POLICY IMPLICATIONS FOR “LAS EMPRESAS RECUPERADAS POR SUS TRABAJADORES” IN ARGENTINA

Abstract

Following the Argentine Great Depression in the late 1990’s and early 2000’s, many firms went bankrupt. In some of these cases, firm owners had withheld wages from employees and stolen equipment before declaring bankruptcy. Faced with no alternatives for employment, some workers united to form a cooperative and continued production without the owner, including during bankruptcy proceedings, illegally occupying the factory in order to continue working. A movement of “recovered businesses” or Empresas Recuperadas por sus Trabajadores (ERTs) began in response. These recovered factories represent a challenge for the Argentine government to respond to an issue of labor relations, private property rights, and bankruptcy protection policy. After considering the literature on institutions and political economy with an emphasis on institutional development, this paper attempts to describe the landscape of firms in this precarious situation and analyze public policy response to the movement and the challenges these workers face. Using data from a comprehensive survey of many ERTs in Argentina in 2010 and comparing previously unconsidered variables, I examine how ERTs have evolved over time and how their needs have changed. I conclude that a fragmented set of policies and systematic disagreement among different governmental entities responsible for regulating these firms leads to social and economic instability. Insofar as the movement represents a novel policy response to issues of unemployment, I suggest that the implementation and support of worker-reclaimed factories is sensible when certain conditions are met. They may be effective responses to lack of institutional monitoring of bankruptcy fraud cases, labor contract violations and exploitation, and inefficient liquidations. Furthermore, ERTs maybe complement government funded unemployment protection plans and community initiatives.