 percent annually, Milei’s austerity is resulting in major income losses for Argentines. In December alone, 8.9 percent wage growth got walloped by monthly inflation over 25 percent. 

This week, however, Argentina’s sovereign bonds rallied as investors celebrated the government’s first monthly fiscal surplus in years. But under the hood, January’s budget numbers were made possible by slashing spending on social security 30 percent when adjusted for inflation — a strategy that “cannot be sustained over time,” according to Buenos Aires-based Latin Securities. 

“It shows the government is ready to play a high-stakes game,” Hernan Ladeuix, director of strategy at Latin Securities, wrote in a note to clients Tuesday. “The government must transition from the current emergency plan to a sustainable economic stabilisation programme.”

While Milei still enjoys high approval ratings at home and wins praise abroad, reality on the ground is starting to lay bare the resistance he and other government leaders anticipate will ramp up in March and April after the South America summer ends. 

Historically, inflation in Argentina tends to accelerate in March as unions demand pay hikes and the school year begin, bringing with it new costs for clothing, supplies and tuition. On top of that, Milei’s administration is significantly increasing transport prices while hiking utility bills as he cuts spending on generous subsidies that fuel the government’s chronic deficit. 

Milei’s spokesman was resolute in the new administration’s commitment to its plan, adding that it was evaluating measures to ensure strikers faced consequences.

“This habitual practice of obstructing the life of Argentines in order to stay in power doesn’t work anymore,” Adorni said. “The president will not move one centimetre from his popular mandate.”

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by Patrick Gillespie, Bloomberg


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