Argentina’s President Javier Milei to cut 70,000 state jobs in ‘chainsaw-style’ approach to economic problems

Argentine President Javier Milei has announced plans to dismiss 70,000 government employees in the coming months, showcasing his "chainsaw-style" approach to drastically reduce the size of the state, Bloomberg reported.

Speaking at an event on March 26 Milei also revealed his decision to halt public works, reduce funding to provincial governments, and terminate over 200,000 social welfare programs, labelling them as corrupt. These actions form part of the libertarian leader's strategy to achieve fiscal equilibrium by any means necessary this year.

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Labour Unions Likely to Pushback

Although the number of job cuts represents only a fraction of Argentina's 3.5 million public sector workforce, Milei is likely to encounter resistance from powerful labour unions. The move also poses a risk to his high approval ratings. One union initiated a strike on March 26, while a government report highlighted the significant wage decline experienced by private sector workers since Milei assumed office in December.

The leader of the state workers union, ATE, swiftly announced a national strike on social media site X (formerly known as Twitter), in response to Milei's plans, although details were not provided.

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Milei cited polls indicating a growing optimism among Argentines regarding the economy's future. Despite austerity measures, a recent indicator showed increased public confidence in the government. “People have hope, they’re seeing the light at the end of the tunnel,” Milei concluded.

Key Points from Milei's Speech

During his speech, Milei made several noteworthy statements:

- He affirmed that peso futures contracts are in line with the central bank's 2% monthly crawling peg scheme, dismissing calls for a significant devaluation of the currency as "ridiculous."

- The Argentine central bank is progressing towards achieving net neutral reserves, having started with debt liabilities exceeding available cash by $11.5 billion in December.

- Milei expressed his commitment to intensify economic reforms post the 2025 congressional elections, with over 3,000 reforms in the pipeline.

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- He praised the Senate's rejection of his emergency decree, seeing it as an opportunity to expose the alleged corruption of politicians he refers to as "delinquents."

- Milei anticipates a V-shaped economic recovery in the near future.

(With inputs from Bloomberg)