(Bloomberg) -- Argentina is preparing a new workplace injury law as it seeks to reduce costs for companies, some of which spend as much as 20 percent of their labor budget on insurance, said Cabinet Secretary Mario Quintana.
The bill will prevent workers from collecting part of the claim before they go to court and will establish fixed fees for lawyers and investigators, who currently pocket a majority of claims by charging a percentage, Quintana said in an interview in his office at the presidential palace. Insurance companies have $5 billion in liabilities from about 370,000 pending cases, he said.
“Technically if we don’t do anything they will go bankrupt soon and the national government will have to deal with those losses,” said Quintana, who alongside Gustavo Lopetegui co-ordinates Macri’s economic team. “Insurance companies have been pushing those costs to companies and today, depending on the industry, there are some industries that are paying as high as 18 percent or even 20 percent of their total labor costs.”
President Mauricio Macri is trying to attract foreign investment to Argentina by opening up the economy and dismantling a system of protectionist policies that made the country an economic ’no-go’ zone under the previous government. After lifting currency controls and resolving a decade-long dispute with bondholders, Macri is now beginning to tackle Argentina’s labyrinthine regulatory system in a bid to reduce the cost of doing business.
The government will send its 2017 budget to Congress in the coming weeks that sees the economy growing 3.5 percent, inflation slowing to an average of 17 percent and the currency depreciating to an average of 18 pesos per dollar, Quintana said. The government will also remove superpowers that allow it to have total discretion over changes in the budget, Quintana said. It will, however, leave some room for discretionary spending, he said.
After 25 years in which Argentina has veered from a economic model under former President Carlos Menem that made it the poster child of neoliberalism to 12 years of protectionist policies under the Kirchners that isolated Argentina from the world, Macri is seeking a middle path, Quintana said.
“We have to leave behind false dichotomies,” Quintana said. “One stupid trade-off Argentina has been trapped in is the idea that a government can’t be at the same time macro-economically disciplined and socially sensitive. We want to be very generous with the poorest part of society, taking care of everybody, while also being integrated into international financial markets.”