MercoPress. South Atlantic News Agency

Thousands of layoffs feared in Argentina next month

The number of Industrial SMEs has remained unchanged for quite a while amid an increase in population, Rosato warned

Argentine SMEs fear a wave of sackings in the coming days due to President Javier Milei's policies which may have been somewhat successful at curbing inflation but at a cost. The Industriales Pymes Argentinos (IPA) chamber released a report saying that some 17,000 jobs had been lost since Milei took office on Dec. 10, 2023, and further suspensions and layoffs appear on May's radar.

The IPA survey mentioned 16,870 formal jobs lost in the last four months in the SME sector and the trend took a turn for the worse since March. The textile sector was the one most affected but terminations of employment were also recorded in automotive, commerce, food, and electromechanical brands, in addition to those at State-run agencies amid Milei's “chainsaw” spending cuts. As regards industrial SMEs, the outlook is also worrisome since the recession has accelerated the trend in the records between March and April.

IPA President Daniel Rosato said that “as the recession deepens, in February there were suspensions that intensified in March, in April we already see companies that closed or operate at 30% of the installed capacity, and in May the layoffs will start”.

The crisis is also expected to hit informal workers, for whom there is no official data, but who are believed to account for roughly 50% of Argentina's economy. Some 34,500 formal construction workers were dismissed in January alone but there is no information as to how many more were left jobless among those hired informally, it was explained.

“The sector where layoffs will be felt the most is the textile sector, where no less than 20 percent of the 5,000 companies will close their doors. We could reach in this sector no less than 30,000 layoffs,” Rosato pointed out.

”If the 'stocks' (currency exchange rate controls) are lifted, the crisis will deepen,“ he warned. ”Importers who come to our domestic market gather in the hotels of Buenos Aires: this is already happening in clothing and footwear because it is a sector of massive sales,“ he went on. Competition ”is not because of wages but because raw materials cost up to three times more than they are worth abroad,“ he added.

”In Argentina, there are some 50,500 industrial manufacturing SMEs, the same number as ten years ago“ while the population increased, thus showing a comparative fall in the number of SMEs, insisted Rosato, who said he had requested a meeting with Economy Minister Luis Toto Caputo but to no avail. Rosato fears that up to 150,000 workers could become unemployed this year. He also decried the impact on local manufacturers of Milei's unrestricted opening of imports and underlined the need for the PAIS tax to be eliminated as it creates a higher dollar quotation for purchases abroad that makes industrial inputs more expensive to add to the ongoing crisis. ”It is a necessary step to reduce costs and make national products more competitive in the world,” he argued.