In Argentina the labour market situation is rather complex.

To begin with, the National Statistics Institute (INDEC) was destroyed during the previous administration. Therefore, there are no reliable figures about how many people are unemployed and about who are those people. Experts believe that during the past few years INDEC underestimated the unemployment rate, by not taking into account unemployed people who had stopped looking for a job. Consequently, the current unemployment rate is estimated to be a two digits rate. Meanwhile, the informality rate is around 35% and youth informality is over 50%.

The following are the key points under discussion in the country.

Youth Employment Act

Around one million youngsters in Argentina are neither in employment, education nor training. They are the so called NEETs.

The current administration has sent a bill to congress to promote the first job among youngsters aged 18 to 24 years old. The key points of the bill include deducting the cost of the employers’ contributions from the wages of young people entering the labour market.

Currently, for every ARS 100 of gross wage, the employee gets ARS 83 after paying contributions, while the employer has to pay ARS 128 (wage plus employers’ contributions). The bill proposes that the employee should continue to get the same percentage, but the employer should pay ARS 97, as an incentive to hire more people.

The bill seeks to provide a subsidy for companies that hire young people aged between 18 and 24 years old, who have made less than 36 contributions to social security in their working life (either continued or discontinued), and/or if they worked as independent contractors or freelancers.

Currently, the contributions that employees make in Argentina are the following: pension 11%; healthcare 3%; retirement healthcare (PAMI) 3%. Employers’ contributions are: 21% or 17% depending on the activity and the revenues of the company; and healthcare: 6%.

The initiative suggests that the State pays for the employers’ contributions and insurance company. The subsidy lasts three years, but decreases as time goes by, being higher during the first year than during the second and third year.

It is a benefit that reduces the contributions for the first 36 months, promoting formal first jobs. In addition, the project classifies the percentage of the subsidy to grant depending on the size of the employer (delivering larger benefits for small and medium companies).

The goal is to encourage companies to hire young people, in a decent work scheme. The importance of having a formal first job lies in the fact that it helps people to have better working lives. Currently, the main way to enter the labour with a formal job is through staffing companies. This form of employment suits young people’s needs as they can gain experience, and 40% of them shall get a permanent job in the company they have been assigned to.

One of the parties of the opposition, the Frente Renovador, has suggested encouraging employment among people who currently receive social allowances. The core idea is to provide tax incentives to the private sector, so that it starts absorbing people with allowances in a 2 years period.

Reducing litigious situations

According to experts, another key point to discuss is the multiplicity of interpretations that current labour laws produce in Argentina. Contradictions among rules and their lack of clarity produce an elevated number of litigious situations that have a negative impact on the labour market.

Unemployment allowances

The government has made a commitment to increase unemployment allowances. The amount of the allowances has remained the same since 2006 and is totally outdated, particularly considering the huge levels of accumulated inflation. In addition, the possibility of providing training to improve transitions is being analysed.

Promoting the Entrepreneur Ecosystem

The government has send the Law for Entrepreneurs to Congress. The bill seeks to strengthen the Entrepreneur Ecosystem in the country. The key points of the bill are the creation of a new kind of partnership, with innovative methods of payment for the employees and less bureaucracy in order to create these companies in a 24 hours period.

The promotion of local startups and entrepreneurs’ projects is one of the paths towards employment creation.

A law that prevents dismissals

As an antithesis of the measures proposed by the government, the FPV, a coalition of parties that ruled the country during the past 12 years, has presented a bill that seeks to protect employment by forbidding dismissals and suspensions for 180 days. The bill was passed in the Chamber of Senates and is being discussed in the Chamber of Deputies.

The initiative also provides the employee with the chance of, upon dismissal, being immediately reincorporated or being paid a double compensation. The bill does not include those companies that hire workers after the bill was definitely passed.

“This bill is a measure that actually damages employment. These are the sort of initiatives that make the Argentinian labour market even more rigid, posing a risk to lots of small companies and discouraging the creation of decent work”, said Martín Padulla, founder and managing director of staffingamericalatina.

“A great deal of the initiatives proposed seek to develop a more modern, dynamic and inclusive labour market that suits the needs of the 21^st century. However, initiatives such as this law only deviate from the right path”, he concluded.