BUENOS AIRES, Argentina (CN) — Argentina’s wage council approved a 26.6% increase in the minimum wage by June in an attempt to keep up with historic levels of inflation, despite trade unions criticizing the increase as enough for workers dealing with the soaring cost of living.
The staggered increase will lift the current minimum wage from $69,500 pesos ($335 dollars at the official rate) to $80,342 ($384) in April, $84,512 ($404) in May and $87,987 ($421) in June.
The current poverty line for a family of four is $177,000 pesos ($847), according to the country’s national statistics agency. It also calculated that the threshold for extreme poverty, defined as monthly income less than the price of the basic food basket, is $80,500 — the same level as the new minimum wage for April.
The current poverty rate in Argentina is 39.2%, with 8.1% of the population in extreme poverty. The figures are exacerbated when it comes to child poverty. According to the latest figures from UNICEF, two in three children in Argentina are either poor or deprived of basic human rights like access to education or adequate housing.
Inflation has hit Argentina hard. Annual inflation reached 102.5% in February, one of the highest levels in the world. Food and drink prices went up by almost 10% in February alone, deepening issues around food insecurity.
Argentina’s wage council, which approved the staggered increase in the minimum wage, is made up of government representatives, business leaders and trade unions. The council's role is to evaluate labor-related issues, salaries, working conditions, job creation initiatives and unemployment assistance.
The increase was approved by 30 votes in favor, one against, and one abstention. The vote against the wage increase came from Hugo Godoy, leader of the Autonomous CTA trade union.
“Once again, the government is offering an increase that is below inflation, leaving the poorest sectors of society unprotected,” said Godoy shortly after the announcement. “We reject it, and we will carry out industrial action.”
The Autonomous CTA has called a strike for April 12, demanding “universal income for all workers to end hunger and poverty” and for “a change in course in the government’s economic policy,” according to the trade union’s statement.
The council had heard that inflation for 2023 is likely to hit triple digits. “Any wage increase has to be well above the 116% increase that we have seen in the basic food basket in the last year,” the statement continued, calculating that, “The minimum wage should be $180,000 pesos ($861).”
Argentina’s labor market suffers from high levels of informal employment. Around 48% of the country’s labor force work in the informal sector; these workers slip through multiple safety nets such as minimum wage, social security and health care.
Wages for formal employees are in general much higher than the minimum wage. The medium wage for formal private sector jobs is around $142,000 ($679), according to the country’s labor ministry.
The abstention came from Hugo Yasky, leader of the CTA — the larger trade union from where the CTA Autonomous split. It is closely aligned with the current Vice President Cristina Fernández de Kirchner.
"The closing of the council did not live up to what we would have wished,” said Yasky at a CTA event, “which was to recover more of the minimum wage, because unfortunately, it lost 25% during the years of macrismo [former president Mauricio Macri] and another 20 approximately during the pandemic.”
In his speech, Yasky highlighted that "our proposal that the review be carried out in three months' time was incorporated” and that “we are going to discuss union action so that we can promote throughout the country the idea that wages maintain, at least, a few points above inflation. That is the objective.”
When compared to the rest of Latin America, Argentina had the lowest minimum wage after Venezuela before the increase. Based on nominal rates converted into U.S. dollars, the Argentine minimum wage was equivalent to just $189.
Mexico’s minimum wage would earn you $325. And in Costa Rica, the minimum wage would get you $603 a month — the highest in Latin America. These figures don't account for purchasing power, but they highlight the eroding effect that inflation is having on Argentina.
James Francis Whitehead reports for Courthouse News from Buenos Aires, Argentina.
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