Having witnessed the successful Brazilian truck drivers’ strike that led to higher freight rates and lower diesel costs, Argentina’s truckers are now threatening to do the same, but with slightly different goals.
By week’s end, truckers are expected to go on strike and blockade Argentina’s main arteries to secure a 27 percent pay increase, which union leaders claim is necessary to cover the South American country’s high annual inflation rate, currently about 20 percent and rising.
Further, with about 90 percent of Argentina’s container cargo moving through Buenos Aires (including Exolgan at Dock Sul as well as Puerto Nuevo), a long strike and blockade will substantially harm the national economy, which is recovering — a rebound aided by the open trade policies of President Mauricio Macri during the past two years.
One telling sign of the economic rebound is container trade volume. During the first four months of 2018, the Port of Buenos Aires handled 323,757 TEU, a 20.2 percent jump from 269,386 TEU in the same period in 2017. Exports were up a healthy 10 percent to 102,929 TEU and imports rose a hefty 26 percent, up to 220,828 TEU, according to Datamar.
Truck drivers have threatened job actions since February
The Argentine Truck Drivers Association has periodically threatened job actions since February 20, when truckers blockaded many central Buenos Aires streets, as part of a wider, organized, multiple trade union protest against Macri’s austerity programs.
The warning shot across the bow of the Macri administration was a 24-hour strike by truckers in February. Another occurred last week when various trade unions marched through the Argentine capital to protest the Macri administration’s $50 billion bailout/assistance package from the International Monetary Fund (IMF), which almost immediately caused interest rates to surge to 40 percent — the highest among free-market economies — and also stoked inflation.
That prompted Pablo Moyano, the leader of the Argentine Truck Drivers Association, to state the union’s demands.
“If the companies fail to accept this salary increase we would probably have to imitate what lorry drivers did in Brazil recently,” Moyano said. “Our union will stand firm on this intended figure [of 27 percent]. This percentage represents the expected inflation rate for this year. If the government does not accept this request, or if we cannot reach an agreement, the federation will greenlight the entity’s board of directors to take the necessary measures,” a union statement read.
Moyano, regarded as the most powerful trade union leader in a country renowned for strong trade unions, underscored that 27 percent was the minimum his members could accept, as that is the average forecast annual inflation rate, he claims, among experts’ forecasts.
Macri’s government, however, insists that the truckers should accept a 15 percent increase, as that is what unions in most other sectors have accepted and that also is the government’s target inflation rate for 2018. Since the IMF intervention, Moyano’s forecasters haven been closer to the actual reported inflation rate than Macri’s, as the official inflation rate seems to have just topped 20 percent; some say unofficial inflation may already be close to 25 percent. Last year, Macri’s economists forecast inflation at 12 to 17 percent, but that was 8 percentage points too low: the 2017 inflation rate was 25 percent.
Another similarity with Brazil is Argentina’s currency decline versus the US dollar. After the IMF intervention, the peso weakened to 25.5 to the dollar, its lowest level ever versus the greenback, which increased inflation. In 2015, it took only 10 pesos to purchase $1.
The causes of inflation
Still, at least one economist concluded that union requests for a large pay increase may not help contain inflation.
“The rate of inflation today is determined by the unions, not the [Argentina] central bank,” Economist Nicolás Catena told FT.com. Catena and others argue that until unions — which were given much leeway under the government of Cristina Kirchner (replaced by Macri in 2015) — accept lower wage increases, it will be almost impossible to curb inflation.
The Argentinian sectors likely to be affected by a truckers strike are wine, beef, chicken, and pork exports. Soybean exports, one of Argentina’s major export revenue generators, also will be affected at the ports of Rosario and Paraguay.
Patricio Campbell, president of ONE Argentina, said that a strike by truckers seems increasingly likely.
“We are awaiting news but we expect a strike by the end of this week,” Campbell said. “The great problem here in Argentina is inflation and although the government is trying to control it, it has been rising. The government is hoping to keep it to 17 percent but, in all probability, it will go over 20 percent. If salaries keep going up it is difficult to control inflation.”
Campbell added that, “On top of this the truckers union in Argentina is very strong and our country is very dependent on trucks for probably more than 80 percent of our transport requirements.” Campbell added that if the truckers don’t get their raise, “they are threatening to do what the truckers did in Brazil. If the strike comes it will affect the access to all ports in Argentina, affecting ONE as well as all other carriers.”
“At the moment we don’t foresee a long blockade, like in Brazil, but we see maybe a series of one-day strikes,” he said.
Contact Rob Ward at email@example.com.