Argentina's economy should start adding jobs in August, as the country's return to global credit markets after a record 2002 default promises to boost foreign investment and public works, the labour minister said on Tuesday. "In the second half of the year we should start to see the impact of investment in both private and public works ... in August or September," Labour Minister Jorge Triaca told Reuters in an interview punctuated by fireworks set off by public workers protesting budget cuts outside the ministry.
President Mauricio Macri has pushed through a string of painful reforms during his first four months in office, aiming to close a gaping fiscal deficit and revive a stagnant economy, but fuelling the ire of public sector unions. Macri's efforts to trim government payrolls have closed a net 10,000 public sector jobs since he took office in December, Triaca said. The private sector has also lost around 15,000 informal jobs and about 30,000 formal jobs, largely focused in the struggling construction industry.
As an economic crisis in Brazil sapped demand for many of Argentina's industrial exports over the past year, the government also fell behind on paying for many public works, leaving builders without the cash needed to keep workers. The sovereign bond sold on Tuesday should help to resolve the second problem, Triaca said, as the government plans to invest several of the billions of dollars raised in energy and transportation infrastructure.
Argentina is issuing $16.5 billion in new debt, its first international bond sale in 15 years, helping to ease government financing and pay settlements related to its $100 billion default in 2002, the world's largest at the time. The minister said surging investments should bring down unemployment that has likely climbed well above the 6.9 percent reported in the latest official statistics. He said that rate far underestimated the number of Argentines who had dropped out of the workforce. The government is also working to establish a reliable national inflation index, but regional indices suggest consumer prices have risen around 30 percent in the past 12 months, an estimate reflected in recent salary negotiations.