Argentina drought starting to hit jobs as govt scrambles to stem revenue losses

Argentina’s private sector is still showing some growth in job creation, but agriculture is starting to suffer the effects of the severe drought across the country.

The drop in agricultural production and the resulting nosedive in exports, a major source of public revenues, has also forced authorities to try to support the sector to help stem the loss of income. 

As of January, nearly 6.3mn people were employed in Argentina's private sector, Buenos Aires-based economic policy center CEPA reported, citing numbers from the labor ministry.

That was nearly 17,500 more registered workers than in December, 501,000 more than at the lowest point of the COVID-19 pandemic and 309,000 above pre-pandemic levels.

In the case of agriculture, the number of registered workers was up 0.3% compared with December, but was down slightly year-on-year and could be followed by more job losses as the decline in revenues affects companies. 

“It's very little in absolute terms. About 5,000 jobs [fewer than in January 2022],” CEPA director Hernán Letcher told BNamericas.

In January, private sector employment in the agriculture industry was 1.5% below the lowest point of the pandemic in June 2020 and 3.4% below pre-pandemic levels.

The financial sector is faring even worse, being the only one to show a monthly fall in registered workers in January, sliding 0.1% from December and 4.1% from pre-pandemic levels. 

Meanwhile, the construction sector is growing, with jobs 43.3% above the pandemic low point and 18.5% more registered workers than in February 2020. 

However, as the drought reduces national export revenues and taxes, tighter public finances will affect the funds available for public works. 

In general terms, Argentina's unemployment rate was 6.3% at the end of 2022, but the International Labour Organization (ILO) warned that around 45% of workers in the country, around 8mn people, are considered informal. 

In February, public revenues tumbled 8.3% year-on-year to 1.6tn pesos (US$7.6bn), mainly due to a 73% drop in export income.

To help support farmers and soften the blow on tax revenues, the federal government established a preferential exchange rate, dubbed the “soy dollar”, for shippers and producers to boost grain exports. 

The program offers an exchange rate of 300 pesos per US dollar for all sales of soybean derivatives, which is significantly better than the official exchange rate of 213 pesos per dollar.

The scheme began on Monday, but demand has been low so far, Reuters reported, quoting traders and analysts.