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Tension grows in Argentina due to the losing race of wages against inflation

Tension grows in Argentina due to the losing race of wages against inflation

They grow in Argentina union protests, such as the strike in the health sector this Thursday or in the railway sector the day before, due to the sharp drop in the purchasing power of salaries in the face of a inflation very high, in a context of severe economic adjustment.

After this Wednesday’s strike of the train drivers, which affected thousands of users, this Thursday workers in the health sector throughout the country will be on strike, who, without salary update at the moment, warn that the inflation rates registered in January (20.6% monthly, 254.2% year-on-year) “definitively pulverized the purchasing power” of their income.

Another front of conflict is educational. Teacher unions threaten not to start classes in the coming weeks if there is no salary adjustment and if the Government of Javier Milei, who has undertaken a sharp cut in salaries, does not reverse his decision to eliminate the Teacher Incentive Fund, through which resources were allocated to the provinces to strengthen the salaries of teachers and professors.

The complaints, which also occur in other unions, have grown after the inflationary flash in December (25.5% monthly) and the lower but still very high pace that prices carried in January, without salaries being updated to the same extent.

For their part, employers – both companies and the State itself in the case of the public sector – are reluctant to validate adjustments that compensate for inflation, alleging, in the case of private companies, the deterioration of their income due to the fall in activity and consumption, and, in the case of the Government, the need to adjust public accounts to achieve a fiscal surplus this year.

In fact, recent negotiations between employers and union centers to establish the new mandatory minimum wage failed and the Executive decided this Wednesday to increase it by decree, with a 30% increase in the wage. salary March compared to last January, well below the inflation accumulated in December and January.

“The loss is brutal. “Projected, the minimum wage will have lost almost half of its purchasing power by June,” Hernán Letcher, director of the Center for Argentine Political Economy, told EFE.

According to data from the Capital Foundation, in the accumulated of the first two months of the Government of Milei (December and January), formal incomes evolved well below the price dynamics (38.4% average versus 51.9% accumulated inflation).

In the first month of the year, many unions managed to agree on adjustments of between 17% and 25%, but this excludes many other unions with stalled wage negotiations and informal workers.

Future evolution will depend on the behavior of the inflationwhich will tend to slow down as consumption continues to collapse, although an eventual new high-magnitude devaluation, such as the one carried out in December, could trigger prices again.

“Another issue to observe is the joint discussions. The drop in economic activity is so phenomenal that it will lead to job losses. And this is going to moderate salary demands, which is a big problem,” Letcher noted.

According to calculations by the Capital Foundation, salaries in the private sector would suffer a real loss of 10.5% this year, a cut that in the informal sector would reach 25%.

Source: Gestion

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