Government hastens measures for informal and MONOTRIBUTISTAS

The report of some mayors of the Buenos Aires suburbs on incidents and tension over the weekend, in the midst of the quarantine, finished convincing the President that he should take new social containment measures.

“We are going to spend whatever it takes to make people well.” Alberto Fernández reassured at noon on Sunday on the popular Telefe screen.

At the beginning of the week there will be measures for monotributistas but also for a vast sector of informal workers and self-employed workers, who were hit very hard by the quarantine. Alberto Fernández himself announced in televised interviews that there will be financial aid for the sector of non-salaried workers and that other measures will be implemented to assist small businesses that have been left without income.

The issue had already been installed after the summit that Alberto Fernández held with the governors in the Olivos estate. In addition to agreeing on the start of the total quarantine, the provincial leaders raised enormous concern about the severe impact that the pandemic will have on the economy, and demanded that the national state secure exceptional funds.

Cordovan Juan Schiaretti left the meeting and leaked the Government’s idea in a tweet: “At the meeting, the national government confirmed that the measures taken and to be taken are going to guarantee a month of salary to Argentines“

At the meeting, the national government confirmed that the measures taken and to be taken are going to guarantee a month’s salary for Argentines. We as a province will grant you the guarantee so that small and medium-sized companies that do not qualify for credits can obtain it.

– Juan Schiaretti (@JSchiaretti) March 20, 2020

But paying a month to all workers (formal and informal) would require a notable effort from the administration, and that is what led to doubts about the feasibility of such a measure.

Consulted by iProfesional, the Minister of Production, Matías Kulfas, rejected that there is such a relief for formal workers. He resorted to the measures that were already put into practice for that sector. Basically, access to financing for SMEs at a preferential rate of 24% per year (negative in real terms) to pay wages.

On the other hand, this Monday, the Government will regulate the access of the companies in trouble to the Repro, through which the State will pay part of the wages of the establishment of workers.

As a background to the application of this policy, in the 2009 crisis, the State paid 145,000 people their wages. This time there will also be an extension of unemployment insurance, something that will also be defined this week.

Informality, the biggest challenge in the crisis

The proposal of the governors, beyond the decisions already taken, refers to a deep debate that is coming: what is the true power of the State to alleviate such a crisis.

And the questions related to the limitations appear: Are you in a position to pay wages? Where would you get the money to finance them?

It is known: public accounts are suffocated and the local and international financial context is going through the worst moment in a decade. In fact, the Central Bank, instead of accumulating dollars in its reserves, is losing them, despite the super exchange rate.

The issue was analyzed during the last Saturday in the Quinta de Olivos, when Alberto F. maintained contact with the economic and social team.

Concern for acts of violence in various neighborhoods of the conurbano (Ituzaingó and San Martín), which included confrontations between the Police and citizens, hastened the decision of palliative measures due to the sudden stoppage of the activity, which is adding to an economy that was already stuck.

When Fernández spoke on television on Sunday, he spoke especially to monotributistas and self-employed, but also spoke of taxi drivers who must be kept at home to take care of the virus.

“I care more about the health of the people than the economy. That they stay calm at home than we are going to spend whatever it takes for everyone to be well“assured the head of state.

In passing, he left the businessmen a phrase that generated concern in some chamber: “If they have to earn a little less, that is not a problem,” he told them.

And so? The Minister of Social Development commented to iProfessional that was defined a scheme to help informal workers.

Achieves? It is the logical question in the midst of the pandemic, when the Government itself admits that the worst – in health terms – is yet to come, that the peak of those infected with “coronaviruses” has not yet been reached.

The extent of the pandemic is also unknown. What is known is that the Casa Rosada decided on the total quarantine, which evidently puts in great trouble a vast number of workers who only have income when there is activity. If nothing moves in the streets, where do they get the money to live?

To take a dimension of the scenario, according to official data from the Ministry of Labor:

– In Argentina there are 12.1 million registered workers.

– Of this universe, there are 9.8 million employees who work in the private and public sectors. They are the most protected against the crisis.

– There is almost 2.4 million who are “non-salaried”, which include monotributistas (about two million, if social monotributistas are included) and the 400 thousand self-employed.

– The most unprotected are the 7.6 million who work in the absolute informality. Totally in “black”.

In other words, of the almost 20 million workers, half are well protected and the other half are not. Towards those 10 million the Government will aim with the next measures.

Alberto F. himself said that he takes into account the monotributistas. But, it is clear from the above point, it is not enough to cover the labor universe.

The gravity of the situation forces to clear the ideological conceptions. The most recognized liberal economists -like Carlos Melconian or Fernando Navajas, a FIEL historian- have already argued that the State must take charge and act in a situation like this.

“We are going to expansive fiscal spending, there is no doubt, with the little machine to emit, but this must be verbose, ordered and thought, “said Melconian.

“People have to be calm that they are going to collect their wages and the businessman has to be able to pay, the resources are not infinite,” said the economist.

“My whole life has been thinking differently, but this is a quilombo,” said the former head of Banco Nación.

Between urgency and caution

For now, the government has been very cautious.

In fact, only part of the entire latest government announcement involves a direct outlay of money. These are the fixed-sum amounts that, for the only time, will be given to retirees of the minimum, beneficiaries of the Universal Child Allowance or bonds for social plans.

In total, it will be $ 37,747 million that, in the absence of new financing, the Central Bank will have to issue (or the other Ministries adjust) and that will be distributed among the most unprotected citizens in the face of the crisis.

Now that amount will be expanded to finance Repro plans. And the great challenge will consist of financing the emergency plan to contain the informal economy, which is no less than 7 million, according to official figures.

The Casa Rosada, aware of the limited margin to use fiscal resources, has shown that it takes these limitations into account. The measures announced so far have little to do with the audacity of Frenchman Emmanuel Macron and even Donald Trump himself, who promised to send citizens a check to spend in the midst of the crisis.

Neither France nor the United States resemble Argentina, but what is needed is a very solid containment network to avoid major social problems.

The economic team works silently and against the clock on this agenda – parallel to the health situation. They know that an explosion on that social side, combined with the terror of the coronavirus, would be a very difficult crisis to contain.

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