Unlike any other time during the current administration, in 2012, the Argentine Government faced serious industrial relations conflict.
Indeed, a government which had enjoyed workers' support since the beginning of its administration through its promotion of salary negotiations between the Trade Unions and employers, faced its first national strike in November. However, the strike was just an inevitable consequence of a long-term mounting dispute between the administration and anti-government factions.
2012 began with numerous demands on the Government from the Secretary General of the General Labour Confederation ("Confederación General del Trabajo" - "CGT"). The demands came in the form of an insistence not to impose a cap on salary increases (which had been agreed during negotiations between Trade Unions and the relevant employers' associations), a minimum guaranteed salary of ARS 3,500, an increase in the tax free portion of salary, and an increase in family allowances.
As a result, it came as no surprise that the Government launched a judicial challenge against the CGT's general elections held in July 2012, in which the Secretary General of the CGT was re-elected for a third consecutive term.
The Government also encouraged the establishment of a government-aligned General Confederation composed of those who competed for the CGT Secretary General's position. The head of this parallel organization was assigned to the Secretary General of the Metal Union.
Recently, some of the Trade Unions who are (theoretically, at least) aligned to the Government, came out in support of some of the demands made by the CGT, in particular the change in the income tax regime applicable to employees.
In other developments, there was a lot of activity on the salary negotiation front during 2012, attributable to the high rate of inflation that Argentina has been experiencing for the past few years. The average salary increases agreed to were the in the vicinity of 20-24%. Although these percentages are higher than the 18% ceiling originally intended by the government; they still appear to be lower than the inflation rate which is expected to reach 25%.
In some cases, salary negotiations included non-remunerative allowances, despite the fact that these were challenged by the Supreme Court of Justice (specifically the Court referred to non-remunerative allowances granted by the Government during the 2003/2004 period). The Federal Tax Authority ("Administración Federal de Ingresos Públicos" "AFIP") is also concerned about the trend of including non-remunerative allowances in salary negotiations and has passed a resolution requiring employers declare, on a monthly basis, the non-remunerative allowances that they have granted to their employees.
We do not expect to see significant changes to the industrial relations landscape in Argentina during 2013. Having said that, as 2013 is an election year, the Government may be forced to adopt some of the Unions' demands in an effort to secure the Unions' vote.