In 2023, the purchasing power of wages continues to decline: in the first quarter, private workers lost 0.9% and informal workers, 0.4%. The only beneficiaries are public sector employees with a cumulative increase of 3.1% in real terms.
Less than three months before the PASO elections in August, Argentines will go to the polls with empty pockets and six years of loss of real wages on their backs.
With the economy heading into recession, the Capital Foundation anticipates that private consumption would fall this year by 1.6% due to the lower purchasing power of families. "With inflation at a higher level, workers will experience a sixth consecutive year of loss of purchasing power: the decline will be 3% for formal workers and 10.1% for informal workers."
While inflation is set to climb to a floor of 130% this year, LCG data show that wages as a whole are 23.2% below the peak they had registered in 2017. Thus, registered workers show a fall of 18.4% in that period and informal workers bear the brunt: the loss reaches 41.8%.
The informal ones are the ones that fall the most and the ones that have been suffering the longest. Unregistered employees accumulate 27 months with negative annual variations while registered employees have presented the same dynamics for 9 months. On the contrary, public sector workers have 4 months of growth in annual terms.
Nadin Argañaraz, director of the IARAF, adds that in the five years between January 2018 and November 2022, formal private workers lost the equivalent of 8.2 salaries, public workers to 10.2 salaries and informal workers to 13.7 salaries "This means that although formal private workers received 60 salaries, compared to 2017 it was equivalent to receiving 52 salaries. In the case of the public ones, it was like collecting 50 monthly salaries in 2017. And finally, in the case of informal workers, it was equivalent to 46 salaries in 2017."
In addition to the informal workers, among the most affected are those who receive the minimum wage. The CIFRA center of the CTA points out that "the purchasing power of the minimum, vital and mobile wage shows a negative trend since 2011, which was particularly strong in the last two years of the government of Mauricio Macri".
CIFRA data show that 2022 closed with an average fall in the real minimum wage of 1.3%, which placed it 33% below the level of 2015
Going forward, there are no forecasts that allow us to estimate that the scenario could rebound. "Job insecurity continues to increase, while formal salaried employment has not yet fully recovered from the crisis," they point out from Claves Información Competitiva.
"With a 2023 in progress, many parity begin to occur in the short term with quarterly reviews, leading to low increases with the condition of applying an eventual trigger clause," they detail from LCG.
On the other hand, an eroded purchasing power could stimulate a greater supply of labor to add income to the household, which, combined with a lower level of activity, can put pressure on unemployment numbers, taking some bargaining capital away from workers." Given that wages are more rigid at the time of an adjustment than the average of prices, we do not expect a real improvement in the average of 2023, "says LCG.