Thursday, April 18, 2024

ECONOMY | 21-02-2024 13:13

Milei caps minimum wage rise at 30% amid soaring inflation

La Libertad Avanza leader backtracks on vow not to set minimum wage unilaterally; 30% hike over next two months for low-paid workers; Unions and employers fail to reach agreement.

President Javier Milei’s government has capped the increase of Argentina’s minimum wage at 30 percent for the February-March period.

Inflation is running at more than 250 percent per annum in the troubled nation, with prices rising more than 20 percent last month.

"It has not been possible for the parties [involved] to agree during discussions for the minimum wage," said Presidential Spokesperson Manuel Adorni on Tuesday.

No agreement was reached during a meeting last Thursday of the Consejo del Salario Mínimo (Minimum Wage Council), which is made up of the government, business chambers and trade unions.

The opposition-aligned CGT, Argentina's largest labour grouping, called for an 85 percent increase and was backed in its demand by the CTA union.

In these circumstances, "the government must arbitrate between the parties and set a minimum wage" unilaterally, added Adorni.

A resolution confirming the move was published Wednesday in the Official Gazette.

President Milei has previously warned that he would not move to establish a new level.

"I don't believe that a politician can define a price by hand. I'm not even going to issue a decree setting a price," Milei declared last Friday.

The CGT accused the government of derailing the wage council and  "breaking a long tradition of tripartite social dialogue."

The new hike lifts the minimum wage to 180,000 pesos for February (US$204 at the official exchange rate), which represents a 15 percent increase over the current 156,000 pesos. By March, it will rise to 202,800 pesos for March (US$230).

Since taking office last December, Milei has overseen a 50 percent devaluation of the peso, stripped away price controls and authorised large hikes for public transport fares, fuel and utilities such as gas and electricity, which will continue in the coming months as subsidies are removed.

Consumer prices rose 20.6 percent last month and year-on-year inflation is now running at 254.2 percent. The price of the basic food basket for a family of four is now 285,561 pesos (US$324.50), according to official data. 

The wage adjustment comes at a time of increasing crisis in Argentina. Poverty affects 57 percent of the population, according to a new study by the Social Debt Observatory of Catholic University of Argentina (UCA) – the highest rate recorded by the private body in 22 years.

Labour and social unrest is picking up. Rail-workers staged a national strike on Wednesday, while healthcare professionals are planning the same on Thursday. Four teachers’ unions have announced walkouts next week to coincide with the beginning of the school year. 

Last week, Milei predicted a “rebound" in Argentina's economy is on the cards – but only after an even "tougher" time ahead in the next two months. 

"You're going to do a sort of 'V,' a first section falling, with the hardest moment around March-April, which is when you hit rock-bottom, and then you start to bounce back, and when you open the ‘cepo’ [currency controls in place since 2019], [and] the economy shoots forward," he argued. 

Argentina has a US$44.5-billion credit programme with the International Monetary Fund, which had collapsed under the previous government and was revived by Milei upon taking office.

"The IMF estimates that if we continue to do this, we can clean up the Central Bank's balance sheet and open the cepo in the middle of the year," revealed Milei, who this week reaffirmed that his promise to dollarise Argentina’s economy is "ever closer" to becoming a reality.



related news


More in (in spanish)