Summer officially ended yesterday but receded a while ago as far as the government is concerned – the bullish start to the season and the calendar year lasted until the Saint Valentine’s Day of the ‘Cryptogate’ scandal. This does not mean that winter is around the corner with still every reason to expect the October midterms to be a springtime for President Javier Milei’s infant party, if only by default. But autumn is very much the tone of the immediate future with most things on hold for a fortnight at least.
The agreement with the International Monetary Fund (IMF) expected for mid-April is being preceded by the inevitable volatility which is not worth too much attention since it will not last beyond final definition – more than curious that Congress last Wednesday voted approval of an agreement which is still being negotiated and with only the barest of details on the table. The Senate session to endorse the Supreme Court nominations of the already appointed justices Manuel García-Mansilla and Ariel Lijo has been set for April 3 (unless the government decides to cut its losses beforehand) – enshrining such a dubious judge as Lijo in the Supreme Court would have been a costly success at best and would be far costlier in the extremely likely event of failure. Wednesday’s weekly pension protest march outside Congress was almost bereft of incident this time, unlike the deplorable violence and police brutality of the previous midweek, thus leaving this front in a certain limbo with either scenario a possible outcome of future marches.
To focus on the latter issue, far too much attention is paid to the demonstrations as such rather than their underlying grievance of pensions. While the miserably low level of pensions in a country busy pricing itself out of its own market is brutally obvious, it remains a complex and worldwide problem far from limited to Argentina. The demonstrators argue that pensions have been slashed 28 percent under the Javier Milei administration but the blame game is not quite so simple. While the worst damage did indeed occur in the first quarter of last year when inflation took its time coming down from 20-25 percent, this was not the fault of the current updating mechanism which only began in the second quarter of the year but the system of the previous Frente de Todos administration, which blithely ignored inflation. This does not absolve the La Libertad Avanza government from blame because they deliberately and cynically delayed changing the inherited defective system in order to achieve their much-vaunted fiscal surplus, but nor are critics entitled to say that the new system based on index-linking is worse than the old – the erosion of pensions was an even higher percentage in early 2024 with an incomplete recovery since then. The Milei government might also argue that the removal of the “inflation tax” benefits pensions as it does real wages.
Yet underlying the crossfire over updating mechanisms and percentages is the fundamental unsustainability of the pension system, again a worldwide problem due to shrinking birth rates (which nevertheless does not prevent the global population from growing almost entirely because of increased longevity). Argentina’s problem here is that only around 40 percent of pensioners have paid into the system, directly reflecting the rise of informal employment – this makes pension and labour reforms twins among the second generation of structural reforms which might (or might not) begin after the IMF agreement and with stronger post-midterm parliamentary numbers. Government supporters are prone to dismiss the other 60 percent as freeloaders (and they are being short-changed via the monthly 70,000-peso bonus for the minimum retirement benefits being frozen over the past 15 months) but any parasites are outnumbered by millions of housewives with a lifetime of unpaid work behind them – they definitely deserve better.
The midweek protest marches have every right to bring this issue to public attention while any lunatic fringe could be neutralised by the simple expedient of not giving them any policemen to throw stones at – the escalation of these marches this month is another example of Newton’s third law of action and reaction being equal and opposite with massive police deployment, suspicious agitators and extremist violence feeding each other. There is already too much polarisation in politics at large – instead of extremes clashing, there is a need to meet in the middle for a serious debate about a complex issue. Autumn is the time to start preparing for winter.
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