January 29, 2018 / 4:40 PM / 7 months ago

Argentina freezes some government salaries, cuts jobs in austerity push

BUENOS AIRES (Reuters) - Executive branch government employees in Argentina will get no pay raises this year and one out of every four “political positions” appointed by ministers will be cut, President Mauricio Macri said on Monday, deepening his austerity drive.

Argentina's President Mauricio Macri speaks during a ceremony at the Casa Rosada Presidential Palace in Buenos Aires, Argentina January 29, 2018. Argentine Presidency/Handout via REUTERS

The clampdown on political positions, including advisers appointed by government ministers, is viewed as an attack on a patronage system that has been in place for decades.

The firings, expected to save $77 million a year, are symbolic of Macri’s drive to regain market confidence.

“Austerity has to be part of politics,” Macri said in a televised address.

He spent the first two years of his administration dismantling the trade and currency controls set up by his predecessor, Cristina Fernandez, who had expanded the role of government in the economy.

Argentina's President Mauricio Macri speaks during a ceremony at the Casa Rosada Presidential Palace in Buenos Aires, Argentina January 29, 2018. Argentine Presidency/Handout via REUTERS

He was elected in 2015 with a mandate to free the markets and improve Argentina’s business climate.

Macri, expected to seek re-election next year, denounced “the corruption and clientelism” of past administrations. Included in the measures announced on Monday, family members of ministers were banned from holding government jobs.

Macri scored a series of business-friendly legislative wins late last year after his coalition swept mid-term elections. But passage of his pension reform bill last month triggered violent protests and a decline in the president’s approval ratings.

“The government wants to foster the idea that politically appointed officials share the burden of the fiscal adjustment. It also wants to convey the message that this administration really is different from its predecessors,” said Ignacio Labaqui, analyst for consultancy Medley Global Advisors.

Pressured by the country’s powerful labor unions, the government canceled a special session of Congress planned for February to debate Macri’s proposed labor reform.

The bill includes amnesty for companies that register workers who had been paid off the books. It aims to curb litigation by workers and would lighten social security taxes paid by employers. The private sector has long argued for more flexibility in labor regulations.

Argentina's President Mauricio Macri speaks during a ceremony at the Casa Rosada Presidential Palace in Buenos Aires, Argentina January 29, 2018. Argentine Presidency/Handout via REUTERS

Reporting by Hugh Bronstein; Editing by Jeffrey Benkoe and Bernadette Baum

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