20/20 vision or 50/50?

Trying to stop a wage-price in an election year is always going to be tricky but the government is raising the bar by approaching it with a policy which contradicts its own premises. In his last months the late Néstor Kirchner revived the old Peronist dream of “50/50” (meaning that wage-earners account for half national income, briefly achieved in 1975) but this sacrosanct aim is now on a collision course with an incomes policy which attempts to restrict pay increases to a 20 percent ceiling at a time when the money supply is being boosted by twice that percentage. Domestic Trade Secretary Guillermo Moreno’s ill-timed forecast that the dollar would reach six pesos by the end of the year (he was talking about the official exchange rate, of course) only increases trade unionist certainty that 2013 inflation will outstrip the government guideline — Moreno’s prediction might just fall within 20 percent but leaves no margin for error for an error-prone administration.

At the same time other margins are being lost. If the pace of job creation almost accompanied the rapid economic growth under the

2003-7 Néstor Kirchner presidency (especially because productivity gains were scorned in favour of full employment), Cristina Fernández de Kirchner’s first 2007-11 term saw jobs continue to grow but at a slower momentum than the still fast-growing economy and with most of the new opportunities in the public sector. But last year job creation came to an almost complete halt along with the rest of the economy while this year the government no longer has the luxury of despising productivity if Argentine industry is to remain competitive — not even with an exchange rate of six pesos. This year might well resemble 1975 not so much because of any progress towards the “50/50” as for the infamous Rodrigazo which has recently become a subject of debate since being evoked by Argentine Industrial Union (UIA) head José Ignacio de Mendiguren — Celestino Rodrigo’s recipe to restore “sincerity”to the economy by a maxi-devaluation, steep public service charge increases and holding wage increases down to 25 percent does not seem all that different from what might well be on the cards for this year.

Yet the Rodrigazo only lasted six weeks in its time with a CGT general strike proving its downfall — will policy remain consistent in an election year or is the rift between the CFK presidency and Peronist organized labour irreversible?