Milei talks about "easing the tax burden" and "lowering labor costs" before opening up imports

In the midst of the presidential debate at the Faculty of Law, the one in which Sergio Massa believed he had cornered Javier Milei after asking him for definitions "yes or no" over and over again, one of the issues that went most unnoticed was the definition of the now president-elect on what he will do with local industries. in particular with SMEs that are not exporters and whose products are vulnerable to any kind of import opening.

Contrary to what his discourse as a "libertarian liberal" might suppose, as he defines himself, in that debate two Sundays ago Javier Milei hinted that there will not be a savage import opening, at least at the beginning of his government.

Milei referred critically to the industrial policy of his now partner, Mauricio Macri, which he defined as an "industricide."

Milei said, verbatim, in the debate two Sundays ago: "When we talk about first-generation reforms, we talk about a reform of the State in which we lower public spending, lower taxes, remove regulations to be fiscally competitive."

Milei put more emphasis on the labor standards that enable what employers call the trial industry.

"We are talking about a program to modernize the labor market, going to a UOCRA-type unemployment insurance system. To be competitive in the labor field, and once you are competitive, only then can you open up the economy," Milei replied to Massa, when the latter accused him of "wanting to close 23,000 SMEs."

Milei defended himself against that accusation, precisely, by pointing out that he does not want to open up the economy from one day to the next. And he used the period between 2015 and 2019 as an example. "They opened up the economy, but they didn't cut public spending. Then they blamed all the cost on the workers, as they did in Chile. Here they wanted to do something intermediate and ended up in an industricide," Milei replied to Massa.

The "UOCRA model" that Milei mentions refers to unemployment insurance that eliminates the figure of severance pay, replacing it with unemployment insurance, made up of employer contributions and that the now president-elect talked about privately with the head of the union, Gerardo Martínez, at the beginning of September.

Labor Costs

Also at that time, a small nucleus began to carve out within Milei's team, headed by Federico Ovejero, an executive from the automotive industry, in charge of drafting industrial policy.

A former vice president of General Motors in Argentina, Ovejero knows from the inside the intricate link between the local auto industry and its peers in Brazil and the heavy dependence on the protective umbrella offered by Mercosur to secure industrial investments that are measured in hundreds of millions of dollars.

Federico Ovejero, former vice president of General Motors and advisor to Milei on industry issues. Photo: Rafael Rafael Mario Quinteros - FTP RMQ07708.JPG Z

But his work for Milei was not limited to the guidelines for the industrial sector itself, but also to the regulatory framework surrounding employment in Argentina. According to automotive executives, Milei's definitions of a "competitive" labor market come from those drafts of the team headed by Ovejero.

"The first thing they mention behind closed doors is that they are going to ease the tax burden and labor costs before opening the economy. They propose that there will be a transition focused on preserving jobs and the working capital of companies," said the director of an automaker with access to Milei's teams.

So far, Ovejero's role in Milei's team is exclusively as an advisor, according to executives who spoke with his former colleague.

"For now (Ovejero's task) are only presentations for Milei to take into account, but the truth is that (Milei) has been raising it as his own issue," added another businessman, from the auto parts sector. He added: "Milei talks about a more competitive industry, which exports, but he also talks about a transition, about relieving companies of the tax burden and easing their labor costs. And in the debate with Massa he spoke out against industricide."