Minimum wage increases approved by the Minimum Vital and Mobile Salary Council last week were published in the Official Bulletin today.
Paid in three monthly increases, the minimum salary will rise by 26.6% by June 1 compared with current levels, but economists say it is falling far behind Argentina’s racing inflation, which hit 102.5% in February.
On April 1, the minimum wage will rise to AR$80,342 (US$386.59 at the official exchange rate or US$213.45 at the MEP rate) and AR$401.71 per hour for day laborers. It will reach AR$87,987 monthly and AR$440 hourly by June 1.
In February, the poverty line for a family of four was AR$177,063 and the threshold for destitution was AR$80,483, according to Argentina’s National Institute of Statistics and Census (INDEC).
Wages for most workers in formal employment are substantially higher than the minimum: according to the Labor Ministry’s Situation and Evolution of Registered Employment (SIPA) report, median take-home pay for employees with formal private sector jobs was AR$141,978 in December, the most recent figures available.
However, the minimum wage helps workers with weak trade union representation, and also orients pay for workers in the informal economy, according to Martín Burgos, coordinator of the economics department at the Floreal Gorini Cultural Centre for Cooperation.
“It is very difficult to say, with this level of inflation, what someone who does odd jobs should earn,” Burgos said.
He added that the minimum wage had shrunk in proportion to the basic basket of goods compared with 2015.
“In Alberto Fernández’s government so far, accumulated inflation has been approximately 350%, while the minimum vital and mobile salary in that same period has increased by just 300%,” said Matías Wasserman, economist and member of the Observatory on the Economic and Public Policy Situation (OCEPP).
“That’s relevant and worrying not just because one would have expected that in these three years, part of the purchasing power lost during the Cambiemos administration would have been recovered, but also because the minimum salary has a direct effect on the Potenciar Trabajo program.”
Potenciar Trabajo is a cash payment to working-age adults who are in poverty, at risk of becoming poor, or work in precarious informal jobs. Holders are required to finish their studies or take part in community projects and activities in exchange for receiving the payments.
The payments for social programs such as Potenciar Trabajo are a percentage of the minimum wage, so increasing the minimum wage leads to increased state spending.
The increases were approved on March 21 by the Minimum Vital and Mobile Salary Council (Consejo del Salario Mínimo, Vital y Móvil) with 30 votes in favor, one against, and one abstention, according to the Labor Ministry.
The resolution also sets unemployment benefits at between AR$23,475 and AR$37,195 from April onwards.