May 27, 2015

Labor Unrest Continues in Argentina

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

It looked like the three-week old strike by workers at the soybean crushing plants in Argentina was resolved late last week when the workers and the companies reached an accord, but the agreement was rejected by the federal government. The agreement called for a wage increase of 36%, which was less than the 42% the workers had original demanded, but they agreed to the lower increase. The agreement though was not approved by the federal government, which has set an unofficial limit of 27% for wage increases. The limit was set in an effort to control domestic inflation.

Where this agreement goes from here is unclear and the strike by the crushing plant workers is ongoing while more negotiations are underway. The Labor Minister has stated that the government will only validate wage packages that do not exceed increases of 27%. It seems unlikely that the union would agree to a 27% wage hike by forgoing 10% of the wage increase that the companies have already agreed to.

Several of the more important unions at the Argentine ports have set deadlines of this week and next week for their wage disputes to be settled or they have threatened additional work stoppages which could further delay the loading of vessels.

The combination of labor issues and two vessels running aground in the Parana River channel has resulted in approximately 90 vessels being delayed at the Port of Rosario as of late last week. About half of the vessels are being delayed because of dredging operations in the river where two vessels recently ran aground. It is uncertain how long the dredging operations will continue.

Other unions have set this week as the deadline for the completion of their negotiations. An example is the union representing bank workers that rejected a proposed 27% wage increase and called for a 48-hour strike starting Tuesday. The entire labor issue in Argentina is likely to get worse before it gets better, but eventually this issues will be settled.