ONLY 5% OF THE INCREASE IN EMPLOYMENT IS IN A FORMAL COMPANY

The INDEC reported that in the second quarter of 2024, the labor force in the 31 large urban agglomerates grew by 400 thousand people compared to the same period of the previous year. Of this increase, 200 thousand obtained employment and another 200 thousand remained unemployed, i.e., actively looking for a job but not finding it. Thus, the unemployment rate in the second quarter of 2024 was 7.6% of the labor force, up from 6.2% in 2023.

Evaluated from a historical perspective, the current unemployment level is not high. Taking the last 20 years, the average unemployment rate was 8.5%, including peaks in the 2004-2006 and 2019-2020 periods that were in double digits. This does not mean that there are no severe labor problems but that, in labor markets with high informality such as Argentina’s, labor problems manifest in other ways.  

One way to illustrate this phenomenon is by looking at the labor dynamics of the last decade. According to INDEC, in the last 10 years (2014-2024), the labor force in Argentina grew by 3.2 million people of which 92% got jobs and 8% was unemployed. Of those who obtained employment, the breakdown is as follows:

• 5% were inserted as registered salaried in a private company.
• 20% were inserted as national, provincial or municipal public employees.
• The remaining 75% were employed “on the black” or as self-employed workers.

These data show that labor market deficits are not much reflected in the total lack of employment (unemployment) as in the deterioration in the quality of jobs. In the last 10 years, barely 1 out of every 20 people who joined the labor market did so as a registered employee in a private company. In other words, registered employment in private companies practically did not grow, remaining at around 6 million workers, representing less than a third of the total number of employed people. Most people who join the labor force do so informally as unregistered employees or self-employed.

It is very revealing that the modality of work that has grown the most in the last decade is the Monotax (Monotributo). There are currently 5 million Monotax payers registered, of which 2.8 million have the Monotributo as their main employment. According to the Ministry of Labor, from 2014 to the present the number of people registered in the Monotributo as the main source of labor income increased by 1 million people reaching the current 2.8 million people. This suggests that many people work in conditions as a salaried relationship, evading labor regulations, through framing the labor relation as self-employment with the Monotributo.

The fact that companies do not increase registered salaried employment is a consequence of economic stagnation and poor labor regulations. The changes incorporated in the Basic Law corrected some deviations –such as the multiplication of the severance payment– but left substantial issues pending. One of the most important is the centralized collective bargaining agreements negotiated in the 1970s and 1980s. There are 26 legislative initiatives in Congress proposing to improve the transparency and democracy of unions and to eliminate the collection of compulsory union fees. But none of them address the decentralization of collective bargaining. It is a priority to establish by law a mechanism for SMEs to be able to opt out of the old collective bargaining agreements. Mercado Libre was able to do so by opting out of the centralized collective bargaining agreement for truck drivers.

High inflation helped to avoid job destruction. The adjustment was made by real wage decreases rather than by job reduction. But in a scenario of price stability and appreciated exchange rate, as it is made explicit in the 2025 Budget Bill, the modernization of labor institutions is essential. Otherwise, registered salaried employment (particularly in SMEs) will cease to be stagnant and will start to fall.