Argentina made some headway this year in its battle against widespread poverty, a painful legacy of its traumatic economic collapse over three years ago.
A government report said that 38.5 per cent of the population, or 15 million people, in this once-prosperous nation fell below the poverty line in the first half of this year compared with 40.2 per cent in the latter half of 2004.
But Argentines consider the number too high for a nation that has seen formidable growth since 2003 and once prided itself on its wealth and abundance.
"The economic results have been enormously auspicious and successful but the levels of poverty, for a country that had marginal poverty just a decade ago, are still very, very high," said Graciela Romer, a Buenos Aires sociologist.
The number of poor Argentines has fallen dramatically from a peak of 57.5 per cent in October 2001 at the height of the crisis.
But it is still a far cry from the 26.7 per cent poverty rate of October 1999, when the economy began to falter in a four-year slide that culminated in bloody street protests, political upheaval and the biggest sovereign debt default in modern times.
The government devalued its currency in early 2002, triggering spiraling inflation that left millions destitute.
By comparison, 27 per cent of Brazilians are poor, 50 per cent of Mexicans and 18 per cent of Chileans.
Poverty in the United States rose in 2004 to 12.7 per cent from 12.5 per cent in 2003.
Nestor Kirchner, Argentina's highly popular president, has vowed to lift people out of poverty since taking office in May 2003 and has been helped by robust economic growth of 9 per cent last year and an expected 7 per cent expansion this year.
But not everyone has felt the effects of the economic rebound and people like Dolores Cristando, an unemployed woman from the Buenos Aires suburb of Quilmes, are running out of patience.
Cristando was one of 50 protesters outside the Labor Ministry office on Thursday demanding more subsidies for poor families.
"Before, people worked. If you ask the majority of people here, they all lost their jobs. We're embarrassed to be out on the street asking for handouts," she said.
‘OCCUPY, RESIST, PRODUCE’ Argentina: the coops’ dividend
Argentina’s economic crisis in 2001 sent many businesses to the wall. But many who lost their jobs have occupied their workplaces and successfully resumed production without their former bosses. Now these new cooperatives are calling upon the state for reforms and policies to support them.
By Cécile Raimbeau
ON 20 March 2003 30 workers who had lost their jobs at the Bauen Hotel broke into a car park, forced a door and made their way into their former workplace. The five-star hotel, a 20-story building in the centre of Buenos Aires built for the 1978 World Cup, had been closed for 15 months. As well as striking a blow against private property rights, the occupation was an attack on a symbol of unbridled capitalism favoured by the dictatorship in power at the time the hotel went up.
After working on reception for 23 years, Marcelo, 56, spent 2002 searching desperately for work. Gladys, a former chambermaid, made $5 a night booking illegal taxis. Rodolfo, previously a caretaker, became one of the tens of thousands of newly unemployed sifting through the dustbins of Buenos Aires for recyclable packaging.
The audacity of this small group was not unusual in a country where unemployment had reached 20% and 45% of the population were living below the poverty line. Such acts of "recovery" are regarded as re-appropriations, for the public good, of places abandoned by "thieves" from the private sector. A mass revolt in December 2001 helped unite previously isolated events into a coherent movement: from 44, the total of businesses taken over has since risen to 170, employing more than 10,000 people (1).
Ex-workers began taking over collapsed businesses in the mid 1990s. President Carlos Menem’s enthusiastic application of neoliberal principles was then destroying thousands of jobs every year (2). Massive privatisations were throwing public employees on to the streets, and the removal of import restrictions and export subsidies were generating a flood of foreign goods with which Argentina’s small businesses could not compete.
What makes Bauen unusual is that it is in the service sector. Most of the salvaged businesses are small and medium-sized industries, mainly in metallurgy, engineering, printing and food. Whether bankrupt or in liquidation, all have collapsed beneath the burden of their debts. Their creditors include the tax authorities, the banks, their suppliers — and also their staff, to whom they owe wages and compensation.
Workers attempting to salvage a business prefer to receive compensation in the form of machine tools than money. But although Argentine legislation on business failures gives them priority over other creditors, it does not clearly encourage reactivation rather than liquidation. And one particular article enables investors to buy up a business without redress for former employees who are owed money. The International Monetary Fund blackmailed the government into reintroducing this provision, known as "cramdown", which has often encouraged the appearance of phantom buyers, acting as a cover for bosses greedy to repurchase their own companies for a song.
Bauen is symbolic of this process: the public loan that subsidised the hotel’s construction, at the height of the dictatorship, has never been repaid. The building was sold in 1997 for $12m to a Chilean businessman who repaid only $4m before shutting up shop at the end of 2001.
Before they occupied "their” hotel, the sacked Bauen workers set up a cooperative, supported by the National Movement of Revived Businesses (MNER). This federation came to prominence in the early months of 2002 under the leadership of two former sympathisers of the Montoneros, the Peronist guerrillas of the 1970s. Eduardo Murua and José Abelli borrowed a formula from Brazil’s Landless Workers Movement to summarise their three-point strategy: "Occupy, resist, produce!"
In 2002 Argentine law was reformed to make it possible for cooperatives to rescue failed businesses. But any magistrate trying to encourage a cooperative must either negotiate a lease with the owner or wait for the authorities to make an expropriation order. MNER representatives can’t help wondering why, since the state is always making expropriations to build roads, it can’t do the same for the public good and the right to work.
Many rescued businesses are operating without legal authorisation and 31% have negotiated a lease. That leaves 29% where there has been an expropriation which, as a rule, authorises the workers to use the machines and occupy the building for two years. After that, if the owners and their creditors have not received state compensation they can demand the sale of the premises and plant.
In November 2004 revived businesses won a more encouraging victory when the city of Buenos Aires expropriated 12 companies outright and granted the cooperatives concerned three years’ debt relief and 20 years to buy the buildings and plant on credit. But this sort of case-by-case support isn’t enough: what workers want is definitive legislation on expropriation covering all salvaged businesses.
The mass media have responded to pressure from big business and condemned such "attacks on private property" as part of a Bolshevik campaign. A team led by the sociologist Gabriel Fajn sees it differently: "There was a time when it was ideology, rather than the need to defend the right to work, that inspired the takeover of businesses. Now there are all sorts of people involved, most of whom have no experience of trades unionism" (3). Ideology would seem to emerge as a consequence of the rescue process, creating "new political subjects" in the process.
Unemployed workers who choose to take this path inevitably come up against employers, the legal system and the police. When that happens, they need all the support and loyalty they can get from their families and colleagues. The shared experience of revolt creates new forms of cooperation and friendship, and also leads to the emergence of a process of democratic decision-making: the assembly, where every worker has a voice.
A sense of freedom
Marcelo, the president of the Bauen cooperative, says: “The sense of freedom we feel is incredible. But we don’t all have the same attitude. Some see this as a chance to do what they want, others see it as a chance to do nothing. That’s the hardest part of worker management: you have to struggle against individualism and inertia. We’ve got to teach ourselves to be more than just workers, without turning into bosses.”
In this new situation some ex-workers drop out — mainly managers, who have anyway participated in only 20% of salvaged businesses. Free from bosses and managers, and driven more by pragmatism than ideology, the assemblies introduce equal pay and reassign responsibilities according to skill and experience. They encourage versatility and elect non-permanent coordinators for different sectors. They transfer workers from production to administration, train them and create mechanisms to guarantee transparent accounting.
After four months of free lessons in marketing from a teacher, Maria — a former cleaner — now handles sales. Osvaldo has swapped his old porter’s cap for a chef’s hat and is making a living from his passion for cooking. Every evening on the third floor, hesitant voices chorus: “May I help you, sir?” as language teachers give the staff lessons in exchange for the use of rooms for their paying classes.
Two and a half years into the occupation, the Bauen cooperative has restored the hotel’s fabric and rooms. Its only capital has been the solidarity and ingenuity of its members. It has gradually built up a clientele attracted by its moderate rates and easy terms. The recruitment of 60 new members has brought its numbers to 110, all of whom earn more than a primary teacher. When things are going well, the staff share 40% of the profits; the remainder is reinvested.
Currently 79% of occupied businesses are productive. But although they have benefited from the economic recovery and the devaluation of the peso, they have all had to contend with legal complexities, a lack of capital, subsidies and a reliable customer base, and with suppliers who are often suspicious of worker management. Most of them produce to order: the workers sell an industrial service to clients who provide the raw materials and pay upon delivery of the finished product. Since this means that the cooperatives earn less and become dependent upon their client-suppliers, it can only be a transitional stage, until the workers can amass sufficient capital to buy their own raw materials. They are still producing at less than half their previous capacity.
Cooperatives benefit mutually from becoming each other’s clients and suppliers and allowing credit. Most of what they produce goes to other industries, rather than direct to the consumer. This is a drawback: it is difficult to see how direct sales can be reconciled with a cooperative market. Andres Ruggeri, an academic in a section of Buenos Aires university’s philosophy department that supports worker management, sees this as a real handicap: “Say a revived business is manufacturing parts for cars: it can only sell them to car manufacturers. But the multinationals don’t want to deal with cooperatives, and certainly not with salvaged businesses. The workers can get round this by selling to a go-between who sells on to the manufacturers, but they lose a percentage on these transactions.”
During 2002 there was a lively debate on whether revived businesses should get involved in capitalist markets. A Trotskyist minority called for nationalisation under worker control. It took over four businesses, including Brukman, a garment factory in Buenos Aires, and Zenon, a tile manufacturer in Neuquén. The workers involved saw the rescue as a first step towards a socialist system in which the state would control economic planning. The hard-left parties associated with them did not believe that cooperatives could survive in a capitalist market.
Beyond the ideological debate, this stance had one significant consequence: the indefinite continuation of conflict. This is certainly the lesson to be drawn from what happened at Brukman which, after police expelled the workers, became a cooperative and, ironically, came under the influence of the more reformist National Movement of Factories Revived by the Workers (MNFRT) founded by Luis Caro, a lawyer with links to business, the Catholic Church and the Peronist right. As Andres Ruggeri points out sadly: “In the name of business efficiency he purged the cooperatives, drawing them away from MNER influence and from any alternative cultural model.”
Although workers at the Zanon tile factory have set up a legal framework for their cooperative, they continue to call for nationalisation. The unity that they have showed has made their revived business a national symbol of resistance. The strong links they had forged with various social movements have allowed them to withstand seven attempts to expel them. They have recruited 210 workers and illegally manufacture more than 300,000 square metres of tiles every month. Their members earn as much as the police and have enough left over to make regular donations to community causes.
The ability to create jobs in a business that has supposedly collapsed may be one in the eye for the bosses; but there is no guaranteed future for all these revived businesses. Each depends upon its own viability and global economic conditions, and also to a large extent upon the financial, technical and legal support of the Argentine state. The MNER argues that, with this support, the movement could restore 150,000 jobs and members of this small movement constantly put themselves forward as possible partners for the state in the struggle against unemployment. But they have never been able to secure either the hoped-for interest-free loans or legislative reforms. Big business has such a hold over the country’s political and legal authorities that MPs and judges would rather turn their back on rebel workers than help them — despite the popularity of these salvaged businesses.
Translated by Donald Hounam
(1) Empresas recuperadas, Secretaria de desarrollo economico, Buenos Aires, September 2003.
(2) The unemployment rate rose from 8% in 1992 to 18% in 1995. Between 1989 and 2000, the number of those in work fell by 35%.
(3) Fabricas y empresas recuperadas, Centro cultural de cooperacion, November 2003.
(4) Informe del relevamiento entre empresas recuperadas por los trabajadores, Programa Faculdad Abierta, Department of Philosophy, University of Buenos Aires, April 2003.
Cécile Raimbeau is a journalist and co-author (with Daniel Hérard) of a book on worker management in Argentina (Editions Alternatives, Paris, forthcoming February 2006)
By Zack Fields, Campus Progress Posted on October 11, 2005, Printed on October 20, 2005 http://www.alternet.org/story/26662/
The police still come once a month to empty the illegally occupied hotel, and might have succeeded by now if not for the hundreds of European tourists filling the available rooms to capacity.
In 2001, a victim of a quarter century of neoliberalism, the Hotel Bauen, went bankrupt and closed, firing all of its workers, many of whom went without work for a full year. Today the former lowest ranking staff — cleaning people, dishwashers, and receptionists — run the enterprise democratically, without a management hierarchy and with a nearly flat wage scale.
The cooperative owners took a vacated hotel with no rooms ready for guests, and transformed it, investing over a quarter million pesos in new beds, televisions, and a new restaurant on the ground level. Today, the enterprise employs 50 more people than when the workers opened it, and will continue to need more workers as they finish renovating the remaining 20% of unopened rooms over the next three months.
Hotel Bauen is one of more than 170 companies, ranging from bakeries to auto parts factories, that were once bankrupted and abandoned and have now become thriving worker-run empresas recuperadas, or “recuperated companies.” In a nation where around 1 in 5 are out of work and many remain frustrated and distrustful toward the government, this kind of do-it-yourself movement has gained considerable support.
It used to be that Argentina was considered the prosperous “Europe of Latin America.” But years of brutal dictatorship in the 1970s not only caused the death or “disappearance” of thousands of individuals, but also destroyed the economy. Years after the economic crisis began in 1976, democracy returned and the country began to take on various neoliberal economic policies of the IMF. But then, in 2002, Argentina reached the “inflexion point.” Unemployment reached 21.5 percent. During 2002 and 2003 poverty rates remained over 50 percent. One banker with whom I spoke said about 90 percent of Argentine companies went bankrupt during the crisis, with the failures concentrated in the industrial sector.
Beginning with the dictatorship, a succession of administrations have followed neoliberal economic doctrine, privatizing state services, introducing labor “flexibility” laws, and ending subsidy or tariff programs designed to protect local businesses. When traveling around Buenos Aires to talk to the workers of the cooperative factories, I rode private buses, private subways, and used privately sponsored street signs to find my way. The Argentine state is dead.
Yet daily needs have persisted, and workers across the nation decided that they did not have the option of unemployment, and chose to continue working even if their bosses were no longer handing out paychecks. Over the Argentine winter (that would be summer here) I spoke with workers in eleven cooperatives, including Hotel Bauen.
Most workers are not revolutionaries, yet their participation in this nationwide trend is revolutionizing the politics and economics of the nation, particularly in the Buenos Aires metropolitan area (Gran Buenos Aires), where the vast majority of the empresas recuperadas are located.
The first empresa recuperada in Capital Federal, the capitol of Argentina and the center of Gran Buenos Aires, was the Cooperativa de Trabajo Vieytes, Ltda., also known by the former private company’s name of Ghelco, a sweets company that produces candy, fudge and ice cream. The former owners of Ghelco told the workers the factory was closing as the crisis worsened, then hired new workers at lower wages.
When the veteran Ghelco employees learned that the factory was operating under new, low wage conditions, 43 of them occupied the sidewalks around their former place of employment, preventing the new workers or owners from entering. More than two months later, the owners and creditors abandoned the factory, and in July a judge ruled that the constitutional right to employment allowed the workers to reopen the factory as a cooperative.
On July 14, 2002, the 43 former employees of Ghelco formed the Cooperativa de Trabajo Vieytes, Ltda., and began production with an 800 peso loan from Union y Fuerza, an empresa recuperada from the Province of Buenos Aires. Since the recuperation of the factory, 10 new workers have joined the cooperative as production has grown. Cooperativa Vieytes now has clients in Spain, Brazil, and Uruguay, as well as in Argentina.
Wages have increased along with production, and the workers earn more now and receive better benefits than they did with the private company. They have achieved these successes without management; the old managers left with the owners. Moreover, they have expanded production without the incentives of graduated wage scales; all socios, or members of the cooperative, receive the same pay.
Many Americans have so internalized the virtues of specialization and individualized material incentives that we find it difficult to conceive of any other system. The capitalist organization exists through natural law, we are taught. In Argentina, I found a different set of natural laws that produced radically different results.
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Manuel Ruiz, a maintenance worker in Vieytes, told me that he works harder under the cooperative, both because he is an equal part-owner and because of the material rewards. Since the cooperative’s founding, he has bought a house and a car, neither of which he could afford with the private company. Another employee told me his pay is three times higher in the cooperative than in the private company.
Manuel also appreciates the cooperative benefits. If he needs to stay home with a sick child, or if he is sick himself, he still receives full pay for that day. The cooperative provides medical insurance as well. He has 15 days of paid vacation per year. Finally, Vieytes has regular training workshops to train workers in their positions and in other skill areas so that its workers are better prepared for a variety of labor every successive year.
The daily conditions of work have improved as well. When Manuel needs some coffee or te mate, a common tea drunk in Argentina, he is free to make some. When he has finished his maintenance work, he goes and works in other parts of the factory, helping other workers.
While I was talking with Manuel, Jose, the security guard and communications director, was helping on the assembly line. Several Vieytes socios told me that they can produce more when they have flexibility in the factory. When the bosses were here, if they finished their task they would pretend to continue working to avoid appearing lazy. Now they find other workers in the company who need help.
Because all employees learn how to do multiple jobs, there is never a work slowdown or stoppage because somebody is unable to come in to work. The flexibility of daily labor also is a constant training program for all the workers, and represents an investment in human capital that may pay individual dividends should the factory close one day. This departure from the Taylor model of “scientific” labor organization is a humanizing process; every worker plays an integral role in the factory, and could not simply be replaced with a low skilled worker to fulfill a single task on the assembly line.
Given the dignified working conditions and economic security of working at Vieytes, it is not surprising that the socios work harder. One finds evidence of the efficacy of their commitment to the factory in a large new contract with Nestle, which will allow the cooperative to invest in several new machines and continue to expand production.
Socios of Cooperativa de Trabajo B.A.U.E.N. demonstrate the same level of commitment to their enterprise. When 38 former employees first occupied the closed hotel in March of 2003, none of the bedrooms were ready for guests, and half the first floor was closed off. Initially, the cooperative could only rent out the “salons” on the second floor for birthdays and other parties. Using that money, they began to renovate and open the rooms one by one, while architecture students from the University of Buenos Aires built a bar in the formerly closed off portion of the first floor.
By the time I visited Bauen, 80 percent of the rooms were open, the bar was busy all the time, and there was a constant stream of visitors flowing in and out of the hotel. The hotel was so busy that the only time I had the opportunity to speak to most workers was during their lunch break. The socios and socias of Bauen are fiercely proud of their hotel. They have created 80 new positions of employment as they have opened more rooms, and rejuvenated a potent symbol in Capital. Presidents, soccer stars and other notables used to stay in the hotel, and from the workers’ perspective the reopening, renovation, and improvement of Bauen represents broader possibilities of economic recovery for Argentina.
That future is far from certain. These co-ops are largely illegal. Though the government has set up an office to help those who want to reopen closed businesses, legal battles continue between owners and workers. There have been clashes with police over eviction notices at a few factories.
The former owner of Bauen has allies in the city government who have refused to expropriate Hotel Bauen for the workers as they have with dozens of other cooperatives in the city. So the Bauen workers hold demonstrations every few weeks and are working with a variety of leftist and centrist government Diputados (deputies, or legislators) as well as a grassroots collective of cooperative factories to promulgate a law of expropriation that will make it legal for workers to reclaim abandoned factories and continue running them.
If the movement of empresas recuperadas is going to continue to generate secure, dignified employment for Argentina, the regional and national governments will have to become more active in expropriating additional factories and also by instituting credit or subsidy programs. While some cooperatives such as Vieytes and Bauen can self-capitalize, some cannot, and in the absence of loans from banks, the government will have to provide either credit or subsidies to some cooperatives.
While the government of Capital Federal has instituted a subsidy program in coordination with faculty from the University of Buenos Aires, the amount of money is small and is inadequate to capitalize some empresas recuperadas with antiquated machinery. Moreover, some delegates from the city government are aligned with reactionary forces, including the owner of the Hotel Bauen.
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If rightist forces recover in upcoming elections, owner seizures of worker-run factories could become a possibility, although the owners are currently poorly organized, with their political power dependent upon personal rather than organizational connections. Thus, today there is not a concerted governmental effort in Capital Federal, much less at the national level, to support the empresas recuperadas, and a reversion to a neoliberal paradigm would pose a grave threat to the cooperatives’ existence.
Finally, until the national government reforms the bankruptcy laws to place workers and creditors on equal standing, future bankruptcies will probably result in abandoned factories rather than functioning sources of work and production.
Regardless of the government response, however, the current success of the cooperatives in generating employment in the face of the worst crisis in Argentine history speaks to the human potential to envision and create a future based on human needs. Rather than accepting the dictates of a dehumanizing economic model, the cooperative workers of Argentina are building an economy based on human necessities, a model from which an increasingly polarized and impoverished American society could learn.
Zack Fields is a student at the University of Virginia.