The Vaca Muerta boom has a job creation problem

One of the most significant economic developments of the Milei presidency has been the exponential growth of the unconventional oil fields in Vaca Muerta, Neuquén. The data is compelling, particularly in the oil sector.  Activity in the sector grew 16.2% year-over-year during the first quarter of 2026, according to the latest Industrial and Mining Production Index (IPIM) from the INDEC statistics institute. The data also shows that exports grew by 9.3% in 2025 compared to 2024, totaling US$87 billion. Energy exports were the fourth-largest category — at US$11.1 billion — and accounted for 12.7% of the total. The Energy Institute at Austral University further noted that 878 million oil barrels per day were produced in March alone. The figure represents a 15.8% year-over-year increase, “consolidating the expansion trend driven primarily by unconventional developments.” “This sector showed a unique trend: export volumes grew by a significant 28.5% [year-over-year], reflecting the expansion of domestic energy production from Vaca Muerta,” added Austral University.  This boom has countless benefits. For one, it is diversifying Argentina’s exports, which has been historically tied to the fortunes of agricultural products. It is also improving the trade balance of an economy in need of U.S. dollars to bolster the Central Bank’s reserves and stabilize the exchange rate.  However, there is a problem that seems counterintuitive in one of the most dynamic sectors of the Argentine economy: the number of workers in the industry is falling.  Trouble in paradise? Based on data from January 2026, employment in the mining and oil sectors is nearly 10% below the levels seen just before Milei took office in November 2023.  In total, there are 8,071 fewer formal jobs. “The issue with oil sector employment is that the jobs lost in the San Jorge River basin—the city of Comodoro Rivadavia — are not being offset by Vaca Muerta. That’s why the net balance is negative,” Daniel Schteingart, a productive development expert at the Fundar think tank, told the Herald.  “Ultimately, average productivity in the oil and gas sector is rising because you have more production with fewer employees, but what’s striking is that it isn’t even creating jobs.” The problem lies in the shift that Vaca Muerta has brought about for traditional oil sector employment. A few months after taking the helm of YPF in 2024, the Milei administration announced the Andes Project, a plan to streamline and optimize its assets that represents the first step of the so-called 4×4 Plan.  The initiative proposes to quadruple the company’s value over a four-year period and reach exports of $30 billion by 2031. Project Andes involves the massive abandonment of low-productivity “mature” fields located in the Patagonian region and Mendoza. The goal was to have YPF concentrate its investments in the most productive unconventional oil and gas fields of Vaca Muerta. The San Jorge basin, located in the Patagonian province of Chubut, was one of the hardest-hit regions. “Its hydrocarbon production fell by 33% for gas and 20% for oil between 2017 and 2025. The impact is palpable on direct and indirect employment, as well as duties provinces charge,” Fundar warned in a recent report.  According to estimates by private consulting firm Politikón Chaco based on the most recent available official data, private-sector wage employment in Chubut fell by 5.9% between the government’s inauguration in late 2023 and January 2026. Can Vaca Muerta reverse the trend? According to Schteingart, the trend of declining employment could “possibly be reversed because the situation in San Jorge will eventually stop having such a significant negative impact, and Vaca Muerta will begin to offset it.” What must be taken into account, the analyst added, is the low level of job creation in those industries.  Schteingart explained that the direct jobs generated by oil and mining amount to approximately 90,000 positions.  “That’s less than 1% of total employment,” he stated, adding that this is because they are capital-intensive activities. This means that “they contribute significantly to GDP and exports, but relatively little to employment.” “They can give you dollars and tax revenue, but those sectors aren’t going to solve the employment problem,” he concluded.  According to the latest official data, Argentina’s unemployment rate was 7.5% in the fourth quarter of 2025, up from 6.4% for the same period in 2024 and 2023.