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Analysis Christmas bonuses in trouble in Argentina

By DANIEL DROSDOFF UPI Senior Editor

BUENOS AIRES, Argentina -- One of the most sacred tenets of the ruling Peronist Party, the year-end Christmas bonus, may be terminated by politicians who onced defended it as untouchable.

Argentina simply ran out of money and can no longer afford to pay public employees extra, at least all at the same time.

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The Christmas bonus, which required all private employers and state agencies to pay an additional month's wages at the end of the year, was launched by decree during a military government in 1946 just before presidential elections of that year.

The popular measure gave nice push to the government candidate, army officer Juan Domingo Peron, who won the election by a landslide and later founded the party now named after himself.

For decades the bonus was a fixture in Argentina. To oppose it was the equivalent of opposing religion or motherhood.

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In 1984, the government of Raul Alfonsin eased the impact on industrial and state cash outlays of the Christmas bonus by cutting it into two sections, one, equivalent to a half month's pay, to be paid at Christmas, and the other in June.

On Monday night Economy Minister Domingo Cavallo announced that the bonus would be nearly dismanteled altogether by stretching out payments through the year.

One out of twelve workers would get a half-month bonus every month, instead of all the workers getting a half-month extra at Christmas and in June.

For practical purposes, according to analysts in the Economy Ministry, the stretch-out plan means that the Argentine government will have to pay only $60 million in bonuses in June compared with $400 million.

Cavallo thinly disguised the budget-retrenchment measure by saying 'the workers will benefit because their bonuses will not set off price hikes.'

That line was not accepted by Saul Ubaldini, leader of one of the two General Labor Confederations in Argentina, who said the Cavallo plan was 'all the more an outrage because it comes just before workers were expecting their bonuses.'

Vice President Eduardo Duhalde acknowledged Wednesday that the dismantling of the bonuses will create 'political damage,' but he added, 'We have to do what we have to do,' an admission of the budget problems.

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President Carlos Menem's Peronist Party is expected to pick up support from conservatives in Congress in what may be a tight battle for quick adoption, vulnerable to delaying tactics by the oppositon.

The Peronists, whose party was virtually born along with the bonus, apparently are willing to risk an voter backlash on that issue in congressional elections in August, September and October in exchange for an opportunity to help Cavallo's anti-inflation plan and present themselves as the party of price stability.

Ironically, the opposition Radical Civic Union, which was lukewarm to the bonus when first introduced just prior to the 1946 election that propelled Peron to power, now say they favor it as a workers' right.

Raul Baglini, a Radical Party leader from Mendoza, said the Peronists have 'closed a circle' by abandoning the once-sacred bonuses.

Before 1989, when Menem took office, the Peronists traditionally supported state ownership of basic industries and utilities.

Now the party has turned that position on its head and backs privatization ofthe state companies. It already has sold the telephone company and Aerolineas Argentinas to overseas investors. Now the party must also shed the bonuses.

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