Labor Markets in Latin America: Combining Social Protection with Market Flexibility

By Sebastian Edwards; Nora Lustig Claudia | Go to book overview

CHAPTER SIX
Argentina: The Labor Market during the Economic Transition

Carola Pessino

IN ARGENTINA the process of economic reform has involved moving large numbers of workers from old production activities in the protected sectors to new production activities in the emerging competitive sectors. In the transition, some firms cease to exist, displacing workers and increasing unemployment. The creation of new firms and the restructuring of old firms should lead to a subsequent increase in recruitment that will tend to increase employment and absorb displaced workers. However, transition is turbulent for many workers, for two reasons. First, those who leave the protected sector also abandon specific skills. They must try to find a new job with new skills, a process that takes time, involves uncertainty, and usually requires accepting a lower wage in the new job. Moreover, some workers are older than is optimal for retraining and learning new skills, so they may either remain unemployed for a long period or find work in the informal sector of the economy. Second, current labor legislation and Argentina's present macroeconomic situation are not helping to smooth the transition. To the contrary, they are,

____________________
I acknowledge the helpful comments of Edgardo Favaro and Silvia Montoya and the excellent research assistance of Luis Andrés.

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