February 10, 2017 / 3:53 PM / a year ago

Argentina nears labor agreement with auto industry, unions

BUENOS AIRES, Feb 10 (Reuters) - Argentina’s government plans to sign by the end of March an agreement with the auto sector and unions to lower labor costs, improve productivity and attract investment, an executive and a government source told Reuters.

The agreement is part of center-right President Mauricio Macri’s broader labor reform effort as he tries to attract investment and pull Latin America’s No. 3 economy out of recession.

In the auto sector, which mostly serves to export cars to Brazil, the goal is to reduce the number of working days employees skip. Currently employers are powerless when up to 10 percent of their staff routinely does not show up.

“We are very advanced,” a source from the production ministry told Reuters of the agreement on condition of anonymity to discuss continuing negotiations.

Argentina hopes the sector, hit by a prolonged recession in Brazil in recent years, can double actual production by 2023 to 1 million vehicles per year. Brazil buys about 70 percent of Argentine-made vehicles.

“We are seeing what steps we can take to meet our goal and improve productivity,” said Daniel Afione, general manager of corporate affairs at Toyota’s Argentina unit, who participated in the negotiations. He said he expected an agreement in February or March.

Toyota Motor Corp, which in recent years invested more than $800 million in a plant in Buenos Aires province, was able to reduce absenteeism through dialogue with unions and with an incentive system, Afione said.

The government source said the agreement would bring some $5 billion of investment to the sector in the next two years, including investment $800 million already announced by Renault and Nissan.

Last year Macri’s government passed a law giving fiscal benefits to automakers that use more parts made in Argentina and extended a bilateral trade deal with Brazil until 2020.

“You have the certainty over the relation with Brazil, you have the law of auto parts and now the union component that was not there last year,” the source said.

The sector’s main union said workers are willing to work toward improving production as long as doing so does not violate employees’ rights.

“Our union is committed to the premise of working to achieve common goals,” Ricardo Pignanelli, secretary general of the SMATA union, said in an email to Reuters. (Writing by Caroline Stauffer; Editing by Bill Trott)

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