Report Nº: 109515/11/2024
The intensification of protests in Aerolíneas Argentinas and Intercargo increases the urgency for solutions. Evidence suggests that the way to reduce conflict is to create an environment of competition and hard budget constraints, as occurs in most private companies.
Since the current government took office, Aerolíneas Argentinas –a national state-owned company– has been suffering the consequences of intense labor conflicts. This deteriorates the quality of the service resulting in flight delays and cancellations. Since domestic flights are operated mostly by Aerolíneas Argentinas, domestic users are the ones who suffer the most.
Now Intercargo has joined the conflicts. A company –also owned by the national State– which is responsible for ground services to the flights. It is in charge of the airplanes signaling on the tarmac, of the ramps and buses for passengers to enter or exit the aircraft, of the baggage and the internal cleaning of the plane. Although these are low-complexity jobs, without them, the airplanes cannot operate. The company acts as a monopoly in practically all the airports in the country.
A relevant reference is to compare labor conflicts in the State with those registered in the private sector. According to the Secretary of Labor, for the period between 2006 and 2024, it is observed that:
These data show that the intensity of labor conflicts is much higher in the State than in the private sector. This phenomenon is not justified by the fact that working conditions in the private sector are better than in the public sector. In general, in the State there are fewer requirements in terms of working hours, attendance and results than in the private sector, and salaries are similar. Therefore, the fact that one-third of registered employees are public employees, but two-thirds of strikes are caused by them, suggests that conditions in the state are more prone to work stoppages.
The main factor distorting labor relations is the nature of activity in the State. In the public sector, budget constraints are lax and the threat of being displaced by competition is low. Both factors create conditions conducive to labor conflicts. If access to public funds were not so flexible and monopolistic conditions were not available, union activity would not be so confrontational. Union behavior would be much more rational and careful with the welfare of the clients given the threat of disappearance due to lack of competitiveness.
Privatization is not the magic solution to the abuses of the right to strike. For labor relations to be constructively channeled, privatization must go hand in hand with well-regulated competition and strong signals that the State will not be responsible for the deficits generated by concessions to unions. Hence the importance of having an orderly State at all three levels of government because the responsibilities for good regulation of the market are concurrent functions of the Nation, the provinces and the municipalities.
The misuse of the right to strike is not the unionists’ fault only. In general, the excesses in the State are supported by the negligence or complicity of the officials responsible for the management. When there is no budget restriction and/or there is a monopoly, the pressures of union conflicts end up benefiting with perks (higher salaries or spurious public employment in favor of relatives and friends) all the members of the organization: union members, workers and officials responsible for the management. Therefore, more important and complex than privatization, is to generate well-regulated competition and hard budgetary constraints to discipline union activity.
