Photographer: Sarah Pabst/Bloomberg

Argentina's Slow Jobs Recovery Tests the Macri Revolution

The economy is picking up while labor markets are slow to recover

President Mauricio Macri wants to revive Argentina's private industry and replace the statist model of his predecessor Cristina Fernandez. The government's preferred measure of the labor market shows just how big that challenge is going to be.

The government is targeting 200,000 new jobs a year, with 60,000 needed just to keep pace with population growth, according to a senior official who asked not to be named. For now, it isn't even close. The Integrated Argentine Pension System, or SIPA, is a monthly jobs report produced by the Labor Ministry that uses social security declarations, dividing workers up into the state and private sectors and the self-employed. The latest report showed a gain of 86,993 in January from the year earlier.

The recent increase in employment provides only the faintest glimmer of hope for a government confronted by mounting labor unrest. Macri faced his first national strike last week as unions demanded higher wages and protested jobs dismissals.

What's more, most of the jobs being created are by the state or among the ranks of the self-employed. Private industry is still losing jobs.

And given that Macri has pledged to shrink the size of the state in South America's second-biggest economy, it could be years before the labor market shows any significant improvement.

Macri has highlighted signs of a turnaround in the economy, which  emerged from recession in the third quarter of last year. Cement and  asphalt sales are rising again and construction expanded in March for the first time since January 2016.

Yet, Argentinians may not feel any improvement until the labor market starts to pick up. The SIPA figures imply that is still a long way off.


(For more economic analysis, see Benchmark.)
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