Argentine Workers Take Over
by Andres Gaudin
Dollars and Sense magazine,
[Translated from Spanish
by Alejandro Reuss]
It started timidly at first, in the mid-1990s,
with workers occupying factories abandoned by their owners and
getting them up and running again. But the phenomenon took off
in December 2001, when the Argentinean economic crisis hit and
massive street protests forced the country's president, Fernando
de la Rua, from office. A decade of neoliberal policies had culminated
in four years of recession, leaving thousands of domestically
owned small and medium-sized businesses struggling or abandoned.
Since 2001, in the face of growing unemployment and the state's
failure to foresee or address the crisis, thousands of workers
have restarted abandoned factories themselves. By taking over
plant and equipment, these workers have put the right to work
above employers' property rights, and have made some think that
Argentina is at the beginning of a revolutionary process. While
that is probably not the case, the takeovers do represent a remarkable
form of action by Argentinean workers under conditions of harsh
"We are a new social actor; we're
creating a new consensus," reads the constitution of the
National Movement of Recovered Enterprises (known by its Spanish
In the face of the failure of company
management, we felt we had to replace individual effort with collective
effort, as the crisis demanded. By raising the flag of self-management,
we were able to go from a situation of social conflict to a productive
consensus. In l955, we [workers] had a 51 % share of the national
income; now we get just 17%. We're using forms of democratic organization
like workers' cooperatives to fight for a more just distribution.
With this declaration, the workers have
given preliminary answers to the major questions about the country's
economic future: How should income and wealth be distributed?
How should workers organize themselves at the worksite and in
the larger society? And how should industry itself be organized?
THE SHAPE OF THE CRISIS
As of October 2003, about 140 factories
had been or were in the process of being "recovered,"
and about 12,000 workers had used this strategy to keep their
jobs, according to a study by the University of Buenos Aires.
Argentina's factory recoveries are taking place amid a catastrophe
of unemployment, off-the-books work, wage cuts, and poverty. Workers
at companies abandoned by their owners see factory occupations
and self-management as the only way to avoid unemployment, exclusion,
. In October 2002, official figures showed
17.8% unemployed in an "economically active" population
of 13.8 million people. In truth, about 21.4% are unemployed,
since in the official figures, people receiving $50 a month from
the government (about $1.70 a day to cover basic necessities for
a four-person family) count as employed.
* Almost 4 million people (equivalent
to 45.1 % of the employed population) work off the books; they
are workers without being officially declared as such. This means
they don't have any rights as workers or any social insurance.
They do not get paid vacations, retirement pensions, or disability
benefits. They have no unemployment insurance, worker's compensation,
or health coverage. Off-the-books work has been on the rise in
Argentina since the so-called "tequila crisis," Mexico's
devaluation of its currency in 1995, which depressed economies
throughout Latin America. In May 2003, off-the-books workers represented
45% of the Argentinean labor force. As shocking as this national
average is, in nine of the country's 23 provinces, off-the-books
work exceeds 50% of total employment, topping out at 58.5% in
the northeastern province of Corrientes.
* According to the International Labor
Organization, the Argentinean working day is one of the longest
in the Western world, and wages are much lower than those in other
Western countries. While workers in the global North work between
1,300 hours per year (in Norway) and 1,800 hours per year (in
the United States), Argentinean workers average about 2,000 hours
per year. The average wage of an Argentinean worker, however,
is just 10% to 20% that of a European or North American worker,
and has about 30% the purchasing power.
* Measured in terms of income, 54.7% of
Argentina's population falls below the official poverty line,
and over a quarter of those below the poverty line are considered
extremely poor or "indigent." With a population of 36.2
million people, this means 17.8 million people are poor, and 4.7
million are indigent. The number of indigent people reaches 5.5
million-14.3% of the country's households- when measured in terms
of housing quality, access to utilities, sanitation, and school
attendance. Among Argentinean households, 50% do not have running
water, 60% have no access to medicine, and 71 % lack phone service.
This is the context in which Argentinean
workers have occupied factories. The workers involved, it should
be clear, have not done so from ideological motives, but as a
way out of even more severe poverty. But their strategy differs
from traditional union struggles, and has put workers in new and
unfamiliar situations for which few have sufficient training:
they are self-managing bankrupt enterprises, trying to overcome
shortages of working capital and other necessities, and confronting
a poor economic climate and unfavorable legal norms. Workers who
have taken over factories have done so knowing that they would
face tremendous obstacles.
Factory recoveries have usually begun
when enterprises have been sued by their creditors, the Department
of Justice has declared them bankrupt, or their owners have simply
abandoned the plants because they can not pay their debts. When
the workers have taken over the plants, the Department of Justice
has recognized their right to operate them. While the old owners
have at that point lost power over the plants' operation, they
have retained ownership. The workers in recovered factories do
not own the premises and machinery, but simply have legal authorization
to use them. In the few recovered firms where this legal process
has not taken place, the workers have rented plant and equipment
from the old owners for a fixed monthly sum. In a few other cases
in and around Buenos Aires, the government has expropriated factories
and turned them over to the workers, who have two years to pay
for the machinery.
That there is a legal process for factory
recoveries is significant. Attorney Luis Caro, who advises recovered
firms, notes, "We have been able to get many judges to agree
that when the destiny of the society is in the balance, private
property should come after the right to work."
All recovered firms are managed by the
workers themselves, and within the factories, all workers have
the same rights and responsibilities, though some may do administrative
work, others work on the production line, and still others may
do less-skilled work. Everyone receives the same monthly salary,
which a general assembly of workers sets based on the firm's net
revenues. (This means that salaries vary from month to month,
depending on the firm's performance. At most companies, salaries
fall between $130 and $170 per month.) So far, the recovered firms
have been able to pay wages, but have not shown profits. This
means they have not been able to buy new equipment or modernize
In most cases, the workers are given two
years to pay back creditors. "For us, those two years are
fundamental, because they allow us to keep working-to avoid unemployment-and
study the viability and profitability of the enterprise,"
explains Caro. "It's a reasonable time frame for figuring
out at what point and in what form it may be possible to make
an offer of repayment to creditors."
During the first two years, recovered
factories face a series of difficulties. First, workers need to
rebuild the confidence of suppliers and customers swindled by
the old owners. They also need to acquire management and marketing
expertise, since in many cases, managers leave along with the
owners. Gabriela Dorrego, a management consultant, observes that
recovered enterprises often have to contract with outside agents
to put their products on the market. To help workers gain accounting,
legal, and marketing skills, the MNER has signed an agreement
for free advice with the Assembly of Small and Medium Businesses
(APYME). The public National Institute of Social Economics (INES)
also offers training. Besides needing management expertise, many
factories lack working capital. Thirty-two percent are located
in factory complexes over 30 years old, using obsolete technology
and equipment. Many must make arrangements for other firms to
supply their raw materials and market their finished product.
Finally, according to Dorrego, recovered enterprises have trouble
investing enough to develop and compete. Together, these challenges
prevent the factories from being as productive as they could be.
Osvaldo Porro, manager of the recovered meatpacking plant Yaguane,
says that it took two years for his factory to break even on a
The recovered sector, although socially
significant, represents a tiny portion of the Argentinean economy.
More than 12,000 workers are employed in the recovered sector,
but measured in relation to an economically active population
of 13.7 million, recovered enterprises employ scarcely 0.08% of
the labor force.
The factories vary widely in size: 13
% of recovered enterprises surveyed in the UBA study employ 10
or fewer workers; 23 % employ between 11 and 20; 40%, between
21 and 50; and 24%, more than 50 workers. Of the roughly 140 enterprises
under workers' self-management, about half are in the metalworking
sector, followed by the printing and food industries. During 2003,
some service enterprises-cleaning services, hotels, and schools-also
joined the ranks.
From the start, managers of recovered
enterprises understood the need for their factories to complement
each other-whether by jointly purchasing raw materials and other
inputs to secure better prices, or by producing inputs for one
another to increase production and ensure lower prices. Nonetheless,
today, recovered enterprises have not developed economic relations
with one another for reasons that the workers themselves are unable
to explain. But 55% of recovered enterprises' output is used as
inputs by other businesses (41 % is destined for consumers), which
has led to some research on the ways that recovered enterprises
might complement each other and increase the overall size of the
Despite the obstacles they face, the recovered
factories are able to pay wages and meet their variable costs-raw
materials, energy, and so on. None of them, however, is working
at full capacity, and their development is limited by a lack of
capital, by an inability to make technological changes, and by
legal difficulties in accessing export markets. For the time being,
they are just trying to maintain the job base. Nonetheless, the
recovered enterprises are not in danger of failing; and if any
of them do fail, it will not be for the workers' lack of ability,
but because of potential legal decisions that could hand the factories
and machinery back to the failed owners.
Dorrego maintains that the recovered factories
have done more than preserve jobs-itself an accomplishment. They
create the possibility for workers to learn about the production
process in sectors currently growing due to import substitution
or competitiveness on the world market. They also
break down hierarchical labor relations
and establish "horizontal" decision-making structures:
recovered factories hold assemblies where all workers can contribute
to decisions. Most importantly, argues Dorrego, they have gradually
involved state, provincial, and national governments in the recovery
project, and have promoted collaboration among different people
and organizations-both within the enterprises themselves, and
with professional employees, universities, civil society organizations,
and state institutions.
COOPERATION, WORKERS' CONTROL, AND CLASS
Knowing that workers do not mean to bring
about revolutionary change, but simply aim to ensure steady employment
for themselves, the state (ambiguously) and employers' organizations
(with perfect clarity) have made their own proposals for the recovered
factories. Their idea is to limit the workers' claim to one of
establishing cooperatives to maintain employment. A claim of this
scope does not challenge the private property system or employers'
power in the economy; it assimilates factory recoveries into capitalism.
As part of their effort to defuse the threat of recovery initiatives,
employers and the state want to see that the factories-if they
must stay in the hands of workers-exist in forms similar to regular
commercial enterprises, whether as nationalized firms controlled
by bureaucrats, or as cooperatives that may redistribute income
but do not redistribute knowledge and power within the workplace.
The state has also tried to present recovered enterprises as part
of its own labor policy, and to show off the peacefulness and
legality of the recoveries.
These strategies aim to prevent the factory
recoveries from rekindling a debate that surged in Argentina during
the 1970s about the best strategy for working-class organization
and resistance under capitalism. On one side were the promoters
of a politics of workers' control, and on the other side were
the defenders of cooperativism. Each proposed a different way
of dealing with the fact that under capitalism, workers are formally
deprived of understanding and control of the production process,
the product of labor, and the proceeds from the sale of this product.
For Marxist economist Eduardo Lucita,
"Underlying the debate between cooperativism and workers'
control is the opposition between a rupture with the logic of
capital and a reintegration with it." Under the cooperative
form of organization, which supposes voluntary association and
self-management, the workers gain a source of work, a more egalitarian
distribution of income, and productive gains that come from the
logic of self-management.
Supporters of cooperativism typically
point to two models to emulate: the Argentinean factory Zanello
and the Mondragon cooperatives in the Basque region of Spain.
Zanello, which manufactures tractors, is a single factory. When
its Italian owners-attracted to the country in the 1990s by the
neoliberal promise of low wages and labor "flexibility"-
decided to abandon it, the workers were able to come to an agreement
with several interested parties. They formed a corporation in
which 33% of the factory remained in the hands of the workers,
33% of the power went to the firms that market the tractors and
provide the capital, 33% went to the top technical personnel of
the factory, and the remaining 1% went to the City of Villa Maria,
where Zanello is headquartered. The organizational model chosen,
the corporation, is one of the principal forms of the capitalist
firm. Mondragon is a utopian example taken as a model by the MNER,
and workers at recovered factories often refer hopefully to it.
Almost 50 years old, Mondragon is now the largest business group
in the Basque region and the seventh largest in all of Spain.
It includes more than 150 cooperative enterprises and 60,000 workers,
and has over 8 billion euros in working capital. Mondragon may
be the most successful example of cooperative enterprise within
a capitalist economy.
According to Lucita, it is clear that
these conditions are infinitely better than the current ones.
Nonetheless, cooperatives cannot escape the logic of market competition,
which puts wage levels, conditions of work, and productivity in
play. Pay, work time, and the pace of work all affect the final
cost of the product, and this is fundamental to capitalist competition.
On the other hand, workers' control, which
also assumes voluntary association and autonomy, allows the enterprise
to remain under capitalist ownership (private or state), while
the workers, through organized struggle against the capitalists,
assume control of the enterprise's production process and financial
Lucita notes that the Argentinean situation
has some unusual features: given the employers' abandonment of
factories and the state's failure to assume responsibility for
them, there are enterprises now functioning under a system of
workers' control where there is no capitalist for workers to assert
Today, Argentinean workers' autonomous
action of resisting, occupying, producing, and marketing has challenged
capital's monopoly over knowledge and authority, and the debate
over cooperativism versus workers' control has reemerged, though
more among advanced sectors of the workers' movement than among
workers in recovered factories.
CRISIS AND CONSCIOUSNESS
From its beginnings, the MNER borrowed
the slogan "To occupy, to resist, to produce" from Brazil's
Landless Workers' Movement. This slogan, the MNER says, summarizes
the stages that the workers pass through: not only maintaining
their source of employment, but also creating an enriching experience
of self-management and cooperation, and ultimately assuming an
active role in the reconstruction of a country and a society razed
Workers in recovered factories speak proudly,
but not ideologically, of having been able to restart their factories
and keep their jobs after the flight of the owners. According
to Alicia Esquivel, an administrative worker at CIS, a bus body
shop, "When we occupied the plant, there wasn't much to think
about: either we acted to run things for ourselves, without an
employer to solve all the problems, or we became unemployed for
good, in a country where once you have lost your job you don't
get it back. Thank God we didn't make a mistake." Her description,
full of emotion and lacking in ideological definition, is common
among workers in recovered factories.
The UBA study confirms that the take-overs
have not produced political or ideological changes among participants.
The psychologists and sociologists who took part observed a notable
increase in workers' self-esteem and a broad development of solidarity,
but have found that these changes did not move workers toward
a larger anticapitalist vision. "In general, these workers
do not seem to be conscious that they have broken with one of
the basic premises of capitalism," say the UBA academics,
"so they do not move beyond the restarting of the factory,
do not stop to consider what would be the best organizational
form to guarantee the survival of the enterprise or for this experience
to embrace new groups of workers."
The directors of some of the recovered
enterprises have tried to tie their destiny to that of the workers'
movement as a whole, but so far this has not borne fruit. In September
2002, when the Central Union of Argentinean Workers held its congress,
a group from the MNER presented a document linking the recovered
enterprises and the workers' movement, but the idea was not supported
by the mass of workers in recovered enterprises. Likewise, the
MNER has kept itself at the margins of the movement against the
Free Trade Area of the Americas (FTAA), so it has not developed
a relationship with what might be called the anticapitalist movement
For now, workers are winning the first
battles in the war for their jobs. But in making the workers take
the capitalist models of Zanello and Mondragon as their paradigms,
the employers are winning the ideological battle. What predominates
today in the recovered sector is workers' direct management. This
development reflects the nature of the crisis in Argentina: it
is not a revolutionary crisis, but it is one where the high level
of concentration of capital does not leave room for a reformist
way out of the impasse.
But even if the workers do not consciously
embrace the larger implications of their struggle, their autonomous
action-"occupying, resisting, producing"-calls into
question the capitalist monopoly of authority and knowledge. In
embryonic form, a new power is beginning to confront the powers
Andres Caudin is an Uruguayan journalist
based in Argentina, a correspondent of LatinAmerica Press and
other publications, and an advisor on international issues to
the Socialist Party legislative caucus.