(Photo: NA/Marcelo Capece)

A conflict is brewing between the government and the CGT umbrella union, that much is clear to anyone following the news about the escalating tension between the two.

Last week’s protest rally at the Plaza de Mayo was followed by the firing of two key CGT allies from the government bureaucracy, in what many saw as President Mauricio Macri’s response to the march. The powerful organization also suggested it wouldn’t back off in the near future, promising to discuss a general strike next month.

But what are the reasons behind these rising tensions? After all, it was Macri himself who named those two CGT allies as part of his government in the first place. And you only need to go two years back in time, to the 2015 presidential campaign, to find Macri and the then-leader of the organization, Hugo Moyano, pictured together during the unveiling of a statue of former president Juan Domingo Perón, in what many saw as an attempt from Macri to get the backing of some long-time Peronists and gain credibility outside his upper-middle class and white-collar voting base.

Now, Moyano’s close ally Juan Carlos Schmid was actually the leading voice of the protest, calling for more job protection, pension increases and warning against government intervention in unions and anti-labor reforms.

At the same time, the government believes the protest was unjustified and argues that Argentina economy is actually recovering and creating jobs so it was suggested that ultimately the protests amounted to a political power play. This explains why their response was also political, with a decision to cut some of the ties with unions that it had worked so hard to establish during the first two years of the Macri administration.

Photo: Aqui Noticias/Maxi Failla
Juan Carlos Schmid addresses the crowd in Plaza de Mayo during a CGT protest earlier this month. Photo: Aqui Noticias/Maxi Failla


So let’s begin by taking a look at the claims coming from each side. How much are the economy and, above all, the job market, really recovering? And how much do those facts explain the moves set in motion by the unionists?

Recently, the government has been boasting about some monthly national output indicators bouncing back strongly when compared to last year’s lows, and has especially touted the latest figures from the Labor ministry showing that the amount of registered jobs has also been on the rise in the last few months.

Yet according to a breakdown of that report published last week by CONICET investigator Daniel Schteingart, who has worked with unions measuring socio-economic data over the last two years, most of that recovery was explained by individuals newly registered as self-employed, while actual hirings in the private sector where still not enough to get back to 2015’s levels.

That, coupled with the fact that the government is now offering new incentives for those who are self-employed to register before the taxman (such as Universal Child Allowance benefits for their kids), could mean that many of those jobs only appeared on paper, and had existed beforehand even if the AFIP tax agency wasn’t counting them. This doubt will remain until the much more thorough Permanent Households Survey (EPH), which measures both registered and unregistered jobs each quarter, is published by the INDEC statistics bureau next month.

In addition, Schteingart shows that if you focus on actual private sector jobs, the picture varies a lot between industries, with agriculture and services clearly above late 2015 levels but the industrial sector 5 percent below them and construction showing a U-shaped trend in that same period, down 10 percent by 2016 and recovering strongly but still just short of 2015’s figures at present times.

That could help explain why union leaders from the CGT, which has been historically big among blue-collar, industrial workers, are still clashing with the government.

Even if they preferred avoiding direct conflict with Macri, as they did during the first year of his administration, the situation would force them to display some animosity towards him, as fear, anger and calls for action mount among the workers they represent. Not listening to them could put their positions inside unions at risk against alternative left-wing labor leaders ready for stronger industrial action.

In line with that sector-by-sector breakdown, union leaders in the rural and retail industry have been no real trouble for the government, and the rapidly-recovering construction sector has also seen its leader, UOCRA’s Gerardo Martínez, making joint public appearances with the President while those from other areas of the economy have been more ambivalent towards Macri since he took office.

In terms of salaries, most sectors have seen an initial decline in their purchasing power since the devaluation with which Macri launched his government in 2015, followed by a partial recovery since then, while other key social security programs such as minimum pensions and Universal Child Allowance benefits have also gone down in real terms overall, with a similar partial bounce back this last year. So it shouldn’t come as a surprise to find working-class discontent channelled through unions.

Happier times: Mauricio Macri offers Hugo Moyano a flower back in 2012. Photo: Anibal Greco
Happier times: Mauricio Macri offers Hugo Moyano a flower back in 2012. Photo: Anibal Greco


But the government thinks that looking at these union leaders’ complaints through the prism of labor’s struggles is largely naive. Instead, they believe, the focus should be on their political calculations to keep Peronism (and their place within it) afloat, and on the defense of shady side-businesses that union leaders – some of whose lavish lifestyles are often hard to explain – might be protecting.

In Macri’s view, an indispensable ingredient needed to make the economy grow again is to lower its production costs, and a series of union practices keeping them artificially high are one of the first that should go.

The clearest example of this has been that of former head of the SOMU maritime workers’ union Omar “Caballo” Suárez, arrested a year ago on charges of illegal association, coercion and fraud, while accusations of using his influence to obtain indirect ownership (through his family and inner circle) over some of the sector’s firms, in a stark conflict of interest with his role as unionist, have also flown by.

“Suárez extorted shipping companies to pay costs 500 to 700 percent above their market rate in the rest of the world,” Transport Minister Guillermo Dietrich said shortly after his detention. Signaling his strong support for the court’s decision, Macri also made Gladys González, the woman who led the intervention against Suárez’s union, his coalition’s second candidate for the key Buenos Aires province Senate race in this year’s mid-term elections.

Most leaders of the CGT umbrella union did not come out to explicitly defend Suárez in public, but the situation might change if the next fight that the government picks is against arguably the biggest fish of the Peronist unions’ pond: teamsters’ Hugo Moyano.

Moyano sometimes fits in with Macri’s idea of unionists acting as roadblocks against his goal of lowering the cost of goods that are locally made. Last year, the Transportation Ministry eliminated a compulsory insurance scheme that forced containers with shippable goods to pay to a firm named IVETRA, which up to 2012’s conflict between former president Cristina Fernández de Kirchner and Moyano was led by his lawyer Daniel Llermanos.

Even if Moyano’s influence over IVETRA dwindled, he is still frequently linked by the press to the owners of courier company OCA, the main sponsor of the football club he also presides, Independiente.

OCA is struggling with huge tax debts, and thus in conflict with the state.

As the relationship between Macri and Moyano deteriorates, that OCA debt could be used as leverage to take power off the hands of the union leader, and let the President’s Cabinet gain a firmer grip over the country’s transportation to continue their logistics reforms instead.

The risk, however, is that their cost-cutting ends up hitting workers as well as questionable side businesses. Indeed, in the eyes of Macri’s opponents, union corruption could simply be the excuse to charge against organized labor’s bargaining power or their defense of labor security, seeing how Macri’s experience dealing with them comes from his days as a businessman.

With Moyano’s faction within the CGT leading the way in the latest labor protests and Macri growing increasingly hostile to him and unions in general, obfuscation between those two aspects of Argentine union life would be a safe bet for the coming months.