THE sharp decline in income and consumption began to spread its effects on a new front with the a series of suspensions and dismissals. In recent weeks, some companies have begun to adopt these measures due to the impact of the ongoing recession caused by the collapse in activity, facing a year in which Economists predict unemployment will rise in 2024.
The head of the Chamber of Construction, Gustavo Weiss, estimated that these are suspensions and dismissals They already affect around 100,000 workers why the work mostly remains at a standstill“. In January, capital spending fell 86% year-on-year in raw terms, representing one of the the lowest levels in the last 31 years AND fuels the clash with the governors.
This situation has led UOCRA branches to ask governors to maintain the jobs with their funds, amid conflict over the withdrawal of funding for teachers, transport subsidies and maintenance of cost-sharing. In this context, the leader of the union, Gerardo Martínez, last week he warned the IMF’s number 2 against “chaos” this will cause the “fierce adjustment.”
The yellow lights have also come on in the automotive sector. FIAT has decided to reduce production at the Córdoba plant due to the general drop in sales of 33% in January and the lack of dollars, while in other cases the terminals remain paralyzed, such as General Motors, in Santa Fe; Volkswagen, in Pacheco; and Renault and Nissan, in Córdoba.
Another affected sector is La Rioja’s textile industry.where there are suspensions, e the electronics sector of Tierra del Fuego. Although the IMF acknowledged that the recession helped reduce inflation from 25.5% in December, he warned of the “social and political risk” of the shock plan. Javier Milei has already anticipated that March and April will be the “hardest moment” for the economy.
According to the latest official data, Unemployment fell to 5.7% in the third quarter of 2023, before activity slumped 4.5% year-on-year in December. Nowthe economists interviewed by the Central Bank wait a decline in activity of 3.3% in the first quarter and unemployment of 7.7% in the first quarterwhile the IMF expects a rate of 8% in 2024.
For the economist and former head of INDEC, Luis Beccaria, the impact will not be automatic. “Informal employment serves as an alternative to unemployment, but clearly there is a tendency for unemployment to increase during recession, and this is not so much due to increased layoffs, but because companies stop hiring when employees leave retire and resign,” he explained.
LUCA estimated that poverty reached 57.4% in January due to devaluation, fiscal adjustment and asset liquefaction, but for now he does not see an “unemployment shock”. “The deterioration of the labor market is expressed in an increase in underemployment, there were no layoffs, the drop in income was the adjustment variable,” explained the director of the University’s Social Debt Observatory, Agustín Salvia.
It will all depend on how quickly the economy recovers after hitting bottom.. In March and April, new adjustments will be added in transport and energy thanks to the removal of subsidies, as well as telephone, prepaid and fuel. We also need to see what happens with the harvest, dollars and tariffs. For the Minister of Economy, Luis Caputo, the recovery will come in the last quarter of the year.
SN
Source: Clarin
