LATIN AMERICA : Argentina’s High Unemployment Rate Undercuts Menem’s Fiscal Successes

Argentines like to describe their life experiences in extremes. They live through the best and the worst, often at the same time.

Such seemed to be the case this week: As the country enjoys brisk economic growth, unemployment has soared to its highest level since President Carlos Saul Menem took office in 1989.

“This is not good news,” Juan Llach, a senior official with the Argentine Economy Ministry, said as he announced unemployment figures that showed 10.8% of the nation’s work force is not working.

The high unemployment rate exposed the weak flank of the government’s vigorous free-market economic program. The currency has been stabilized, inflation has been brought under control and the economy is growing. But with a huge trade deficit and foreign investment still sluggish, job creation is not keeping pace.

Many of the estimated 2.8 million people who are jobless got that way when the government, as part of its program, began selling off state companies with bloated payrolls. Tens of thousands of employees were laid off as entities such as the telephone and oil companies were privatized or sold.

The 10.8% rate reflects unemployment in May, up from 9.9% a year earlier. In October of last year, unemployment was at 9.6%.

The government, putting its best spin on the data, said that while more people than ever are out of work, there are more jobs than ever. As the economy is being restructured, the officials say, many of the new jobs being created require skills that Argentines are in the process of acquiring.

Also, in the past five years or so the work force has been inflated by women returning to the workplace, immigration and the decision of many retirees to take jobs to make ends meet.

“It (the level of unemployment) is a little worrisome,” Menem told reporters. “I say ‘a little,’ because in a country that is growing, producing and consuming like Argentina, this can be overcome. . . . Unemployment as a product of recession is one thing; unemployment as a product of growth is something else altogether.”

A certain amount of unemployment is acceptable, he said, because computers and “robots” are replacing people.

Computers don’t have families to feed, however, and Menem was reminded of that earlier this month.

In the largest demonstration in more than three years, tens of thousands of Argentines marched July 6 on the Casa Rosada, the presidential palace, to protest the widening gulf between rich and poor.

The demonstrators, many of whom were from the country’s neglected provinces, complained that the president’s policies had thrown many of them out of work. And they charged that those who do have jobs have discovered that their salaries are no longer covering their basic needs.

In a new challenge to the government, opposition unions have called a strike for Tuesday that threatens to shut down public transportation, schools and many public offices.

The angry workers are protesting the decline in their buying power and proposed labor laws that they fear would erode their benefits. The president was seeking to have the strike declared illegal.

Economy Minister Domingo Cavallo defended the government’s program, saying that steady growth in the economy in the last three years--at an annual rate of about 8%--has created more than a million jobs. He contended that the government has also reduced poverty and slowed what was once runaway inflation.

Indeed, Argentina’s legendary inflation--it reached nearly 5,000% in 1989--was just 7.4% last year.

Still, many in the middle and working classes are feeling pinched.

“You work, you get by,” said Angel Picone, a 70-year-old retired clothing manufacturer who started driving a taxi to supplement his $300-a-month pension. “You have to work.”