The president and the economy minister have repeatedly signaled a “clear recovery” of production, employment, and consumption. However, Argentine industry is making the case that the worst of the economic crisis that has engulfed the country is yet to come.

In a report published on Thursday, the Association of Small and Medium-Sized Enterprises  (IPA, by its Spanish acronym) warned that employment has fallen in all economic sectors since President Javier Milei took office and that the situation is bound to worsen in the coming months.

During the first three months of 2024 alone, the private sector shed 58,000 jobs, 11,000 of which were in SMEs. The report stressed that the slump is similar but more abrupt than the one experienced during the first six months of Mauricio Macri’s government, when 63,000 employees were laid off.

Milei has consistently said that, after the initial shock, the economy would have a “V-shaped” recovery, meaning that it would rebound dramatically after a deep recession.

“We haven’t seen the worst yet in terms of employment,” said Pablo Bercovich, director of the Mi PYME consultancy, during the presentation of the report. Bercovich argues that steep decline in productivity is more likely to “plateau.”

“It’s not going to be V-shaped,” he said during the presentation of the report. “It’s going to be an L.” 

Most of the job losses have ocurred at major corporations. The PA theorized that the current administration likely “did not negotiate with these large companies” and anticipated that SMEs would soon be increasing layoffs as well.

The chairman of the IPA, Daniel Rosato, said that 1,000 textile companies, representing 30,000 jobs, could disappear in the next four months. Rosato believes as many as 300,000 SME jobs are at stake.

The report also found that every sector of the economy contracted in March — something that has only happened in four months since 2016. (Two of these months occurred during the crisis of 2019 under Macri and the other two at the height of the COVID-19 pandemic.)

“This depression has led companies first to give up profit margins, then to bring forward vacations and cut shifts, then to suspend personnel. Now, we are in the process of accelerating layoffs,” the IPA report said. 

“For many businesses, the next, final step is looming:  closing down the company,” it continued. “It is very difficult to recover employment when companies are being destroyed, even if the economy starts to grow again.”

Rosato said that imported finished products are “flooding the market” and stressed that a “labor reform” during an economic crisis would not improve the situation, as companies are not hiring. A survey conducted by IPA found that 35% of SMEs think they will lay off their staff. Just over 50% of the companies said they would neither hire nor fire employees, and only 10.1% would incorporate new workers.

However, not everyone in the industry agrees with the SMEs. The Union of Argentine Industry (UIA), which consists of large companies, supported some of the government’s most contested initiatives, including the Incentive Framework for Large Investments (RIGI, by its Spanish initials). The goal of the RIGI — part of the Ley Bases — is to grant tax and fiscal benefits to companies that want to import and invest over US$200 million in Argentina.

Rosato did not agree with the UIA, arguing that RIGI could mean more imported goods, with foreign companies buying out local businesses and passing those purchases off as investments, whether they would benefit local providers or not. He also stressed that the government does not have a plan for industry, even though the IPA has presented it with one.

“Somebody explain to me why we could improve,” Rosato said.