May 7, 2015

Labor Unrest Spreads across Argentina

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The labor situation in Argentina is very chaotic with numerous labor organizations across Argentina either on strike or contemplating striking over wage increases. These labor organizations are as varied as the metallurgical workers, banking personnel, dock workers, truck drivers, soybean crushing plant workers, food quality inspectors, etc.

Many businesses are offering wage hikes of between 20-25% while workers are demanding wage increases of 30% to 35% or higher. Labor leaders are accusing the Labor Minister and the Economy Minister of trying to impose a wage hike ceiling of 25%, but both ministers reject that claim. They say that the wage negotiations are free of government interference and their main concern is that they do not want business to grant excessive wage hikes and then pass along the higher costs by increasing prices to consumers.

Soybean oil shipments slowed down on Tuesday due to a strike by the Soybean Oil Workers Federation which represents approximately 20% of Argentina's soybean crushing plant workers. The union met with representatives of the exporting companies and the Labor Minister on Monday, but they were unable to reach a new accord. Several soybean oil facilities are closed due to the strike while others continue to operate. The workers are demanding wage hikes of 42% to 48%, which is significantly above the inflation rate. The Argentine government says the inflation rate is 18%, but most economists feel it is 30% or greater.

The exporters say they are not willing to negotiate wage hikes of that magnitude and for their part, the union says that the exporters are ignoring their demands and they will continue their strike as long as it takes to achieve their goal.

Unions representing the dock workers and truck drivers are said to be considering joining the strike by the crushing plant workers. The dock workers union has the power to paralyze activities at the nation's ports at a time when Argentina is set to export a record large soybean crop.

The labor situation in Argentina is very chaotic and it is probably going to get worse. How much of a potential impact it will have on port activities remains to be seen, but it is probably safe to say that these work stoppages certainly wont't help Argentina export a record large soybean crop.