Yesterday, President Macri signed decree 632/2018, which imposes a government hiring freeze, a reduction of bonuses and vacation time for existing employees, and seeks to reduce travel expenses and the number of government vehicles until the end of next year. The measure, signed by Cabinet Chief Marcos Peña and ministers Nicolás Dujovne and Andrés Ibarra, will result in a savings of AR $20-25 billion.
“We want to create a serious austerity policy. This decree is part of what we are doing from the beginning of this administration, which has to do with bettering the state. The objective for it to function better and give more services to citizens, to businesses, with less bureaucracy,” said Ibarra.
The Cabinet is hoping the trend catches on, hinting not-so-subtly that the “Judiciary of the Nation, the Legislature of the Nation, the provinces, and the city of Buenos Aires adopt similar measures to those established in the decree.” Word’s out on how they’ll follow suit.
Under the pretext of necessary austerity, Macri continues to implement policy that is in line with his “smaller is better” ideology regarding government. Indeed, the current number of permanent state employees is 208,000; when Macri assumed the presidency in 2015, there were around 240,000.
However, there are still a few exceptions to the salary and hiring freeze: the National Public Administration, the Federal Administration of Public Revenue, the Federal Penitentiary Service, public universities, and the Armed Forces will not be placed under the same restrictions.
Contents of the decree:
- Places limits on bonuses and incentives, preventing any new incentives until the end of next year and requiring that they be approved by the Technical Advisory Committee on Public Sector Wage Policy;
- Freezes the hiring of any kind of executive personnel from budgetary or non-budgetary financing;
- Reduces travel expenses, current costing five billion a year, by 30 percent by requiring all government agencies to submit a report to the Ministry of Modernization on the payment of all extraordinary services;
- Requires the Agency on the Administration of State Goods to submit an appraisal on government vehicles within 30 days including information on who uses them and when;
- Requires all other agencies to submit a report to the Cabinet Chief within 60 days outlining an optimization of “the functional structure, the employment scheme, and the planning of staff expenses for 2019, so that they can be assessed and eventually applied adjustments.”
Although this measure is a small step in the direction of the fiscal equilibrium that the Macri administration so desperately seeks, it is also largely symbolic. Decree 632/2018 doesn’t offer any seriously significant cost savings, representing only ten percent of what would need to be cut in the next year. Yet importantly, it’s a gesture to a citizenry concerned about economic crisis toward a willingness among executives to also make the sacrifices they are requiring of others.