Argentina’s New President Taking Chainsaw To Civil Service.

Photo: Senate of Argentina. President Milei aims to make huge cuts in the public sector and bring improvements to the economy of Argentina.
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Argentine President Javier Milei plans to fire 70,000 more government workers in the coming months. This is a clear sign of how the new president’s chainsaw-style approach intends to cut away the underbrush of the large public sector of the Argentine economy.

Milei is considered to be a right-wing libertarian, and as soon as he took office last year he dismissed 5000 public servants who had been appointed by his predecessor.

But it is not just job cuts. Milei boasted Tuesday at an event that he’s frozen public works, reduced funding to provincial governments and terminated more than 200,000 public pensions, which he labeled as corrupt.

The Argentine peso has been hit by severe devaluation relative to foreign currencies.

In 12 December 2023, following the election of president Javier Milei, economy minister Luis Caputo changed the official exchange rate to 800 pesos to the U.S. dollar from the previous 366.5, a devaluation of 54%, to be followed by a monthly devaluation target of 2%. At the time, the unofficial exchange rate was around 1000 pesos per US dollar.

It’s all part of his strategy to get Argentina onto a balanced budget this year, no matter what the social costs.

“There’s a lot of blender,” Milei said in an hour long speech at the IEFA Latam Forum in Buenos Aires, referring to the erosion of wages and pensions by massive ongoing annual inflation. “There’s a lot more chainsaw.”

While just a small fraction of Argentina’s 3.5 million public sector workers, Milei’s job cuts are bound to face more pushback from the country’s powerful labor unions and could jeopardize the  high approval ratings that followed his election.

One union representing some government workers went on strike Tuesday, while a government report detailed that private sector workers suffered the worst one-month wage loss in at least three decades once he took office in December.

The leader of the state workers union ATE quickly shot back on X, announcing a national strike without providing further details.

Milei cited polls showing Argentines are more optimistic about the economy’s future, while a recent indicator of the public confidence in the government rose despite his austerity measures.

“People have hope, they’re seeing the light at the end of the tunnel,” Milei concluded.
Sources: MercoPress, Bloomberg, Wikipedia.
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