Argentina's Macri backtracks on austerity; announces $2 billion social benefits package.

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In a bid to compensate for the recent increase in public transportation and utility rates and high inflation, Argentine President Mauricio Macri yesterday announced a set of measures to “improve the income” of the most vulnerable sectors, increasing funds for social programs and announcing a substantial increase the minimum wage and unemployment insurance in the coming months.

The bill being sent to Congress would reimburse retirees, pensioners, and pregnancy and universal child allowance (AUH) beneficiaries 15% of value-added tax (IVA) paid at the supermarket. This refund would be limited to 300 pesos ($20) a month. This same group of beneficiaries (8.4 million people, or 20% of the Argentine population) would receive one-time, 500-peso ($35) payment in May to help mitigate the effects of the recent run-up in prices.

Macri's announcement would also extend the AUH to self-employed workers, which make up nearly 25% of Argentina's work force. “The measure will benefit 514,000 children and their families,” Macri said, speaking at a senior center in the working class Buenos Aires district of Mataderos. “The state," he added, “is as active as it has never been before.”

The bill likewise includes a hike in unemployment insurance, set at 300 pesos ($20) a month since 2006 despite an over 7-fold increase in prices since then. The insurance, for which demand has risen sharply with the 70-fold jump in layoffs so far this year, may be increased to 3,000 pesos ($200) a month.

Other social programs from the Kirchner era, which many in Macri's right-wing alliance had called to be rescinded, will instead be increased by 20%; these include the 'Argentina Works' coop support program and the 'Women Make It' job training program for poor single mothers (with 200,000 beneficiaries).

President Macri announced that the Minimum Wage Council will meet as scheduled in order to discuss an increase in the minimum wage for July. The council, created by former President Néstor Kirchner in 2004, is a three-party committee formed by Labor Ministry, business, and trade union representatives. The minimum wage currently stands at 6,060 pesos ($410) a month for full-time work, still one of the highest in Latin America despite Macri's recent steep devaluation. The President is said to be seeking an increase to 7,600 pesos ($520), or 25%; the minimum wage hike could reach 30%.

The package, as announced, is estimated to cost 30 billion pesos the first year ($2 billion); of which 20 billion pesos would be for increased social benefits, and 10 billion for the value-added tax refund.

Mixed reactions

The announcement was welcomed by most of Argentina's wide political spectrum, albeit with caveats.

The head of the Buenos Aires Province Justicialist Party (Peronism) head Fernando Espinoza applauded Macri’s announcement. “Peronists will always agree with measures that benefit the most humble. Reimbursing the value-added tax to retirees was one of the campaign promises made by Daniel Scioli,” he pointed out, referring to the center-left Peronist candidate Macri narrowly defeated last November. Espinoza warned, however, that these measures “are just a patch - insufficient, given the difficult situation the middle class and the workers are going through.”

Renewal Front head Sergio Massa, which represents centrist Peronists, largely dismissed the announcement, pointing to Macri's steep public service subsidy cuts and sharp increase in rates and fares. “We won’t be able to solve the economic crisis if we don’t do it together, workers and business leaders. But the largest effort has to be made by those with the most means, the business leaders and the state - not the workers,” he said on his Twitter account. “The Macri government,” Massa lamented, “is trying to lower inflation by reducing consumption.”

Federico Pinedo, the Provisional President of the Senate and leader of Macri's right-wing PRO party, praised Macri’s announcements, proclaiming that “the lie about Macri only ruling for the richest people is now over.” Referring to concerns over 100,000 mostly private sector jobs lost in the first two months of 2016 alone, Pinedo said that “these measures will boost the income of Argentines while looking out for employment.”

At: http://buenosairesherald.com/article/212736/macri-trumpets-welfare-benefits