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Argentina's New President Delivers Positive News to Labor Unions

Argentina's interim president met Wednesday with top union bosses to discuss the new Peronist administration's plan to create one million new jobs. Much to the unions' delight, the new president said he would reverse federal workers' 13 percent pay cut and convene the National Minimum Wage Council.

In a scene reminiscent of former Argentine president Juan Peron's time in office, Argentina's Interim President Adolfo Rodriguez Saa stood flanked by top union bosses Wednesday singing the Peronist anthem.

To loud cheering and applause, Mr. Rodriguez Saa told the General Labor Confederation's top leaders that he would look out for working class and poor Argentines.

For union boss Hugo Moyano, the head of the hardline labor union, having a Peronist president back in office was one battle won against neo-liberalism.

Mr. Moyano and other union bosses blame the free-market reforms that former president Carlos Menem, himself a Peronist, undertook in the early 1990s for the current economic situation. They would like to see a return to the 1950s when General Peron and his wife Evita elevated the working class to a higher economic level by promoting national industry through protectionist measures.

While Mr. Rodriguez Saa didn't say he would restrict imports, he did tell the union leaders he would convene the National Minimum Wage Council to study raising the minimum living wage.

The president also said he would reverse the 13 percent salary cut the previous administration implemented in July. The pay cut, which affected all federal workers' salaries and pensions, was part of former Economy Minister Domingo Cavallo's plan to slash government spending.

However, the move angered middle class civil servants, many of whom had voted for then President Fernando de la Rua. Argentina's middle class has been especially hard hit by the 43-month long recession and it was middle class anger in the form of spontaneous protests a week ago that essentially brought down Mr. de la Rua.

Mr. Rodriguez Saa, who earlier this week said Argentina would suspend debt payments and default on its $132 billion public debt, will issue a new "third currency" in January to pay the higher salaries.

The "third currency" has been dubbed the argentino and will circulate along with the peso and U.S. dollar. The country's new Treasury Secretary Rodolfo Frigeri has said the Argentino will allow for an orderly exit from the decade old currency board that pegged the peso at 1-1 with the U.S. dollar while injecting much needed cash into the economy to spur an economic recovery.

Cash has become scarce in Argentina since a December 1 decree limited bank withdrawals to $250 per week. Argentine banks have offered only limited functions since December 21 when the Central Bank declared a bank holiday in the wake of looting and rioting.

However, Mr. Frigeri said late Wednesday that banks would operate normally Thursday although bank limits will remain in place until further notice to prevent a run on the banking sector.