Vantage | Argentina's Javier Milei makes bold moves to fix country's economy

In the heart of South America, Argentina finds itself in the grips of a severe economic crisis. With inflation nearing a staggering 200 per cent, and foreign reserves depleting rapidly, the nation is facing tough times. However, in the face of adversity, the people of Argentina have turned to a new leader, President Javier Milei, who is advocating for bold and unconventional measures to revive the ailing economy. President Milei, a proponent of shock therapy, aims to implement drastic changes to steer Argentina away from economic turmoil. One of his recent moves, announced on Tuesday, involves trimming down the country’s government by terminating the contracts of more than 5,000 public officials. Unveiling of layoffs The plan hinges on not extending contracts, particularly those set to expire on 31 December. In his special decree, President Milei initially targets workers hired in 2023, gradually expanding the scrutiny to include those employed in preceding years. Certain exceptions, such as senior officials and workers hired under legal quotas, are expected to be spared. President Milei’s primary objective is to cut government expenses in a bid to address Argentina’s economic challenges. The country currently employs around 3.5 million people in the public sector, constituting 7.7 per cent of the population. Their salaries account for more than 2 per cent of the GDP, a figure deemed unsustainable by the new administration. Global precedents for government layoffs The move to downsize the government workforce is not unprecedented on the global stage. Countries such as Greece, the United States and Brazil have resorted to similar measures during times of economic crisis. Greece, under pressure from lenders, laid off around 1,50,000 public officials from 2010 to 2015. The US government downsized by approximately 7,50,000 jobs in the aftermath of the 2008 recession and Brazil fired 4,600 public officials in 2016. The trend of government layoffs aligns with broader austerity measures implemented by nations facing economic challenges. This raises fundamental questions about the role of governments in providing employment. Government employment on a global scale In India, a country with a substantial population, government jobs are highly sought after. Approximately 20 million Indians work in government sectors, constituting 2.2 per cent of the workforce. Comparatively, China employs around 39 million government workers (4.6 per cent of the workforce), the US has an almost 7 per cent government workforce, the UK stands at 17.5 per cent and Europe averages around 18 per cent. The question of whether governments should serve as significant employers lacks a simple answer. It depends on factors such as a country’s economic capacity and debt levels. Nordic nations, with high per capita incomes and low public debt, can afford a larger government workforce. India’s path forward For India, striking a balance is crucial. With around 500 million workers, relying solely on the public sector is impractical. Instead, the private sector should take the lead in job creation. Public officials can play a pivotal role as enablers, attracting investments, providing services and expeditiously clearing projects. Argentina’s bold move to trim down its government workforce under President Milei reflects a global trend of governments resorting to layoffs during economic crises. The debate over the role of governments in job creation continues, emphasizing the need for a balanced approach tailored to each country’s economic circumstances. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views. Read all the Latest News, Trending News, Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.