The measures taken during the first 100 days will determine the viability of an orderly solution of the public debt and the recovery of trust that will start a positive process. Only with a strong recovery of private investment in a framework of competitive rules can the crisis be transformed. By transforming the vicious circle of poverty and fiscal imbalance into a virtuous circle that results in sustained development and monetary stability. Argentina can enter a 6% annual growth path starting in 2021 and aim to create four million productive jobs in four years. This would allow absorbing the one million young people who will enter the labor market during that period, in addition to a million public employees, a million recipients of social plans and a million who are now in the informal economy. To achieve this, it is necessary to face structural reforms that free the forces of the private sector and that, if possible, that action be initiated in the first 100 days of the new presidential term.
A) Labor reform. Privilege labor agreements at company level over collective agreements at the activity sector level. This will require that the representation of the company’s workers be unified. This reform requires a change in articles 17, 18 and 19 of the Law 14,250 of Collective Conventions (by DNU or by Law). Ensure freedom of association. Deregulate and simplify the administrative controls of the enforcement authority, and of the labor police. Modify by regulation decree, Article 84 of the Labor Contract Law to increase productivity and reduce cost overruns and labor risk. Reduce the cost and risk of layoffs, respecting the acquired rights, through the suppression of severance pay (reform of articles 231 to 255 of the Labor Contract Law, by DNU or Law) by compensating it for a fund and insurance of unemployment. The example applied in Austria, known as the “Austrian backpack”, can be taken as an example.
B) Reform of the national administration. Its objective is to substantially reduce the number of employees of the National Administration and achieve greater effectiveness and efficiency in management. Ensuring that no person loses income immediately and has the opportunity to reintegrate and progress. It includes:
i) Changes in public sector standards to incorporate results management. Continue with digitalization and improvements in computer technology.
ii) a Decree with a new structure (there is a proposed organizational chart) within the framework of the attributions established in Law 25,164, on Public Employment. The administrative units dependent on each of the six ministries and Cabinet Headquarters (See attached chart) will be defined, up to the level of national directorates, general directorates and decentralized agencies. The decree will establish the staffing of each administrative unit, by category.
iii) Appointment of the ministers of the new structure. Transitionally, for 90 days, the administrative units of the old structure are assigned to each of the new ministries. In that period each new minister covers the charges of the new structure giving priority to the personnel in availability. Once the re-typesetting of the staff is completed, those who have not been relocated to the new structure will remain in the condition of availability established by Law No. 25,164 Art 11 (They do not fulfill tasks; but they collect salaries for one or two years, avoid the social cost of running out of income).
iv) Incentives for companies that hire them: exemption of employer contributions over a period of two years and subsidy on training expenses in new employment. Early retirement to those who, being available, would not have obtained employment in two years and are over 60 years of age.
C) Gradual reduction of social plans to those who need them least seeking to encourage employment, for example, by generalizing the “Empalme” plan. Suppression of funds allocated to the Popular Economy. International audit to review the excesses committed in the fraudulent allocation of disability benefits.
D) Continue with the reduction of energy and transportation subsidies, normalizing tariffs and prices within a reasonable period of time, so that they cover costs plus a profit that encourages investment in the sector. The impact on the lower income strata should be selectively buffered with demand subsidy instruments (Social Rate).
E) Raising the retirement age in a process that will begin by matching women and men in 65 years announced to reach 70 years for both sexes in a decade. Mothers will be recognized, the equivalent of two years of contributions for each child up to a maximum of 7 years.
F) Sending to Congress a Law for the reform of Federal Co-participation. Return of tax powers to the provinces (Earnings of natural persons, Fuels, Personal Assets, Internal). Replacement of Gross Revenue by Sales (are provincial) and calibration of this with the VAT rate (national) to join with current primary distribution. Suppression of vertical co-participation. Compatibility with current secondary distribution through a Horizontal Redistribution Fund that produces a splice with a current system, but when these percentages are immovable, they must accompany any increase in expenditure of a province, with additional provincial taxes. That way the incentives will be aligned and will tend to spend less and better.
G) Announce the gradual elimination of the tax on the checks and export duties as public spending decreases, but with a course pre-established by law.
H) Work on the realization of the Mercosur European Union free trade agreement. Agree with Brazil and the other two Mercosur partners on how to reduce the common external tariff. Start the negotiation of other bilateral free trade agreements.
I) Correct the regulations that prevent the use of other currencies, repealing the forced legal course of the peso. Facilitate the use of electronic money.
J) Regulatory deregulation and simplification. Particularly of the rules of the AFIP, the BCRA and other regulatory bodies. To disrupt the interventionist norms (Ex. Rentals Law).
Measures b) to g) aim to achieve fiscal (financial) surplus that allows to reduce the tax pressure and restructure without taking away the public debt. That achievement, accompanied by a), h), i), j), will constitute the axis of the plan to be presented to the IMF immediately to unlock the outstanding disbursements. The objective should be to recover the stability and strength of the currency to genuinely reduce interest rates and expand credit. These economic measures must be accompanied by the consolidation of efficient and independent justice, for better security and for political stability. This will boost investment, competitiveness and the creation of private employment. The latter will make the reduction of public employment and social subsidies feasible. In this way, the current vicious circle of stagnation, deficit and inflation will become the virtuous circle of growth, employment, improvement of real wages and stability.
