President Javier Milei plans to green-light a 30% rise in the minimum wage in two installments, government sources told the Herald’s sister title Ambito Financiero, far below the 85% increase demanded by trade unions. 

Following last Thursday’s failed attempt at an agreement between labor unions and business leaders, the government will issue a ruling to enable a two-part increase (expected to be around 19% first and 11% later). This will raise the minimum wage, which is currently AR$156,000 a month, to AR$202,800 (almost US$200 at the MEP rate) starting in the second quarter.

Last week’s failed Minimum Wage Council — comprising state, worker and employee representatives — led to heated backlash from union organizations CGT (General Confederation of Labor) and CTA (Argentine Workers Central) after business chambers refused to accept the 85% rise they demanded.

In the absence of an agreement, the Human Capital Ministry, which runs the Secretariat of Labor, must now issue a ruling to set the rise percentage, which government sources told Ámbito would be around 30% in two installments. 

The last increase of what’s traditionally known as the “minimum, vital, and mobile” wage (SMVM, for its Spanish acronym) was back in December of last year. But inflation was above 25% that month, and January inflation was 20.6%. Currently, the minimum wage is AR$156,000 — with the staggered 30% increase, it will be nowhere near the AR$288,000 unions intended with their calls for an 85% boost.

Argentina’s minimum wage defines the amount due to recipients of social benefits like Potenciar Trabajo, a cash payment for working-age adults who are in poverty. According to Ambito, the 30% cap could be to maintain the government’s program of fiscal austerity. 

Should the 30% increase go through, the minimum wage would reach AR$202,800 and would be the new basis for welfare payments: Potenciar Trabajo would go from the current AR$78,000 to AR$101,000. The same would happen with the calculation of the minimum social security, which by law cannot be under 82% of the minimum wage. 

The minimum wage increase would also raise the Progresar Scholarships and the Family Allowance program (AUH, by its Spanish initials) amid the strong fiscal austerity program promoted by Economy Minister Luis “Toto” Caputo.

Last week, Milei had said that he would not set the minimum wage by presidential decree after the failed Wage Council, described by the CGT as a “historic rupture.” 

“Isn’t this an issue that should be resolved between workers and their employers? I don’t think a politician should determine a price by himself,” the president said in an interview with Radio Rivadavia on Friday. “I can’t even think of something like that. Me, issuing a decree that sets a price?”

The government’s ruling will be issued this week — while Human Capital Minister Sandra Pettovello and Secretary of Labor Omar Yasin decide who will sign the 30% increase cap decision, union leaders are readying for action. The CGT’s co-secretary general Héctor Daer did not rule out the possibility of “carrying out the necessary response, at any time we have to do them.”

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Originally published in Ambito.com / Translated by Agustín Mango