3 out of 4 working – age adults suffer from labor shortages

Workers’ Day is an opportunity to celebrate and pay tribute to all those who strive every day in the labor market to support their families and contribute to the country’s development. Work, from the individual point of view, is claimed as the main mechanism for the material welfare of families. From the collective point of view, it is an essential component for social progress. 

However, under current conditions, Workers’ Day should also be a day of reflection on the situation of the labor market. There is evidence that the labor market has been moving away from the traditional imaginary that reduces labor relations in terms of employers and workers. Therefore, the high symbolic value of Workers’ Day should be nuanced in the face of a much more complex reality.

A particularly suggestive facet appears when analyzing the situation of people of working age. In Argentina, there are approximately 23 million urban people of working age, that is, between 20 years of age and retirement age. According to INDEC, the employment situation of these people can be classified as follows:

• 28% are registered private salaried employees and professionals in the liberal practice of their profession.
• 45% are public employees or informal workers.
• The remaining 27% do not have a job either because they are looking for one but cannot find it (unemployed) or because they are not even looking for one (inactive).

These data show that just over a quarter of people of working age work as dependents in a formal company or in the liberal practice of their profession. Almost half are public or informal employees and the other quarter have no work at all. Although this classification is not strict (for example, within public and informal employment there are high productivity occupations and there are inactive people who choose not to work even if they could), the proportions are so striking that they are sufficient to reflect the enormous deficit of quality jobs, which is one of the main causes of the social situation degradation. 

While many factors contribute to widening labor deficits, a particularly important one is the obsolescence of labor institutions. Norms dating back to 1953 (Collective Bargaining Law) and 1974 (Labor Contract Law) continue to be upheld, ignoring the profound changes in the context generated by the technology advance and globalization. There is much passion and longing in the refusal to update labor institutions, but there are also pressures to sustain spurious privileges benefiting vested interests. 

Faced with this situation, some policies are mere expressions of wishful thinking with loads of naivete. For example, transforming welfare plans into a bridge to formal employment. Others are directly inconsistent, such as those aimed at strengthening the “Social Economy”. Supporting the “Social Economy” implies increasing the tax burden on the most productive enterprises, which are those that generate quality jobs, in order to subsidize the least productive enterprises, which generate the lowest quality jobs. The result of these interventions, beyond the declared objectives, is to deepen the degradation of the labor market.

Increasing tax and regulatory pressure on the formal sector is destroying jobs and eroding wages. This is making it more attractive for some people to subsist on welfare, combined with informal work, rather than access more productive employment in the formal sector. This is an extreme and terminal situation. The more formal employment continues to fall, the more unviable it will be to sustain the financing of the welfare system and the more degraded will be the conditions in informal work.