The social protection system in Argentina. What to expect from the libertarian experiment?

TOMAS NOUGUES

Manchester

Seminario; Labour relations in Latin Americ: Current challenges and future directions; 2024

Work and Inequalities Institute

Argentina is back on the world stage. The scale of the economic crisis and the emergence of the world's first self-proclaimed libertarian government have put the country in the spotlight.Among the many open fronts, Milei's government is attempting a rapid and comprehensive reform of the Argentine state. There are many issues involved in this endeavor, but I will focus on those relating to the welfare system. The libertarian administration is committed to dismantling the universal and public pillars of Argentina’s social protection system. So far, it has not made much progress in this task. Various political, institutional, legal, and social factors have limited the government's plans. However, Milei's political platform and the failed attempts to pass laws to reform the state give us an idea of what to expect from the libertarian experiment.The Libertarian government program rests on two main pillars: the 'chainsaw' and the 'blender'. The chainsaw refers to the sharp reduction in public spending, accompanied by a severe downsizing of the state structure. The blender refers to the sudden devaluation of the national currency in order to reduce public spending, liquefy the state's liabilities, and cool down domestic demand amid skyrocketing inflation. One of the main objectives of the libertarian plan is to undertake the biggest structural adjustment in Argentina's history to overcome the fiscal deficit. In just three months, Milei has cut public spending by 36%.The social protection system has been the target of both of the chainsaw and the blender. On the one hand, the government is reducing the state's capacity to provide welfare. The libertarian administration has fired over 20 thousand public employees, many of them from welfare agencies. It has also closed departments and discontinued several social programs, discharged CCT beneficiaries, and eliminated key funds that contribute to the sustainability of welfare systems at the sub-national level. On the other hand, the blender has been relentless with the social protection system. The government froze the 2023 public budget in a context of 287.9% annual inflation. It has also implemented a sudden devaluation of 50%. This combo has severely affected the real value of wages and social benefits, especially pensions, which have lost more than 38%. In March, consumption fell by 19% compared to the previous year, and poverty reached its historical maximum: 57.7% of the population.The dismantling of the social protection system is a blow to the labor movement. Firstly, the government has yet to carry out massive layoffs of public sector workers. Secondly, the reform of the pension system, which affects pensioners and formal and informal workers, has been a historical point of conflict between neoliberal administrations and the labor movement. Thirdly, the loss of purchasing power of wages and social benefits has triggered poverty even among formal workers. All this, together with many other aspects that I cannot go into now, has increased the confrontation between the labor movement and the liberal government.The outcome is developing news.