Wages in Argentina suffer record drop after Milei’s currency devaluation

Following President Javier Milei’s currency devaluation in Argentina, private-sector wages experienced their sharpest decline in nearly thirty years, according to a recent government report. In December, wages dropped by 11% compared to November when adjusted for inflation, marking the largest monthly income loss since labor market reports began 29 years ago. Despite some wage increases in January, the overall decrease significantly reduced consumer purchasing power, contributing to continuous double-digit declines in spending at small businesses since Milei’s inauguration on December 10. While Milei’s rapid policy changes have garnered approval from markets and economists, they face resistance from Argentina’s influential labor movement. One major union representing government workers plans to strike following the rejection of what they deemed an “unacceptable” pay increase from Milei’s administration. Although Milei maintains relatively high approval ratings domestically and receives praise from investors internationally, his shock therapy approach, including a 54% peso devaluation in December, is expected to deepen Argentina’s recession and complicate the passage of major reforms through an already hostile congress. Economists surveyed by Argentina’s central bank in February anticipate a 3.5% contraction in gross domestic product this year.

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