"There's A Lot More Chainsaw": Argentine President Milei To Fire 70,000 Government Workers

Tyler Durden's Photo
by Tyler Durden
Thursday, Mar 28, 2024 - 01:55 AM

Argentina's libertarian president Javier Milei, perhaps best known for his shotgun approach to government jobs...

... plans to fire 70,000 government workers in the coming months, in what Bloomberg called "one of the clearest signs yet of how the libertarian’s chainsaw-style approach intends to slash the swollen state."

Beyond the job cuts, Milei also boasted at an event on Tuesday that he has frozen public works, cut off some funding to provincial governments and terminated more than 200,000 social welfare plans, which he labeled as corrupt, all as part of his strategy to reach a fiscal balance at any cost this year.

“There’s a lot of blender,” Milei said in an hour long speech at the IEFA Latam Forum in Buenos Aires, referring to the erosion of wages and pensions by 276% annual inflation. “There’s a lot more chainsaw.”

Other key points from Milei’s speech Tuesday:

  • Milei said peso futures contracts are aligned with the central bank’s 2% monthly crawling peg scheme, labeling calls to sharply devalue the currency again “ridiculous”
  • Argentina central bank on the path to achieving net neutral reserves after starting with debt liabilities that surpassed cash on hand by $11.5 billion in December
  • Milei says he’ll double down on his attempts to reform the Argentine economy after 2025 congressional elections, with more than 3,000 reforms in the pipeline
  • He described the Senate rejecting his emergency decree as “marvelous” because “it left all the dirty fingers” of exposed of politicians he calls “delinquents”
  • Milei expects V-shaped economic recovery

Full speech is below:

It's not just the US that has a government worker problem with its 23.2 million state parasites...

... Argentina's state (and deep state) is also rather extensive. And while Milei's termination plans affest just a small fraction of Argentina’s 3.5 million public sector workers, the job cuts are bound to face tremendous pushback from the country’s powerful labor unions and could jeopardize his high approval ratings. One union representing some government workers went on strike Tuesday, while a government report detailed that private sector workers suffered the worst one-month wage loss in at least three decades once he took office in December.

The leader of the state workers union ATE quickly shot back on X, announcing a national strike without providing further details.
Milei cited polls showing Argentines are more optimistic about the economy’s future, while a recent indicator of the public confidence in the government rose despite his austerity measures.

“People have hope, they’re seeing the light at the end of the tunnel,” Milei concluded.

Well... maybe, but maybe not, because it doesn't take much by those used to state handouts to organize and collapse the system. And sure enough, a quick look at the country's real GDP (as measured by the EMAE monthly activity indicator), shows a brutal 4.3% year over year contraction in January, as well as a sequential decline in real GDP of 1.2%, with Goldman noting that "activity softened significantly at the end of 2023 and the weakness extended to the beginning of the year."

While we appreciate the novelty and excitement sparked by Milei, we wonder: just how much real pain can the people sustain before they demand that he, too, be replaced with someone who promises to ease their pain?