Macri’s administration initially floated the idea after Thursday’s Congressional session had to be suspended when violent clashes erupted between protesters and state security forces.
Argentinian President Mauricio Macri’s government has executed a swift u-turn on plans to approve pension reforms via emergency decree after the proposal was met with widespread public condemnation.
Macri’s administration initially floated the idea after Thursday’s Congressional session to discuss the reforms had to be suspended when violent clashes erupted between protesters and state security forces outside the Chamber of Deputies at 2pm.
Trade unions and social movements from across Argentina tried for a second time to reach Congress to protest against the proposed pension and tax reforms, but were forced back by police firing tear gas and rubber bullets.
Cambiemos Coalition Deputy Elisa Carrio posted on her Twitter account that if a Decree of Need and Urgency (DNU) was issued to carry out the reforms, it would “seriously violate the National Constitution.”
“Carrio and the Civic Coalition swore to respect the National Constitution and will not violate it under any circumstances,” she wrote. “A DNU would seriously violate the National Constitution.”
Local media reported that government officials met at the Casa Rosada presidential headquarters to discuss the possibility of a decree and adding a compensatory bonus for retirees in order to “facilitate” the transition to the new system.
Present at the meeting were Chief of Staff Marcos Peña; Minister of Security Patricia Bullrich; Senate President Federico Piñedo, Minister of Finance Luis Caputo, and Deputy Mario Negri.
General Confederation of Labor of the Republic of Argentina (CGT) spokesman Hector Daer said: “If a decree of necessity and urgency is used to generate this act of subtraction of salaries for retirees, the Board of Directors has promised a 24-hour strike as of midnight.”
The bill, which passed the Senate last month, is crucial for Macri’s efforts to cut the fiscal deficit, but has drawn criticism from opposition politicians and labor unions, who say it will hurt retirees and welfare recipients.
Thursday’s protests demonstrated that obstacles still remain for Macri’s pro-business agenda, which includes tax and labor reforms. While his “Let’s Change” coalition swept October’s legislative midterm vote, he lacks a majority in either chamber.
“We will not back down,” opposition lawmaker Mirta Tundis told local television. “It is outrageous that year after year, those who have less are affected most.”
The pension reform would change the formula used to calculate benefits. Payments would adjust every quarter based on inflation, rather than the current system of twice-yearly adjustments linked to wage rises and tax revenue.
Economists say the current formula means benefits go up in line with past inflation. Left unchanged, that could harm Macri’s efforts to cut the fiscal deficit.
Under the new formula, benefits would increase by 5 percentage points above inflation, according to Cabinet Chief Marcos Pena. The plan would take effect at a time of lower inflation expectations, hence slowing the pace of pension benefit increases.