Argentina Issues Coronavirus Emergency Decrees to Protect Both Labor and Economy

RIO DE JANEIRO, BRAZIL – Last week, the Argentinean government issued several emergency decrees in reaction to the Coronavirus crisis. They are intended to protect employees from being fired or laid off, and to provide state support to business sectors that are under particular pressure due to the crisis.

In addition, they are intended to put a stop to the massive price increases for basic products that have occurred since the onset of the crisis.

On March 31st, President Alberto Fernández issued a decree prohibiting the dismissal of workers and employees in the private sector “for lack of manpower or force majeure”. The decree is initially valid for 60 days with the option of a further extension.

It was issued as part of the Economic and Social Emergency Law passed in Congress in December 2019 and its extension decided in March due to the coronavirus crisis.

The decree has been criticized, not only by the business community and the right-wing opposition, but also by the left-wing. As it does not contain a retroactive effect clause, thousands of workers and salaried employees dismissed before March 31st will remain unemployed.

Similarly, according to critics, up to 5 million people working in the informal sector or in illegal employment are not covered by the protective measures.  For contractors and unregistered workers, the government had already decided on a one-off aid of 10,000 pesos (US$154) at the end of March, which benefits approximately 3.8 million households.

One day after the decreed ban on layoffs, another decree was passed to introduce a package of measures to provide financial support to companies.

This will benefit all sectors of the economy that find themselves in an economic emergency because they are not among the key sectors exempted from the current quarantine regulations.

The state undertakes to provide financial cover for a portion of the payroll, granting financial preference to smaller-sized companies over larger ones. In addition, employers’ social security contributions will be reduced by 95 percent in April and payment deadlines extended.

Finally, on April 4th, a decree was issued freezing the prices of basic service products at their level a month ago. This is intended to address the often drastic price increases since the onset of the coronavirus crisis.

The regulation affects some 2,000 products, mainly in the food, beverage and hygiene product sectors, and will initially be valid for 30 days with the option of a further extension. Retailers may only offer these products at the price at which they were sold on March 6th, 2020.

The Minister of Social Development, Matías Kulfas, announced strict controls by employees of the AFIP tax authority and regional bodies. Penalties can amount to up to 10 million pesos (around €143,000) and may result in up to two years’ closure.

“We do not want anyone to take advantage of the discomfort this pandemic has caused among the people,” said Kulfas.

Meanwhile, the opposition called on its supporters to protest against the government’s policies. In response to a Twitter message from President Fernández suggesting that entrepreneurs should get used to the idea of earning less during the crisis, former President Mauricio Macri’s PRO party is now demanding cuts in politicians’ salaries.

A crisis fund is to be set up, which would be financed by 30 percent of the salaries of government politicians, deputies, and top officials in the three governmental branches.