Inflation in Argentina has risen almost 30 percent in the past year, while the exchange rate Argentine Peso - US Dollar has risen by over 20 percent in the last four months. The combination of inflation and rising exchange rate Argentine Peso - US Dollars has resulted in depreciated salaries. Additionally, as a result, collective negotiations have become a major challenge for Human Resources Managers and Labor Relations Experts.
Unions are fighting for salary increases in order to mitigate the negative impact that the current economic climate has had on the purchasing power of employees.
The Argentine National Government's goal is to limit salary negotiations by setting an annual "cap" on salary increases of 28 percent, with the increases taking effect in installments. The strategy is not a result of any regulation, but is rather an understanding that has arisen from various official comments. Most unions are negotiating for, or expecting, an annual salary increase at a higher rate than that proposed by the Government.
Some Unions have begun negotiations, and are negotiating for a fixed-sum for the first quarter of 2014. In lieu of entering into salary agreements, some Unions have postponed salary negotiations until the current economic environment becomes clearer. Bank workers, bus drivers and workers in the oilseeds industry have agreed to fixed-sums, roughly equivalent to a salary increase of 25 to 30 percent, Negotiations for these workers are set to resume in April.
The Metallurgical Workers Union initially claimed a one time annual salary increase of 30 percent; or an increase of 20 percent in April 2014, an additional 10 percent in July 2014, non-remunerative allowances in November 2014 and January 2015, and a payment of ARS 1,000 in March and April 2014. After negotiations with the Chamber of Companies of the Metallurgical industry, the Union lowered the percentage of salary increase claimed to 25 percent plus fixed amounts, that result in a salary increase of 28 percent. Thus far, an agreement has not been published under those terms. If an agreement with the level of salary sought is published, the increase would be very close to that of the official Government position.
So far, developments of the collective negotiations in the first quarter of 2014 have shown that the process needed to reach a salary agreement in 2014 will be a difficult one.
In Argentina, employers and Unions face difficult challenges as a result of a complicated economic situation characterized by persistent inflation, devaluation, public controversies between the National Government and the Head of the Employment General Confederation (one of the strongest Union’s representatives) and judicial precedents challenging non-remunerative allowances.
In light of this, companies face difficult fights with unions when it comes to salary negotiations, and collective conflicts in the coming months could become more frequent.