VZCZCXYZ0000
OO RUEHWEB

DE RUEHBU #1245/01 2491948
ZNR UUUUU ZZH
O 051948Z SEP 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1968
RUEHC/DEPT OF LABOR WASHINGTON DC
INFO RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 001245 
 
WHA/DRL FOR MITTELHAUSER AND NEWLING 
USDOL FOR ILAB TINA MCCARTER 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ELAB AR
SUBJECT: ARGENTINA'S MAIN LABOR CONFEDERATION SPLITS 
 
REF: BUENOS AIRES 1172 AND PREVIOUS 
 
¶1. (SBU) Summary:  Long-simmering internal tensions within 
Argentina's main union confederation, the CGT, finally boiled over 
in the confederation's latest internal elections.  CGT Secretary 
General Hugo Moyano won a second term, while his rival, Luis 
Barrionuevo, quit the CGT to create a ""dissident CGT"" taking 60 
small- and medium-sized unions with him.  Although there is 
historical precedent for such a split, current labor legislation 
makes it unlikely that the GOA would grant formal recognition to 
Barrionuevo's faction.  Nevertheless, Barrionuevo, who is closely 
aligned with Peronist (PJ) opposition leader and former President 
Eduardo Duhalde, is a force to be reckoned with on the labor scene, 
and his decision to break away from the CGT may lead to increased 
competition in Argentina's labor politics and an upswing in strike 
activity.  Already the unions are trying to squeeze the government, 
which is increasingly reliant on union support, for more wage and 
other benefits.  End summary. 
 
-------------------------------- 
The Kirchners Stand by Their Man 
-------------------------------- 
 
¶2. (SBU) Hugo Moyano, the Secretary General of Argentina's main 
union confederation (CGT) won a second term in July 8 internal 
elections with 77% of the vote.  Moyano, who is also a 
Vice-President for the Peronist Party (PJ), is a close ally of 
former President Nestor Kirchner, who used Moyano to keep union 
demands in check while the GOA focused on putting its economic house 
in order in the wake of the 2001-02 crisis.  In the months prior to 
President Cristina Fernandez de Kirchner's (CFK) election in October 
2007, however, Nestor Kirchner courted other prominent labor leaders 
in order to weaken the CGT's position in annual wage negotiations. 
In the end, the Kirchners stood by Moyano.  Most labor analysts 
believe they did so because they still need Moyano to help ensure 
governability, particularly after the GOA's protracted conflict with 
the agricultural sector (reftel). 
 
-------------------------------- 
Barrionuevo Breaks Away from CGT 
-------------------------------- 
 
¶3. (SBU) Meanwhile, Moyano's rival, Luis Barrionuevo, quit the CGT 
to create a dissident union confederation known as the ""CGT White 
and Blue,"" taking 60 small- and medium-sized unions with him. 
Barrionuevo, who leads the Restaurant Workers' Union, has announced 
his intentions to seek legal recognition from the Ministry of Labor. 
 However, Argentina's labor laws only allow the legal recognition of 
one national union confederation, which makes it unlikely that the 
GOA would grant formal recognition to this new faction.  In the 
weeks following the elections, Barrionuevo sided with the farm 
sector in the agricultural conflict and publicly aligned himself 
with PJ opposition leader and ex-President Eduardo Duhalde, whom he 
reportedly consults with on a daily basis. 
 
--------------------------------------------- -- 
GOA Attempts to Appeal to Working Class Base... 
--------------------------------------------- -- 
 
¶4. (SBU) In the aftermath of the farm conflict, the GOA has sought 
to regain the political initiative by announcing measures the 
administration hopes will appeal to their working class base.  In 
recent weeks, the GOA has announced a 26.5% increase in the minimum 
wage to be implemented in two stages, rising from AR$ 980 
(approximately USD 325) to AR$1200 (approximately USD 400) in August 
and rising again to AR$ 1240 (approximately USD 412) in December 
¶2008.  The Ministry of Labor estimates that 300,000 formal, 
unskilled workers will benefit from the measure.  (Note: The measure 
would not, however, benefit informal workers, who make up an 
estimated 38-42% of the Argentine workforce.)  Subsequently, the GOA 
announced that it would raise the income tax exemption ceiling by 
20%, benefiting an estimated 800,000 workers.  According to the 
Ministry of Labor, 200,000 workers would no longer pay income tax 
and 600,000 would pay less incomes taxes. 
 
--------------------------------------------- ------ 
...is a Step in the Right Direction, but Not Enough 
--------------------------------------------- ------ 
 
¶5. (SBU) The press has portrayed this as a victory for Moyano; 
however, Moyano himself, while indicating that the measures are 
steps in the right direction, has also publicly noted that this 
falls short of CGT expectations.  Barrionuevo strongly criticized 
the GOA decisions, claiming that the measures did little to help 
workers recuperate their purchasing power when ""real"" inflation had 
increased by 55% over the last two years.  The rise in minimum wages 
only benefited unskilled and freelance labor, he added, noting that 
unionized labor make significantly more than the minimum wage, he 
noted.  Subsequently, Moyano threatened to call for a general strike 
if the GOA does not address CGT concerns such as increasing retiree 
pensions and obliging companies to pay higher benefits to middle and 
lower-paid workers with families.  This prompted CFK to meet with 
Moyano and Hugo Yasky, leader of a rival trade confederation with 
limited legal recognition (CTA), on September 3, when she reportedly 
promised to address these issues soon. 
 
¶6. (SBU) Although Argentine public opinion has long viewed labor 
leaders negatively, including Barrionuevo, a recent poll published 
in lapoliticaonline.com, an independent journalism website, 
suggested that Barrionuevo had the highest public approval ratings 
of any labor leader.  Barrionuevo's approval rating stood at 30.8% 
(with 50.1% reporting a negative view of him), while Moyano's stood 
at 10.9% (with a 72% negative view).  According to the website, 
Barrionuevo's relative popularity is largely due to the public 
perception that he was supportive of the agricultural sector in its 
months-long confrontation with the government over export taxes and 
farm policy. 
 
------- 
COMMENT 
------- 
 
¶7. (SBU) Barrionuevo's decision to break away from the ""official"" 
CGT is not without precedent.  The CGT split twice in the 1980s, and 
once in the 1990s.  The latter split was led by Moyano himself.  The 
CGT remained divided until 2004, when then-President Nestor Kirchner 
successfully convinced labor leaders to reunite.  The confederation 
held elections that year, which resulted in the establishment of a 
triumvirate to lead the CGT. Peaceful coexistence among the three 
main factions was short-lived, however, and in 2005, Moyano 
proclaimed himself CGT Secretary General. 
 
¶8. (SBU) In Argentina, unions aggressively fight over membership, 
since the exclusive right to enter into collective bargaining with 
companies on behalf of all workers is granted to the union that can 
prove it has the largest membership roster.  Recent examples of such 
union competition in the express courier industry have impacted U.S. 
companies operating here.  Widespread distrust of official inflation 
data has already resulted in labor demands for wage increases 2-3 
times above the official inflation rate.  With Barrionuevo's 
departure from the ""official CGT"", competition between the two 
factions will intensify and likely lead to further radicalization of 
labor demands as each side promises a tougher stance in labor 
negotiations in order to attract more adherents.  As a result, an 
upsurge in strike activity over the next year cannot be ruled out. 
End Comment. 
",