Minimum wage has lost 40% of its purchasing power under Milei

Registered workers earning the minimum wage in Argentina can today only buy six of every 10 products permitted by their salary before Javier Milei took office. This level of purchasing power is even inferior to the crisis of 2001, warns a new report from the University of Buenos Aires (UBA). It also comes within a context of the shuttering of private firms – over 2,000 have shut their doors in just one month.

The mínimum wage has lost almost 40 percent of its purchasing power since November 2023, the month prior to Javier Milei’s inauguration as President, says the report issued by the IIEP (Instituto Interdisciplinario de Economía Política) institute of UBA’s Economics Faculty. It highlights that with the arrival of the libertarian government, an extended process of falling real basic wages began with a 15 percent contraction due to accelerated inflation. This was followed by an even steeper fall of 17 percent in the first month of 2024. The trend was temporarily interrupted for some months when the nominal increase accompanied or exceeded inflation.

Nevertheless, in the balance between November 2023 and May 2026, the real minimum wage accumulated a fall of 39.7 percent. This contraction, along with the declining trend of previous years, led to last month being inferior in real terms to 2001, before the collapse of convertibility. It also implies an erosion of 66.5 percent against the maximum value in the series in September 2011.

Parallel to this plunge, formal employment lost 11,000 jobs in March, enumerates the UBA report. Since November 2023, 217,000 jobs have fallen vacant in the private sector, it adds.

This job destruction is due to a shrinking economy. The latest figure from Fundar think tank warns that 26,448 companies have closed down between March, 2023 and the same month this year when 2,011 enterprises were shuttered.

“That figure contrasts with the fall of 257 firms registered in the previous month and marks a new acceleration in the deterioration of the productive fabric,” explained Fundar.

Among the most relevant cases are Citroën, which stopped manufacturing vehicles in Argentina to concentrate its regional production in Brazil and Uruguay; Leval SA, a longstanding manufacturer of metal structures and a supplier of Siderar, Siderca and Acindar, ending over 50 years of activity; and the plant of Granja Tres Arroyos in Entre Ríos.

The latest report of the PRO think tank Fundación Pensar detailed that the Milei model has created winners but they are not a majority. Their data analysis has shown that capital-intensive sectors grew more, as well as those dealing in natural resources, dollars, finances, major investments and exports: energy, mining, farming, banks, professional services and real estate.

Meanwhile, labour-intensive sectors paying wages and active in the PyMES small and medium-sized companies, the domestic market, public works and mass consumption suffered most: construction, industrial PyMES, traditional shops, mass catering, state employment, personal services, education, health and culture.

Pensar concluded that this kind of growth produces a group “which generates dollars and investment but has still not managed to transform that recovery into mass employment, high wages and an extended improvement for the middle class.”

A new public opinion surveys about sectorial perception at odds with the libertarian model were incorporated with 83 percent of the respondents assuring a favourable image of national industry while 40 percent agreed that it must be protected against foreign competition for the country to grow.