Argentina’s Government Is Collapsing As People Just Refuse To Work

Working a regular job is out of the question for the 1.2 million participants of the social program Empower Work. Let’s take a look at what led to Argentina’s government collapse, as people just refused to work.

Argentina’s Government Is Collapsing As People Just Refuse To Work

As people of Buenos Aires clash with their center-left government over major changes to social programs, protests have broken out over the previous 90 days and have only worsened within the city.

Based on household income, cutbacks on energy industry subsidies already started in June.

Thousands of outraged citizens have taken to the streets as a result of many other subsidies, notably the infamous welfare program, being put on the chopping block.

In the last 20 years, the amount of state-sponsored aid for citizens has increased dramatically, making 22 million Argentinians reliant on some kind of government support.

Government statistics show that the nationwide rate of employment was 43% in the first quarter of 2022.

Argentina’s Government Is Collapsing As People Just Refuse To Work 2
Argentina’s president Alberto Fernandez is pictured during a meeting in Germany at Elmau Castle, on June 27, 2022. (Markus Schreiber/AFP via Getty Images)

State-funded programs in the nation cover almost all facets of the economy, including wages, utilities, education, and health care.

Argentina presently allocates an approximate 800 million pesos (more than $6 million) every day on state benefit programs.

In addition, inflation in the South American country reached 58 percent in May and climbed past 60 percent in July. Comparatively, national inflation in 2015 was little over 14%.

The spending practices of Argentina’s government are the cause of the growing issue, according to Harry Lorenzo, chief finance officer of Income Based Research.

“The Argentine government has been grappling with a collapsing economy for some time now. The main reason for this is the government’s unsustainable spending, which has been funded in part by generous welfare programs,” Lorenzo explained.

Deeper Into Economic Chaos

On July 9, during the commemoration of the country’s independence day, the irate masses who congregated near the president’s residence, Casa Rosada, chanted for more public funding, independence from the International Monetary Fund (IMF), and for President Alberto Fernandez to resign.

Since then, planned protests have persisted under the direction of “piqueteros,” or professional protest organizers, who have called for the revocation of the planned subsidy cuts and a wage raise.

“This is madness. What the piqueteros are asking for is madness,” said Alvaro Gomez.

Gomez has spent more than 15 years living and working in Buenos Aires. He is presently a taxi driver. He has seen his nation’s economic instability worsen as the years have gone by.

“I’ve seen five presidents come and go in that time; nothing has improved. Half of our country doesn’t want a job, and the ones that do, don’t want to pay the taxes for the others,” he said.

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Current vice president Cristina Fernandez de Kirchner speaks during a news conference in Buenos Aires, Dec. 7, 2017. (Reuters/Marcos Brindicci)

Martin Guzman, Fernandez’s close associate and Argentina’s minister of the economy, departed from his position on July 2 after claiming that inside disagreements hindered him from doing his duties.

A crucial new IMF agreement was driven by Guzman. Additionally, he reportedly had disagreements with Cristina Fernandez de Kirchner, Argentina’s vice president and former two-term president, about how to handle the country’s escalating economic problems.

Kirchner has previously criticized Argentina’s reliance on the IMF and is a fervent proponent of subsidies.

In conclusion, the ruling coalition’s other half favors additional foreign bailouts to combat inflation and bankrupted coffers.

The other half, while rising taxes on a populace that is progressively becoming more destitute, wants to keep the current social programs and remain independent of foreign aid.

Currently, more than 40% (read below) of the people in some areas of Argentina live in poverty.

Low Investor Confidence

During a media conference in the province of Santa Cruz, Kirchner referred to Guzman’s abrupt departure as “an immense act of political irresponsibility.”

On July 3, Silvina Batakis was swiftly chosen by Fernandez to replace the vacancy in the crucial position.

Without wasting any time, Batakis convened with IMF managing director Kristalina Georgieva on July 25 to go over the possibility of a new agreement for the nation’s $44 billion in outstanding debt.

According to Robert Donnelly, the finance manager at Marketplace Fairness, Argentina’s dependence on foreign bailouts is more of a temporary respite of economic pressure than a long-term remedy.

“While this has been somewhat successful, it has not solved the underlying problem,” Donnelly said.

He clarified that boosting exports and luring more foreign investment were two ways Fernandez’s administration might lessen the nation’s reliance on loans from abroad.

Outside investor confidence is still very low despite the fall of the peso, severe inflation, and the lack of a clear government plan for the future.

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The International Monetary Fund logo outside the headquarters building during the IMF/World Bank spring meeting in Washington on April 20, 2018. (Yuri Gripas/Reuters)

Reducing government spending, in Lorenzo’s opinion, is crucial. “This would involve scaling back the welfare programs, which have been a major contributor to the country’s debt.”

Working a regular job is out of the question for the 1.2 million participants of the social program Empower Work, which is an income subsidy that offers a livable salary for an indefinite length of time.

An upset female Buenos Aires citizen and piquetero complained to journalists during a live television broadcast that “The government expects us to work from 8 a.m. to 5 p.m. for the same amount of money.”

When asked where she got her money for her family, the woman said, “the government.”

Anger at Having to Work

Another demonstrator, an adult male, likewise criticized the proposed changes to social programs, informing local reporters, “Cristina [Kirchner] told us we have to go to work instead of receiving social benefits. Going to work, that’s the policy of a right winger.”

Protesters continue to call for additional subsidy money or for Fernandez to resign.

Meanwhile, on the 206th anniversary of the country’s independence, the troubled head of state appealed for unity in the economically stricken nation. Within the same speech, Fernandez slammed anti-government parties that sought to “keep all the income.”

Fernandez stated, in response to the country’s escalating economic crisis and resulting instability, “Unity is always the fruit of the willingness of those involved to consolidate it.

“History teaches us that it’s a value that we must preserve in the most difficult moments.”

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