BUENOS AIRES – Bus drivers will walk off the job in Argentina Wednesday to demand higher wages as inflation fast cuts into spending power, a union leader said Monday.
Roberto Fernandez, secretary general of the Automotive Transport Union, said he has tired of waiting for the government to sign off on a salary increase of over 30 percent this year.
“We have been demanding this for five months without a solution,” Fernandez said on La Red Radio.
This is the latest union pressure on President Cristina Fernandez de Kirchner, who is struggling in her last two years in office to contain wage demands as inflation runs at 35 percent annually and slowing growth dims job prospects in Latin America’s third-largest economy.
More than a million workers walked off the job on April 10 to demand that wages rise in line with inflation to conserve purchasing power.
But the government is pushing to limit the increases to 30 percent to contain consumer prices and prevent job losses as the economy slows. Many economists say the economy is falling into recession after growing robustly between 2003 and 2011 and more moderately since then.
Fernandez said that bus companies, both urban and long-distance lines, are stalling on wage hikes until they get an agreement from the government on diesel subsidies designed to keep a lid on fares.
“We are caught between two powers,” Fernandez said of his union, which represents 110,000 workers.
Florencio Randazzo, the minister of interior and transport, called on the bus drivers to pursue dialogue for a solution.
“I want to appeal to the rationality and common sense of the union leaders so that they don’t take a measure like this that will affect thousands of passengers,” he said in a televised press conference.
He spoke after Jorge Capitanich, the president’s chief of staff, sought to calm rising social tension about the slowing economy.
Capitanich said that the government expects economic activity to recover in the second half of this year thanks to lower prices, increased payments in social welfare programs and rising salaries.
This will create “a multiplying effect on demand and the economy,” he said in a televised press conference.
Not all are so certain. Walter Molano, an economist at BCP Securities in Greenwich, Connecticut, said in a note to clients that while a 20 percent currency devaluation at the start of the year, a reduction in some subsidies and a hike in interest rates may suggest changes to prevent an economic crisis, the situation remains tenuous.
Molano said that a new car tax has slashed sales in a sector that drove economic growth last year, while the hike in interest rates to nearly 30 percent annually has “squashed the little bit of credit that existed in Argentina.”
And slow growth in Brazil, the country’s biggest trade partner, is weighing on activity in Argentina, he said.
With unions demanding higher wages and the government’s support base mostly the poor, excessive hikes in salaries and any cuts in public utility subsidies and social welfare spending will be hard to sell politically, Molano said.
“Investors should be careful when they project an alternate reality for Argentina by changing one of the causal variables,” he said. “There is a fine line between counterfactual analysis and wishful thinking. Argentina will always be the land that might have been.”
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