Argentina Plans Law for Promotion of Worker-Owned Companies

RIO DE JANEIRO, BRAZIL – The Argentinian Congress intends to pass a bill on the expropriation of companies for the benefit of their workers and employees.

A proposal to this end, drafted by the National Movement of Expropriated Companies (MNER), was submitted to Congress in mid-April.

The draft “Law on the Expropriation of Productive Units” provides for the expropriation and transfer to their workers of companies in default, which have been abandoned by their owners, are in the process of being wound up, or are about to close for other reasons.

Should the law be passed, the state could in the future, in the event of an impending closure of a company, enable its co-operatively organized workers to continue operations.

The bill was introduced by deputy Leonardo Grosso of the government political alliance ‘Frente de Todos’ and was supported by six other deputies either from the left-wing or close to the government camp.

In a radio interview, Gisela Bustos, a consultant for the MNER, said that a law to this effect would for the first time legally acknowledge the approximately twenty years of experience of workers’ self-organization in Argentina and recognize its social role for the respective communities and districts.

It is not about the private appropriation of real estate and machines by the workers, but about their use and the preservation of jobs. The wording of the bill declares the appropriation of companies by their workers for the purpose of continuing operations to be a social asset.

Consequently, compensation to owners or their creditors should in future be paid through a trust fund financed from the state budget. In the case of expropriation in the event of insolvency, the amount of compensation will be determined in agreement with the respective bankruptcy judge.

In the absence of an agreement, the starting price in the case of an auction will be taken as a benchmark. However, the wording of the bill does not provide any details on the amount of compensation to be paid directly to owners whose businesses are not subject to insolvency proceedings.

The state provides the workers with the expropriated properties and equipment free of charge for their use, on condition that portions of the business are left for social, cultural and educational activities. The use agreement is in force as long as the social purpose is maintained and the above conditions are met. Moreover, the companies must commit themselves to purchase at least 50 percent of their supplies from other worker-run companies in order to promote the sector as a whole.

Worker-owned companies may register in a National Register of repossessed companies to be set up. This will give them privileged access to certain government support measures, such as technical and legal advice, tax, duty and energy rates advantages, access to credit and technological development programs, or assistance with export transactions.

In addition, companies on the register enjoy preferential conditions for government contracts. The deputies note that the bill comes in response to demands that have been made for many years, but which are particularly urgent and relevant in the current crisis triggered or exacerbated by the Covid-19 pandemic.

The more recent causes for the movement for the repossession of companies and workers’ self-management in Argentina date back to the 2001 state crisis.

Since then, many companies that were plunged into crisis have been successfully managed by their employees. Currently, there are more than 400 worker-administered companies nationwide, employing approximately 18,000 workers.

In 2019, the National Directorate of Repossessed Companies in the Ministry of Social Development granted them official representation within the state system for the first time.