Unions begin to take the centre stage again in Argentina

With the beginning of March seeing the return of congress from its summer recess and Argentines back to work, the relative calm that has been bestowed on Macri since taking office in 2015 gave way to a return of mass unionised protest across Argentina earlier in March. Public school teachers, hospital workers as well as the country’s largest union by membership - the CGT (Confederación General de Trabajo) - took to the streets in protest against Macri's pro-market policies and the failure to reach salary agreements with local provinces.


Argentina's annual wage negotiations (or collective bargaining by the unions) are a test for both Macri and the central bank as increases above the 18% cap set by the government for provinces in 2017 could greatly hinder its ability to dampen down inflation. Both this proposed cap and the government’s plan to leave the negotiation of agreements to individual provinces was staunchly rejected by union leaders who argue their members should be compensated for their rapid decline in purchasing power. Private analysts have put inflation at near 40% for 2016 and estimate the government will fail in its inflation target of between 12-17% this year as records for the first months of the year (2.5% for February, 1.8% for January) put this target in doubt.

With both sides laying blame on the other for this failure, the march was expected to lead up a general strike to be announced by the CGT for the end of March or beginning of April to further pressurise the government. However, the leaders of CGT fell short in announcing a concrete date during the march, which angered many of its affiliated factions and members, leading to incidents of violence and a sign of a fragmented organisation. In a sign of wanting to show a front of unity, the CGT later announced, at a time of writing and as reported by La Nación, that a general strike will take place on April 6th for 24hrs across the country.

Although this will be the first general strike to befall Macri, unions have not adopted a different approach to the current administration in comparison to those previously, in softening their tone and visibility during times of high approval ratings before becoming openly defiant and taking action during times of weakness. The strong traditional role and history of unions in Argentina politics remains important to this day.

Argentina's long heritage and history of labour organization

The political role of union’s in Argentina can be traced through the rise of Juan Domingo Perón and the CGT. Before Perón took power in 1946, union ties to central government were weak, with labour organization both dis-organized and with few members. There existed three central umbrella groups with the Unión Sindical Argentina and two factions of the GCT counting around a million members.Speyside_Argentina-01

However, by the time of Perón’s ousting in 1955 by a confederation of military leaders, the CGT had been significantly emboldened by Perón as a political actor and was the sole umbrella labour movement with a near 6 million members. Perón’s use of labour organisation as a political vehicle first began in his role as The Secretary of Labour and Social Welfare in 1943, where his pro-working class policies were embraced by unions who helped grow his influence and standing in office. This relationship would ultimately help Perón ascend to becoming president in 1946 as it had been the CGT who called a general strike that won his release from custody having been ousted from government a year prior.

From that time, the political power of unions has mirrored the rise and fall of Peronism as it was disrupted by military interventions and rule that ultimately led to trade union activity being banned in one of the first acts after the military overthrew President Isabel Martinez de Perón in 1976. During the ‘Dirty War’ of military dictatorship between 1976 and 1983, both union leaders and the unions they represented were brutally repressed until the ban was rescinded in 1981. What followed was mass bloody protests and deep economic issues, which hastened by failure in the Falklands War, led to the relinquishment of power in 1983 and a return to democracy.

Although labour reforms were passed in 2004, over the last decades, continuous governments have struggled to introduce significant reforms that would loosen the rigidity of the labour market and reduce the ability of industry wide collective bargaining. General strikes and pressure but on by unions watered down any proposals put forward.

Today, in times of a non-peronist government, unions wield significant power and wealth in opposition and although they publicly claimed they did not want recent protests to be politicised, opposition leaders have used them to position themselves before the midterm vote. Cristina Kirchner - whose last mandate was littered with unionised protests as leaders turned against her damaging and abrasive polices - instructed her militant wing to protest together with the CGT and other unions and demand the instant announcement of a strike. The CGT, although re-unified in 2016 after a 4 year hiatus, currently finds itself fighting an internal battle for control between the leaders of the three principal factions in Juan Carlos Schmid, Hector Daer and Carlos Acuña, that will no doubt lead to a singular figure taking the organisation forward.

The year head

In the short-term, the general strike agreed by all unions for April 6th strategically takes place in the middle of the World Economic Forum in Buenos Aires (5th – 7th of April). Unless one believes in pure coincidences, the agreed date backs the government into a corner in finding common ground with the unions and away from its current 18% wage increase cap. An agreement would save the embarrassment of a general strike taking place when world business leaders descend on Buenos Aires to hear the government’s proclaiming message of a new and changed Argentina. With unions seeing these as fragile times for Macri as economic recovery has taken longer than initially anticipated and October’s crucial legislative elections fast approaching, Macri needs to demonstrate strength whilst wanting to avoid a crippling general strike and questions of history repeating itself.

Looking to year ahead, the peronist movement and opposition remains deeply divided and in an internal fight for leadership. With this, not only do the marches and strikes pose a true check for Macri, but they act as a battle ground for the opposition to pick their candidate and strategy to regain power, starting by reducing his standing in both congress and the senate in October where half the seats in the Chamber of Deputies and a third of the seats in the Senate are up for vote. Unions, still entrenched within various factions of Peronism, are becoming more vocal and taking centre stage in opposition against the current administration and its policies. Perhaps this is in fear that success in the midterm vote would not only allow the government to deepen its market-friendly programme, but introduce labour reforms that would diminish their power and role. Negotiations are set to begin immediately between the government and unions with both sides given little room for manoeuvre.

To discuss a potential requirement for support and learn more about our business, please contact:

James Duncan