Argentina Raises Minimum Wage by Decree for the Fourth Time
The Argentine government has increased the minimum wage by decree for the fourth time since President Javier Milei took office. This decision came after talks with business and union leaders failed to reach an agreement. The new minimum wage will be 234,315 pesos per month for full-time workers, which is around US$260 at the official exchange rate. This change will take effect on July 1.
This new wage is a 34% increase from the previous minimum wage of 175,000 pesos, which had been in place since February. The decision was officially published in the Official Gazette on Thursday, after a meeting of the Minimum Wage Council on Wednesday ended without consensus.
Why Was the Wage Raised by Decree?
The Minimum Wage Council is made up of representatives from the government, business chambers, and labor unions. Their job is to set the minimum wage through negotiation. However, since President Javier Milei took office in December 2023, the government has often used decrees to set the wage because talks have repeatedly stalled.
Labor Minister Julio Cordero explained that the increase was needed to "protect the purchasing power of workers" as inflation in Argentina has soared. Inflation has now exceeded 270% year-on-year. In a statement, Cordero said, "We are committed to ensuring that the minimum wage keeps pace with the cost of living."
The government also announced that the new minimum wage would apply retroactively to July 1. Officials said they will keep monitoring the economy to decide on future changes to the wage.
Reactions from Unions and Businesses
The CGT, which is Argentina’s largest labor union federation, said the increase is not enough. The union argued that the new wage does not match the rising cost of basic goods and services. In a statement, the CGT said, "This adjustment is far below what workers need to cover their basic needs."
On the other hand, business groups are worried about the impact of higher labor costs, especially for small and medium-sized businesses. Many of these companies are already struggling because of a long-lasting recession.
Why the Minimum Wage Matters
The minimum wage in Argentina is important because it is used as a reference for several social benefits. These include unemployment insurance and some welfare programs. When the minimum wage goes up, it can affect how much people receive from these programs.
The government’s repeated use of decrees to set the wage has drawn criticism from both unions and opposition lawmakers. They accuse the government of not following the usual process of collective bargaining, where all sides work together to reach an agreement.
Argentina’s Ongoing Economic Crisis
This latest wage increase comes at a difficult time for Argentina. The country is facing a severe economic crisis, which includes:
- Very high inflation (over 270% year-on-year)
- Rising poverty levels
- A sharp drop in economic activity
The Milei administration has put in place several austerity measures and market-friendly reforms to try to stabilize the economy. However, these changes have also led to many protests and strikes across the country.
What Happens Next?
The government said it will call the Minimum Wage Council to meet again in September. At that time, they will review the wage level again, depending on how the economy is doing.
For now, the new minimum wage of 234,315 pesos will be in place starting July 1. The government says it will keep watching economic conditions and make more changes if needed.