the DNU on financial assistance to SMEs was published

With an express procedure and with an extraordinary publication almost at dawn of the Official Gazette, the Government finally decided to prohibit the layoffs of personnel for the next 30 days.

In other words, companies will not be able to reduce personnel until at least next June, as reported in the Decree of Need and Urgency (DNU), signed by President Alberto Fernández in the framework of the health emergency to combat the coronavirus.

Support for this decision was given by a report from the CGT who anticipated that the economic impact of the pandemic could affect 1.5 million public, private and informal jobs.

For this reason, it was a decision awaited by the unions, which demanded measures from the authorities to prevent companies from reducing their provisions, especially after the dispute that arose with the decision of the Techint Group to end the employment relationship of 1,450 employees of your construction company.

This, despite the deep crisis that all sectors are suffering and that derives from the economic consequences that compulsory social isolation is causing.

He DNU It has seven articles but it only focuses on the continuity of labor contracts and clarifies that dismissals are prohibited if there are no causes that justify them and they are not enabled due to the causes of lack or decrease of work and force majeure for the term of 60 days counted from the date of publication of this decree in the Official bulletin.

The Head of State also prohibited suspensions for the same causes and for the same period and, in the DNU, warns that dismissals and suspensions that are provided in violation of the provisions “will not produce any effect, maintaining existing labor relations and their current conditions. “

Businessmen waiting

With this decision, the Government finally took note of the CGT’s requests but left almost no aid tools for a large number of companies that had been requesting financial aid through reports and documents prepared by the Argentine Industrial Union (UIA) who were approached by the main government officials.

In this sense, the President defined only a strong injection of funds to SMEs with up to 100 employees with almost $ 30,000 million that will be used to guarantee the repayment of the working capital loans that these companies have taken to payments of wages, contributions and contributions employers, and coverage of deferred checks, among other reasons.

These measures were also published in a first DNU known a few hours ago, which establishes micro, small and medium-sized companies as beneficiaries.

According to the document, the guarantees may cover up to 100% of the loan taken by this sector and the Argentine Guarantee Fund (FoGAr) may grant them up to what is defined in each case, without requiring counter-guarantees from the company taking the loan.

The Ministry of Productive Development will be the enforcement authority and will determine the destination of the funds that were not committed by reason of guarantees granted, being empowered to decide to transfer them to trust funds that operate under its orbit and promote the financing.

In this framework, a Specific Affectation Fund in order to grant guarantee to facilitate access to working capital loans by MSMEs, and the Head of the Cabinet of Ministers is empowered to make the appropriate budgetary adjustments to transfer to the Argentine Guarantee Fund (the $ 30 billion that will be used as financial aid) to the companies most compromised by the crisis that is causing compulsory isolation and the lack of production and sales in almost all sectors of the economy.

At first, another DNU had circulated in which dismissals and suspensions were also prohibited, but social security and tax benefits were granted to companies based on a series of measures that involved an expenditure by the national State of $ 400,000 million.

However, in the official decree at the last minute of this Tuesday, March 31, nothing was added about these supposed benefits for the sectors affected by the economic crisis caused by the mandatory isolation.

Speculation had hovered in a much broader mega rescue plan such as a substantial reduction in workloads of up to 95%, the payment by the national state of a part of the salary in companies with up to 100 employees, the generalization of the Repro , unemployment insurance of between $ 6,000 to $ 10,000 pesos, among other decisions.

Wave of layoffs widens

Instead, President Fernández agreed with the rest of his cabinet that economic aid be limited, at least for now, to SMEs and medium-sized companies with up to 100 workers.

For this reason, other sectors also strongly affected by the brake on production and sales that, through the UIA, had been requesting protection from the Front of All government, could be left out of official aid.

Sectors that show difficulties due to the lack of liquidity to face all the obligations -among them, the salaries- and bearing in mind that great efforts will have to be made to get Argentina back on track, even if it is on the same path of recession that it suffered before that the Covid-19 pandemic will arrive.

Also because the Techint case, which led to the intervention of the Ministry of Labor and the announcement of a compulsory conciliation for 15 days, was not the only one with warnings about layoffs, suspension or reduction of wages.

The closing of the magazine was known Soon, which leaves 50 workers on the street; the possible termination of contracts that Mirgor It has 700 employees and the contractors of the Livent mining that they untied another 400 workers.

To these cases are added the forced suspensions in the Automotive industry, where the terminals were forced to stop production and send a large part of their personnel to the home with the payment of a smaller percentage of wages.

Also in the air Latam They have already announced that they will reduce by 50% the wages of all their workers worldwide, including those who work in Argentina.

Between the gastronomic, services and in the tourism and the hospitality the scenario is repeated in a much more dramatic way and also with the specter of mass layoffs as an immediate possibility starting in April.

Even in the sectors that were excluded from compulsory social isolation, there are companies that operate with part of the staff and gave rest to the rest, since the drop in demand is another factor that influences business income.

Both in supermarkets, as in producers of foods and the sector of the Logistics they suffer restrictions derived from the lower sales that are observed these days and that have to do with the impossibility of consumers to move freely and with the fear that these same people have to lose their jobs and that leads them to cut their expenses as much as possible .

However, and despite the fact that more sectors were expected to be included among those that must not comply with the mandatory isolation, the DNU that extended the quarantine until April 12 added nothing about that possibility.

In its article 2 it explains that “the workers who are not reached by any of the exceptions provided for in article 6 of Decree No. 297/20, and must comply with” preventive and compulsory social isolation “, Belonging to the jurisdictions, agencies and entities of the national public sector, whatever their form of contracting, they must abstain from attending their places of work, but they must carry out their tasks, as far as possible, from the place where they fulfill the ordered isolation , fulfilling the indications of the corresponding hierarchical authority “.

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