Some 3,000km south of Buenos Aires, the province of Tierra del Fuego has been locked in a four-month conflict over pension reform and workers’ rights. Elke Wakefield reports on what is going on at the self-described ‘End of the World’.
Rosana Bertone hasn’t exactly had a dream start to her gubernatorial term.
Bertone became governor of Tierra del Fuego, Antarctica, and South Atlantic Islands (the latter two including contested territories) in December 2015.
By February, things had started to go south. Since then, she has faced a series of protests, been blocked out of her office, and is engaged in a stand-off with public-sector unions on strike for almost 90 days.
Conditions weren’t ideal for governing when Bertone entered office. The provincial coffers were in dire straits: at least 90% of the budget was committed to paying the salaries of state workers; the pension scheme was in deficit; and the incoming Federal Government was looking to cut, not increase, spending.
Undeterred, she got to work. In early January, when most of the province was enjoying the summer holidays, she introduced a package of laws that declared a state of “emergency” in the pension system, overhauled the pension-scheme and streamlined tax collection.
Unions representing state workers rejected the new laws outright. They claimed they were the basis for “brutal” austerity measures and an attack on workers’ rights.
The conflict escalated on 1st March when a “front” of at least 20 unions – representing teachers, hospital workers and other government employees – called a strike. Their message was clear: “Ni un paso atras. Ni un derecho menos.” (Not one step back. Not one right less.) They demanded the complete revocation of the laws.
Bertone didn’t flinch, insisting that the changes were happening. The “battle” for Tierra del Fuego had begun.
Almost three months have passed since then, and there has been no shortage of drama: daily protests; petitions; assemblies; a permanent camp outside the provincial government building; a roadblock on National Route 3 (meaning that provincial capital Ushuaia was, for a time, inaccessible by land). Approximately 500 students are still yet to set foot in a classroom.
At times, the situation has been darkly comic. Bertone was briefly forced to conduct official business from a hotel room because the protest camp blocked entry to the goverrnment building.
More than anything, however, it is an ugly affair, characterised by high emotion and moments of violence.
In early April, the union front blocked access to the Orión Plant, the main source of fuel for the island. Frustrated members of the truck-driving union arrived with “sticks and stones” and attacked the protesters as – according to José Gómez from AFEP (Fueguina Association of Public Employees) – the police stood by.
In May, protesters swarmed the vice-governor in what was either an attack or an escrache (legitimate direct action), depending on who you ask. A result, five union leaders were arrested in the early hours of the morning and charged with assault; they denounced the criminalisation of protests and warned of the dangers of “state terrorism”.
Bertone’s resistance seems to be paying off: after almost four months of conflict only three unions continue to strike. Yet the long-running conflict – unprecedented in the province – is also viewed by some as a possible preview of more widespread unrest in the face of unpopular reforms. Which begs the question: what’s really been going on in Tierra del Fuego?
The most obvious problem is that the province is short of funds.
Tierra del Fuego is the smallest Argentine province in terms of population (153,257 compared to the over 16m in Buenos Aires Province, according to the 2010 census). It has only had provincial status since 1991 and, in that time, has enjoyed handsome funding from the federal government. A report released by the Argentine Institute of Tax Analysis shows that in 2015, Tierra del Fuego received more federal funding per inhabitant than any other province in Argentina; locals, known as fueguinos, receive 13 times more in federal funding per year than those who reside in Buenos Aires.
Yet, when Bertone entered office, IPAUSS, the Unified Autarchic Provincial Social Security Institute, a self-managed organisation that administered the pension-scheme and other social benefits, did not have the funds to pay the pensions of the approximately 6,000 retired fueguinos.
How did things get this bad?
One government secretary who did not want to be named put the problem in simple terms: “The issue is the retirement-scheme. It was completely unsustainable.” He says that fueguinos retired too early and with too much. Without reforms, he claims, bankruptcy was inevitable.
According to a report released by IPAUSS last week, the average age of retirement in the province is 52, with some able to claim pensions even earlier. For instance, the ‘Law of 25 Winters’ enabled some fueguinos to retire as young as 42. Under the scheme approved in 2006, men aged 50 and women aged 45 could retire once they had reached 25 years of contributions to the pension fund. However, once a worker entered their early forties, the state started discounting years for contributions, which meant that some men retired at 47 and some women as early as 42.
With life expectancy in Argentina is pushing 80, some in Tierra del Fuego could be receiving a state pension for the best part of three decades. And not just any pension: under the scheme inherited by Bertone, pensions were worked out based on the “82% móvil” (variable rate). This means that when a person retires, their retirement income will be 82% of the highest income they earned continuously over a 24- month period in the last ten years. It is “variable” because it updated monthly based on increases in the salaries of those who are still working.
The source from within the provincial government says this system was completely unsustainable: “It resulted in gigantic pensions…there were monthly pensions of $80,000 [US$5,600], $120,000 [US$8,520], $180,000 [US$12,780].”
This is particularly significant in a place where there is a very high number of people employed by the state. Pablo Riffo, political commentator, broadcaster and fueguino elaborates: “The number of government employees simply does not correspond to the population. There are 15,000 government employees…At least 6,000 are retired and receive a pension. It didn’t work”
However, many unions disagree that the scheme itself was unsustainable.
Horacio Catena, who is Secretary General of the teachers’ union SUTEF, defends the 82% móvil rate. He says it allowed fueguinos to retire with dignity in a province where the geography and climate are harsh, the cost of living is very high (a bus trip costs $8.5 compared to the $6 it costs in Buenos Aires), and inflation is rampant.
Other union leaders say it was government corruption and incompetence that led to the deficit in the pension-fund, with the mismanagement of contributions dating back at least 15 years.
“The government did not pay the contributions into the pension fund like they were supposed to,” says Darío Orellano, Río Grande native and national delegate for the Association of State Workers (ATE).
Orellano says that, among other things, the government misused the funds to give unguaranteed loans to local businesspeople via the Bank of Tierra del Fuego (this was confirmed by a judge in 2007). The loans were never repaid and since the early 2000s the government has owed a debt to IPAUSS. This debt has been rolled-over from government to government and now no one is really sure how big it is. ATE and other unions estimate it to be some $3.5bn.
For the unions, the new laws, which dismantle IPAUSS, gradually raise the retirement age to 60 and take a contribution of up to 4.5% from workers salaries to put towards a ‘Solidarity Fund’ to cover the deficit, are unjust.
Catena from SUTEF complains that, instead of initiating proceedings against those who misappropriated pension funds, Bertone has introduced laws that “strip rights from workers, disabled people, and the retired” and lay the foundations for the liquidation of this historic debt.
Others, however, are less convinced by the union action, saying that their talk of ‘workers’ rights’ can seem more like mere rhetoric to disguise self-interests as solidarity. “They didn’t do anything when the pensioners were waiting in line at IPAUSS for pensions that never arrived,” says Riffo. “They didn’t do anything when the sick had to sleep in a church awaiting government medication.”
There is an important question hanging over the current crisis: what future lies ahead for Tierra del Fuego, or ‘Isla de la Fantasía’ as it is sometimes called?
It’s not like other provinces in Argentina; some 3,000km south of Buenos Aires, few places in the country depend more on the intentions and intervention of the national government.
Tierra del Fuego was borne of geopolitical factors. In the 1970s, the Argentine government began to fear that an unpopulated south was an unprotected south. It also began to eye other islands – Tierra del Fuego lies close to the long-lost Falkland/Malvinas Islands.
In 1972, the government passed the Law of Industrial Promotion, creating tax exemptions (fueguinos don’t pay VAT or income tax) and directing extra funds towards the region. Internal migrants started moving south to hacer guita or ‘make money’. By 2012, the population had grown at least nine-fold.
Another consequence of the law was the development of an unlikely electronics industry in Tierra del Fuego, centred in the province’s second city, Río Grande. Like many things in Argentina, depending on whom you ask, this is either the best idea the government ever had, or the worst.
Journalist Pablo Riffo says that electronics industry employs thousands of fueguinos (the second-most important source of jobs after the public sector) and that factories produce goods to world-class standards. If they didn’t, he says, brands like Phillips and Samsung wouldn’t put their name to them.
However, others claim the industry is a sham and ultimately unsustainable. In 2012, prominent Argentine journalist Jorge Lanata, went to Tierra del Fuego to expose the ‘truth’ behind the industry, and reported that the Argentine electronics industry was actually a Chinese one. Lanata claimed that all the parts were imported from China (Riffo disputes this – he says they are made from a mix of local and imported parts just like in other factories) and pointlessly assembled in Tierra del Fuego before making the long and expensive journey to Buenos Aires. “They don’t manufacture in Tierra del Fuego – they put things together,” Lanata said.
Regardless of the benefits of a southern presence, there is no denying that Tierra del Fuego has become an expensive habit for a national government. A recent report, produced by the Ministry of Economics and Public Finances, shows that the law of Industrial Promotion cost the government $23.5bn in 2013 (US$1.6bn). According to economist Federico Muñoz, as quoted in Bloomberg, this means that in order to keep the industry competitive, the government effectively subsidises each worker by $180,000 a month.
This dependence on the national government makes 2016 – a time of nationwide belt-tightening – a particularly uncertain time for Tierra del Fuego. Riffo points out that President Mauricio Macri, who has remained tight-lipped throughout the strikes, is no friend of the law of industrial promotion and it is unclear whether he will subsidise the region to the same extent.
Governor Bertone has stated that “the president has been very clear that the provinces need to manage themselves with their own resources”, suggesting she expects no special treatment. Moreover, like all provinces, Tierra del Fuego is dependent on the federal government to distribute tax revenues, and influenced by the political leverage this system creates.
Darío Orellano from ATE holds no illusions about the fueguino political system: “Tierra del Fuego depends a lot on the national government. To stay in power politicians sell themselves.”
He says that Governor Bertone started political life as a Menemist [supporter of neo-liberal Carlos Menem]. She is now a member of the Frente para la Victoria (FpV) party, the same party as former president Cristina Fernandez de Kirchner, but since coming to power has moved closer to Macri and was one of only three governors to accompany the president as he visited the Pope in February.
In this context, some claim that the laws approved in the early hours of 9th January, a Saturday, were rooted in expediency rather than political vision.
Of course, there’s always a twist in Argentine politics. As the local government secretary pointed out to me, President Macri’s close friend Nicolás Caputo has extensive businesses in Tierra del Fuego, businesses that depend heavily on the law of industrial promotion. For that reason, he doesn’t think it likely that Macri will do anything too drastic to its privileged existence any time soon.
Though the situation has calmed in recent weeks, the conflict continues with underlying tensions. Unions have denounced the recent burning of a protest camp and this week teachers’ union SUTEF reported police aggression towards female protesters.
Unions remain defiant. “We have won rights by fighting for them. And we defend those rights without regard to judges or governors – we’re not governed by their logic,” says ATE’s Orellano. “It’s a struggle for workers everywhere. And we had it in Tierra del Fuego, until the governor took it away.”
For him, the struggle to maintain workers’ rights transcend the politics of the day. Their defence is justified by their absoluteness. This is particularly the case when these ‘rights’ are challenged by government ministers who are perceived as fickle and buyable.
Others, like political commentator Riffo, don’t buy what he describes as a narrative of victimisation by the unions. He describes their method of protest – preventing non-protesting teachers from entering schools, yelling insults at government employees, and blocking off access to the Orión Plant – as being peaceful only in name.
He points out another thing: after the new laws were passed, the state pensions were now finally being paid on time, something that “didn’t use to happen”.
As the political stand-off continues, attention is turning to the other key factor of life in Tierra del Fuego: the weather.
Some believe the conflict would drag on endlessly were it not for one thing: Winter is coming, and with it, the bitter cold and public holidays that see many state employees leave the island in search of warmer climes.