Argentina: wages lost again against inflation

The latest wage report from Argentine INDEC confirmed that nominal wages for the average worker increased by 5.1% in October. Revenues lost again against inflation, since the CPI registered a jump of 6.3% in the same period. Wages go up the ladder and prices up the elevator.

Nominal wages had an 80.7% increase compared to October 2021, but prices increased 88%. The cumulative salary increase between January and October averaged 69.5%, and once again the evolution of the CPI was higher and reached 76.6%.

All the sectors that make up the labor market lost purchasing power after the effect of the inflationary stampede. The real salary of workers in the formal private sector fell by 0.9% in October, in the public sector the fall was 0.3% and in the informal private sector a collapse of up to 3% per month was observed.

The recovery promised by President Alberto Fernández has yet to materialize in reality. The average wage in the economy has systematically lost against inflation since December 2019, and has accumulated a 4.9% drop since then.

Real wages are not only at the worst level recorded in the Fernández administration, but they even fell back from the worst level of the previous administration in 2019. Also, the average real remuneration in Argentina is the lowest since 2003 according to the historical series produced by INDEC.

But disaggregating by sectors, the development of the inflationary process mainly affected the most vulnerable sectors. Workers in the registered private sector lost 0.7% of their purchasing power since December 2019, in the public sector they lost 4.9%, and workers in the informal economy saw their income drop by a brutal 16.8% since Alberto Fernández and Cristina Kirchner assumed the presidency.

Year-on-year inflation climbed from 53% in December 2019 to 92.4% in November 2022, and it is estimated that it will be dangerously close to 3 digits for the year-on-year data corresponding to December. The monthly dynamics of prices shows increases of between 5% and 6%, practically doubling the levels observed at the beginning of the Kirchner administration.

Inflation expectations were completely unanchored. The projection suggested by the REM report prepared by the Central Bank reaches 96% for December 2023, while the survey of expectations of the Torcuato Di Tella University suggests 70% for the same month.

The goal of 60% annual inflation embodied in the 2023 Budget lacks credibility, and does not materialize either in market expectations or in salary negotiations or contract updates.

With information from La Derecha Diario