Download The Argentine Republic

The Argentine Republic
Topic: Easing Unemployment in the Post-Financial Crisis Era
The global financial crisis in 2008 is considered to be the worst financial crisis since the Great Depression of the 1930s. The global
employment situation is affected by the uneven economic recovery and successive downward revisions in economic growth projections.
Global unemployment increased by 5 million people in 2013, and, on current trends, it would rise by a further 13 million people by 2018.1
Current trends may jeopardize future improvements in the quality and quantity of employment, as well as growth and poverty reduction.
Perversely, the economic crisis happened 7 years ago protects Argentina from the worst of the fallout. Argentina’s exposure to the crisis is
limited by the country’s financial ‘quarantine’ over the past seven years. The international crisis mainly impacted Argentina through foreign
trade, both in the slowdown external demand as well as a temporary drop in commodity prices. The drop in exports and investment created an
abrupt slowdown in the economic growth rate in 2009. Furthermore, the uneven economic performance with severe recession and income
mal-distribution leads to high unemployment rate. Argentina’s unemployment rate increased from 6.4% in the forth quarter of 2013 to 7.1%
in the first quarter in 2014. The unemployment rate averaged 9.90%from 2002 to 2014, which is higher compared to Brazil and Chile. 2
To combat the economic crisis, the Argentine government implemented the following measures to reduce unemployment:3
• Reducing export duties on wheat, corn, fruit and vegetables and sharing the agricultural export tax
• Creating new public works: building community centres, refurbishing schools and health centres, providing facilities for the disabled
• Cutting interest rates: It encourages the demand for credit, reduces saving and increases consumers' disposable incomes; all of which will
boost consumption and demand. It also encourages firms to invest, as the marginal cost of investment will fall.
• Launching the “Argentina Trabaja” programme with creation 100,000 jobs for the unemployed who lack training in 2009
• Encouraging the formation of workers’ cooperatives, which helped reducing the effects of the crisis and hard-core unemployment.
Non-Profit organizations and other international organizations have paid a lot of effort in solving the problem. The European Union had
envisaged for the period from 2007 till 2013. 4 It strengthened education and training with a view to enhancing social inclusion in Argentina;
improved the country’s economic competitiveness, with special emphasis on the SME sector and enlarged capacity building in the public and
academic sectors. They have also invested Argentina €22.8 million, which has been dedicated to SME development; €14.3 million has been
allocated to funding the Higher Education Programme. They aimed at supporting Argentina's economy and social recovery, thus reducing the
high unemployment rate. The World Bank has developed a new Country Partnership Strategy with Argentine government.5 The World Bank
have improved the competitiveness and quality of the exports of primary industry; they have also consolidated and expanded progress in
reducing poverty by increasing household incomes and integrating marginalized groups into the productive marketplace. Furthermore, REDI,
a non-government, radical disability-rights organization, advocated campaigns to fight for the disabled population, in avoiding them being
exploited the chance of being employed. 6 These activisms helped reducing unemployment in Argentina.
Effective policies are needed to encourage an improvement in the employability of the labour supply and incentives for people to search and
accept paid work, and a sustained period of economic growth so that new jobs are being created. Argentina has the following suggestions:
i. Develop entrepreneurship: The entrepreneurial process leads to economic growth with the creation of successful growing companies.
Entrepreneurship, by virtue of creating a new venture, contributes to a growing economy that creates job opportunities. Unemployed
entrepreneurship has a refugee effect by which more people are pushed towards business ownership.
ii. Establishment of Foreign Trade Zone: It helps encourage exports and investment by allowing delayed or reduced duty payments on
foreign merchandise, as well as other savings. It also opens up job opportunities for the unemployed.
iii. Employment Subsidies: Government subsidies for firms that take on the long-term unemployed will create an incentive for firms to
increase the size of their workforce. Employment subsidies may also be available for overseas firms to attract multinational corporations
to set up business in Argentina. This may complement the drop in investment in Argentina.
iv. Benefit and Tax Reforms: A reduction in direct taxation increases consumers' disposable income and boosts household spending. The
effect may be greater if taxes are cut for people on lower than average incomes. Reducing the real value of unemployment benefits might
increase the incentive to take a job - especially if the unemployment benefits are below the national minimum wage rate. Search times
between jobs could be shortened as workers would have to quickly take on new positions before their financial situations deteriorated.
v. Reflating Aggregate Demand: The government can use macro-economic policies to increase the level of aggregate demand. It might
also encourage foreign investment into the economy from foreign multinational corporations. An increase in aggregate demand leads to
an expansion of aggregate supply. As the demand for output increases, the demand for labour grows, thus total employment increases.
The longer the unemployed remain out of work, the harder it will be for them to find new jobs, and their potential incomes will continue to
erode. Not only those workers are harmed by their prolonged unemployment, the world economy misses out on their productive abilities.
Long-term unemployment will decline as global economic growth accelerates, but there is no guarantee that rapid growth will come any time
soon. Argentina is looking forward to joint-hand efforts in improving the lives of low-income individuals facing barriers to employment and
paving the way toward global economic prosperity.
Reference:
1 ILO (2014). “Global Employment Trends: Update January 2014”
2 Trading economoics(n.d.). Argentina Unemployment Rate. tradingeconomics.com. Retrieved August 10, 2014. from http://tradingeconomics.com/argentina/unemployment>rate
3 Bermudez,Ismael (Reviewed Sep 15, 2009).Argentina responds to crisis with unorthodox measures. forumfed.org. Retrieved August 10,2014. From http://www.forumfed.org/en/products/magazine/vol8_num2/argentina-unorth-measures.php
4 Argentina(2013). MID-TERM REVIEW AND NATIONAL INDICATIVE PROGRAMME 2011-2013. Country Strategy Paper 2007/2013. Retrieved August 10, 2014, from http://eeas.europa.eu/argentina/csp/11_13_mtr_en.pdf
5 World Bank (Reviewed Apr 9, 2014).Argentina Overview. worldbank.com. Retrieved August 10, 2014. From http://www.worldbank.org/en/country/argentina/overview#2
6 Schrader, S. & Penillas, F.C. (2012). Crisis, Class and Disability in Argentina: Red por los Derechos de las Personas con Discapacidad. Disability Studies Quarterly. Vol 32,No 3 .Retrieved August 10,2014. From http://dsqsds.org/article/view/3274/3107