Argentina’s Jobless Rate Falls as Carmakers Increase Production

Volkswagen AG and Toyota Motor Corp. are hiring in Argentina to boost output, part of growing job creation that is driving down the jobless rate in South America’s second-biggest economy.

President Nestor Kirchner said on May 16 that the unemployment rate fell to 11.4 percent in the first quarter from 13 percent in the same period a year earlier. The government is scheduled to officially release the number today at 3 p.m. New York time.

“We have engaged in an major program of training for new personnel as production is up and we have launched new models,” said Ronaldo Frost, public relations manager at Volkswagen in Buenos Aires. Volkswagen, Europe’s largest carmaker, in January added 400 workers, an increase of about 30 percent, to its Buenos Aires factory to raise output, he said.

Argentina’s jobless rate will fall to a 13-year low of 9 percent by yearend, according to Aldo Abram, an economist with Exante SA research firm in Buenos Aires. The rate has dropped from 20.8 percent at the end of 2002, when the economy began to pull out of its worst recession on record following a government debt default and currency devaluation.

The devaluation, which cut costs in dollar terms, led companies to boost output for sales abroad. Exports have risen for the past three years, climbing to a record high $40 billion in 2005 from $26 billion in 2002.

The Argentine unit of Toyota, the world’s largest automaker by market value, doubled its staff last year to 1,700 and hired 700 more workers in January to increase production of its Hilux model to 65,000 units per year from 45,000. Toyota exports 70 percent of its locally-made cars.

Rate of Growth

Argentina’s economy grew more than 8 percent in each of the past three years and is slated to expand 7.5 percent this year, according to a central bank survey of 55 analysts released May 5.

Still, economists such as Jose Luis Espert, who runs a research firm in Buenos Aires called Espert & Asoc., said the prospects for continued job growth are limited.

“The problem is the rate of job creation is falling as numerous salary increases granted by the government have reduced much of the competitiveness of Argentine workers,” Espert said in a telephone interview. “The government increased salaries 40 percent by decree in the past two years.”

José Luis Espert

José Luis Espert

Doctor en Economía

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