Government unilaterally raises minimum wage by 35%

The Government says it will boost the minimum wage by 35 percent over the next three months, following the sharp fall in the peso.

The announcement comes after a meeting of the Salary Council produced no agreement between the parties in involved.

Wages will be raised in three installments, according to a decree published in the Official Gazette on Tuesday. Wages will rise from the current level of 12,500 pesos (US$215) to a final amount of 16,875 pesos per month after the three payments.

The level of increase was set unilaterally by the Government, after meetings failed to produce an agreement between government officials, businessmen and trade union leaders. 

Business representatives had proposed an adjustment of 25 percent, but trade unionists had asked for it to be risen to 31,934 pesos, the same value as the basic food basket of goods and services measured by the INDEC national statistics bureau. 

The Executive stressed in its announcement that the minimum wage was "one of the fundamental social rights."

The move comes after the peso has dropped by 20 percent against the dollar since the August 11 PASO primaries. Following the slump, the Mauricio Macri administration announced a series of measures aimed at softening the blow for Argentines, including tax breaks, bonuses and price freezes. The currency collapse is likely to further fuel inflation, which is already running at over 50 percent a year.

On Sunday the government announced capital controls in an effort to contain the country’s escalating financial crisis. Argentina’s Eurobonds fell, while the peso strengthened in the wake of the announcement.

The International Monetary Fund, which is currently analyzing whether to pay out the next tranche of its US$56-billion loan to the country, said that it is studying the details of the measures.

– TIMES/BLOOMBERG