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In 2016 between 5000 and 6000 small businesses closed their doors across the country, leading to a negative balance between the number of new enterprises and the ones that had to shut down. Mariano Mayer, Secretary of Entrepreneurs and PYMES (Small and Medium-sized Businesses), argued that many projects to open businesses of the kind are holding off because of the large number of lawsuits from employees against employers.

In fact, the government has started a crusade against this, arguing that shady lawyers and some workers to consistently take advantage of how favorable labor laws are to employees in Argentina in order to create unfounded lawsuits against their employers and squeeze them out of money.

President Mauricio Macri himself accused several judges of being involved in the illegal ring allegedly to get a percentage of these eventual compensations to rule in favor of workers. To refer to this, Macri coined the term “labor laws mobs,” and accused the leader of the Victory Front (FpV) caucus in the Lower House, Hector Recalde, of being involved. Recalde rejected the accusations and said Macri has a personal grudge against him.

Tackling this issue — although others deny it actually being a thing — is part of a larger plan by the government to help small and medium-sized businesses boost their production and encourage more people to start their own. There is a law promoted by the administration to support small and medium enterprises by giving them state benefits. Mayer argues that these small sectors are ready to take off, but mounting labor costs that labor activity trials demand generates great amount of uncertainty making people less likely to invest and hire new people. This issue is worrying, particularly if we take in count the amount of unemployment in Argentina at the present time.

According to the Argentinean Confederation of Medium Enterprises (CAME), small businesses’ production fell by about 3.8 percent in April.

Mayer acknowledged that from the 6 million formal jobs, 4 million are generated by medium-sized enterprises. Because of this, the Government need for medium-sized businesses to generate jobs is immense. The Secretary agreed that it is needed to lower the bureaucratic costs in all areas, especially concerning employment. Macri’s administration has already passed a law to modify the taxing pressure in small enterprises and change the requirements for the loans that these projects need to take off.

In respect to the so-called labor law mobs, Mayer argued that they are very much a thing and emphasized the need to tackle the issue, as it terrifies small businesses when it comes to taking on new employees. Fabián Tarrío, president of the CAME, supported the statement.

The Secretary concluded adding that after a year and a half in Government, they managed to loosen up some of the pressure that was on these small businesses’ shoulders. However, he adds that it is necessary to keep working to help small businesses because how necessary they are to the country.