Economic Storm Clouds Brewing for Argentina?

[Gringoboy]

I feel for you there Citygirl. That must really irk.
I'm going to stick it out for as long as I possibly can running my business solo.

 

[earlyretirement]

I don't like to join the cheap Bsas v the rest of the world debates so I'll stand aside on that one but in terms of affordability, as an employer you think first and foremost about the cost of doing business and the total cost of staff if you're running a services company as we are. It was hard to miss a good opportunity in 2001 when the same highly qualified staff in 2000 were on "offer" for a 3rd of the price. Having just hired 2 PMs in Spain we're now seeing the cost of a qualified resource here versus Bsas as still about 20% more expensive than Bsas but the long term potential and stability as greater. Maybe the 20% is worth it for peace of mind and not to have the nightmare 25% -30%- salary increase discussions and general sense of despair...

Yeah but you also have to factor in your equation the fact that running a business in Argentina is a much bigger hassle vs. most countries. I'm not sure about Spain as I've never owned a company there but I can't imagine it can be worse than Argentina.

Yes, salaries might be less in Argentina but the past several years by law they have forced you to pay employees on average about 27% more per year. So salaries can double in 3 years or even less! Plus you have horrible horrible pro employee laws on the books. So even if you fire employees for cause you typically end up paying them a severance. You have to factor that into the equation. The laws on the books for owning a company aren't efficient.

Even if you fire an employee for cause, they get a scum bag lawyer and if you fight it, you have tons of legal bills fighting them. And in the end, the judge usually finds some excuse for the employee to win. So it's typically cheaper to just settle and give them something. But you have to add all these effective costs into the equation. You can't just say, "salaries are 20% lower vs. X country" because you also have to factor into the mix all the BS pro-employee laws in place.

I'd say as an employer if you can outsource and not be forced to officially hire employees it's the best thing. But once you hire them and they are on the books for more than 6 months..... it's not always an "asset" having the employees but a huge eventual "liability".

 

[earlyretirement]

And the ability to accurately forecast out for more than 3 months in advance

I posted a while back - we stopped adding projects and HC in Arg b/c of the ridiculous costs of doing business here.

My latest - I had an employee that I had to let go. He wasn't performing on one project, and client wanted him off the project I offered him a transfer to the other project b/c he wasn't bad, just wasn't a good fit at the same salary. he refused so we had to terminate him even though really, he defacto quit b/c he wouldn't accept the transfer (again, same salary, same level of responsiblity, same title even).
Total cost of pay out: about 3.5 months worth of salary.

I had an employee quit. The law here says that an employee has to give 30 days notice. The employee gave no notice. Puts me in a terrible position since there was no work handover, client is upset, I'm upset, directly impacted my project.
Things I can do even though the employee broke the law and handled it completely unethically: NOTHING. Zero. And I still have to pay out the employee.

You have to be a masochist to have employees here. It's the sad truth.

Citygirl! Exactly! Those kinds of things I ran into all the time. You and I can compare notes sometimes and have some laughs. The typical expat on these boards I'm sure doesn't own a big company or have many employees. I do realize several do but the majority probably don't.

When you do everything "white" and legal it makes things much more difficult and typically no matter what...the employee always wins. You'd think the fact you are doing everything white would protect you as the employer but it simply doesn't. That's why few companies have an incentive to do everything in white.

The system there is really horribly inefficient. And sadly probably always will be.

 

[citygirl]

Yes, salaries might be less in Argentina but the past several years by law they have forced you to pay employees on average about 27% more per year. So salaries can double in 3 years or even less!

That is accurate. Of the employees that started with me 2.5 years ago, they are earning approximately 100% more. It's unbelievable.

 

[fifs2]

That is accurate. Of the employees that started with me 2.5 years ago, they are earning approximately 100% more. It's unbelievable.

Yup I hear the word convenio and I run a mile from those employees in particular..

 

[fifs2]

I had an employee quit. The law here says that an employee has to give 30 days notice. The employee gave no notice. Puts me in a terrible position since there was no work handover, client is upset, I'm upset, directly impacted my project.
Things I can do even though the employee broke the law and handled it completely unethically: NOTHING. Zero. And I still have to pay out the employee.

You have to be a masochist to have employees here. It's the sad truth.[/quote]


CityGirl, early retirement can we form a club for weeping on each other's shoulder and sharing stories?!! Yup Citygirl just had same situation last Friday..Pm quit one of our biggest accounts and gave us 3 days notice....3! This US customer just doesn't get Argentine practices so we fudged the issue and advised them she had to leave for "personal reasons"..she flipped at that and wrote 3 long diatribes to HR, the Snr managers, me..about how it was her right to tell the customer why she was leaving (she was leaving acc. to her because she wasn't recognised (she was promoted 3 months ago): real reason she was leaving: us: she was jealous of her Team Lead and didn't take feedback well..). This is an employee with 2 years work experience in her entire life. The sense of entitlement and lunacy is out of control....and is a crying shame for the many shining stars in the workplace who must watch these guys "benefit" financially and wonder why on earth bother to do the right thing....

 

[GS_Dirtboy]

And if you're speaking of buying...... Buenos Aires is more expensive to buy vs. most cities in the USA with the exception of New York City and a few others. But the cost per sq. foot is very expensive in Buenos Aires compared to the USA now. I sold a 2 bedroom apartment in Recoleta for $250,000 recently. You can buy an entire house in most cities in the USA for that.

Yes, that's probably true. If anyone wants to check the real estate prices in any city in the USA here is a great source: Altos Research

What I was getting at is whether you are using a straightforward $US to $US comparison using the exchange rate.

Or, if you were using some sort of proxy for Cost of Living and Salary Parity.

Thanks!

 

[earlyretirement]

Yes, that's probably true. If anyone wants to check the real estate prices in any city in the USA here is a great source: Altos Research

What I was getting at is whether you are using a straightforward $US to $US comparison using the exchange rate.

Or, if you were using some sort of proxy for Cost of Living and Salary Parity.

Thanks!

Yes, I was using a straight forward US $ to US$ comparison. However, things certainly will help now with the 6 pesos to $1 US rate. The peso is rapidly deteriorating very quickly compared to the official rate so that certainly will help but inflation should keep going up probably 25% to 30% a year.

Just on a true cost of living standpoint, by most measures, Buenos Aires isn't any bargain anymore and you have the "hassle factor" of many things there. Again, I love the country and always will. But I always believe in being honest with situations of how things are there.

Just like when the banks in the USA were giving anyone with a heartbeat a mortgage before and prices got out of control.....I moved to Argentina. Now as things get wacky in Argentina and real estate gets cheap in the USA... I move to the USA. You have to move with the cycles if you can.

 

[fifs2]

You have to move with the cycles if you can.[/quote]

My very best boss always warned me about "golden handcuffs"...the need to flexible in all parts of life is vital and never more so in terms of the job market...

 

[citygirl]

Sorry for sidetrack but yes, you, earlyretirement and I should have a virtual sobfest and compare stories

Back to the discussion, I just got back from a work trip to China and it was all over the Hong Kong news about the economic slowdown that is happening in China.

Doesn't bode well for Argentina.