It’s a well known fact that many Argentine workers are payed under the table, however a recent study revealed just how big of an issue this is. The study found the figure to stand at a whooping 4.5 million workers – that’s 33.6 percent of the entire Argentine workforce. The situation is far worse in the Northern region of the country, where 60 percent of workers are paid under the table.
In order to tackle this issue, The government recently announced plans to bring 300,000 workers onto the books per year. “This has been a long-standing goal and we have been calling on the previous government” said GCT umbrella union spokesman, Jorge Sola.
“I want to return to advancing the contracts of increased productivity” said Labor Minister, Jorge Triaca.
Two initiatives have been proposed to deal with the issue: a debt payment plan – a moratorium, in technical language – or establishing a tax amnesty, where employers would have to pay a one time penalty for the amount of workers they want to bring into the formal sector and be pardoned of all the taxes they didn’t pay during that time. Considering the success of the recent tax amnesty – where the Macri administration collected US $116 billion – it seems likely the government will opt for the latter.
The initiative was met with praise from representatives of both employers’ chambers and unions. Vice President of the Argentine Industrial Union (UIA) Daniel Funes de Rioja, told Clarín that bringing workers into the formal sector of the economy is “indispensable, especially now that the economy is starting to recover.”
Union leaders also supported the initiative, but argued that the government also needs to sanction the business leaders who have kept their workers in the informal sector because “they took advantage of both them and the state.” “There are people who deserve being pardoned. Small and medium-sized businesses (Pymes) are examples, but this shouldn’t apply to big companies,” said Sola.
Sola went on to say that the measure will only be acceptable if the employer in question keeps their payroll on the books for several years, at least five and that all the time that were unregistered is computed as years of service with contributions to social security.” said a spokesman for the GCT.
Should it be implemented efficiently, the measure would report a benefit for all parties involved, at least partially. Employers wouldn’t have anything to hide from the tax collecting agency in the future and would get away with not having paid what they had to in the past; employees would have their employers start paying for their social security and pension funds; and the state would collect more tax money.