Patrick Gillespie
Mon, March 25, 2024
(Bloomberg) -- Private-sector wages in Argentina fell the most in nearly three decades after President Javier Milei’s currency devaluation, according to a new government report.
Paychecks plunged 11% in December from November when adjusted for inflation, the largest monthly loss in income since the government’s labor market reports began 29 years ago. The decline, while partially compensated by wage gains in January, led to a “significant drop” in consumer purchasing power, the government said.
The data help explain why spending at small businesses has seen double-digit declines every month since Milei took office on Dec. 10. Although markets and economists view his swift policy changes as long overdue, Argentina’s powerful labor movement is resisting. A major union representing government workers plans to strike Tuesday after rejecting what it called an “unacceptable” pay increase from the Milei administration.
While Milei still enjoys relatively high approval ratings at home and investor applause abroad, his shock therapy, including a 54% December peso devaluation, stands to send Argentina deeper into recession this year and make it more difficult to pass his big reforms through an already hostile congress.
Economists surveyed by Argentina’s central bank in February expect gross domestic product to contract 3.5% this year.
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