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Due to the recession, the trickle of layoffs has already begun and they expect higher unemployment in 2024

2024-02-26T13:23:12.284Z

Highlights: The IMF expects unemployment to reach 8%. The sharp drop in income and consumption began to spill its effects onto a new front with the trickle of suspensions and layoffs. In construction, they claim that there are 100,000 layoffs and suspensions due to cuts in public works. Automotive companies are cutting production and some are stopped. The IMF acknowledged that the recession helped lower inflation from 25.5% in December, but it warned about the "social and political risk" of the shock plan for 2024.


In construction, they claim that there are 100,000 layoffs and suspensions due to cuts in public works. Automotive companies are cutting production and some are stopped. The IMF expects unemployment to reach 8%.


The

sharp drop in income and consumption

began to spill its effects onto a new front with the

trickle of suspensions and layoffs

.

In recent weeks, some companies began to take these measures due to the impact of the ongoing recession caused by the collapse of activity, facing a year in which

economists expect an increase in unemployment in 2024.

The head of the Chamber of Construction, Gustavo Weiss, estimated that the suspensions and layoffs

already affect about 100,000 workers

because "the

works are still mostly stopped

."

In January, capital spending fell 86% year-on-year in general terms, representing one of

the lowest levels in the last 31 years

and

fueling the fight with governors.

This situation led UOCRA sections to demand that the governors maintain the works with their funds, in the midst of the conflict over the withdrawal of funds for teachers, transportation subsidies and the retention of co-participation.

In this context, the leader of the union, Gerardo Martínez,

warned the number 2 of the IMF last week about the "chaos"

that the

"ferocious adjustment" will cause.

In the automotive industry, yellow lights also went on.

FIAT decided to reduce production at its Córdoba plant

due to the general drop in sales of 33% in January and the lack of dollars, while in other cases the terminals remain paralyzed, such as General Motors, in Santa Fe;

Volkswagen, in Pacheco;

and Renault and Nissan, in Córdoba.

Another sector affected is the textile industry in La Rioja

, where there are suspensions, and

the electronic sector in Tierra del Fuego

.

Although the Monetary Fund acknowledged that the recession helped lower inflation from 25.5% in December,

it warned about the "social and political risk" of the shock plan.

Javier Milei already anticipated that between March and April will be the "hardest moment" for the economy.

According to the latest official data,

unemployment fell to 5.7% in the third quarter of 2023

, before activity plummeted 4.5% year-on-year in December.

Now

, economists surveyed by the Central Bank

expect

a drop in activity of 3.3% and unemployment of 7.7% in the first quarter

, while the IMF forecasts a rate of 8% in 2024.

For the economist and former head of INDEC,

Luis Beccaria, the impact will not be automatic.

"Informal employment plays as an alternative to unemployment, but clearly there is a tendency to increase unemployment in recession, which is not so much because layoffs increase but because companies stop hiring when employees retire and resign," he explained.

The UCA

estimated that poverty reached 57.4% in January due to the devaluation, fiscal adjustment and asset liquefaction,

but does not see an "unemployment shock" for now.

"The deterioration of the labor market is expressed in an increase in underemployment, there have been no layoffs, the drop in income was the adjustment variable," said the director of the university's Social Debt observatory, Agustín Salvia.

Everything will depend on the speed at which the economy recovers after hitting its bottom

.

In March and April, new adjustments will be added in transportation and energy due to the removal of subsidies, in addition to telephone, prepaid and fuel.

You also have to see what happens with the harvest, dollars and rates.

For the Minister of Economy, Luis Caputo, the rebound will come in the last quarter of the year.

S.N.

Source: clarin

All business articles on 2024-02-26

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