MercoPress. South Atlantic News Agency

Study underlines Argentina's low minimum wage

An increase in the number of “households living in poverty” is to be expected, the UNDAV said

A study from Argentina's Universidad Nacional de Avellaneda (UNDAV) on the southern outskirts of Buenos Aires showed this week that under the Libertarian administration of President Javier Milei the South American country boasted one of the lowest minimum wages in the region for people to live in one of the most expensive nations worldwide.

At a face value of AR$ 234,315, Argentina's lowest minimum wage represented only US$ 264 at the official exchange rate and even less if the “blue” (a euphemism for “black market”) quotation is to be considered. The research also highlighted that Argentina used to have the highest minimum salary in the continent just a decade ago.

The UNDAV also pointed out that minimum wages per country stood at US$ 274 (Peru), US$ 276 (Brazil), US$ 339 (Colombia), US$ 361 (Bolivia), and US$ 516 (Chile). The researchers noted that Spain's lowest salary amounted to the equivalent of US$ 1,141.

This UNDAV's Observatory of Public Policies report was drafted after December's devaluation and the other measures implemented by the Libertarian administration since Dec. 10, 2023, to curb inflation which led to a sharp decrease in incomes coupled with a steep rise in the prices of the main foodstuffs.

”There is a strong correlation between the variation of the exchange rate and inflation. Therefore, it is to be expected that this strong compression of the variation (of prices in the last months compared to December) is largely explained by the maintenance of an exchange rate variation at 2% per month,“ the study read.

”The distance between the variation of the exchange rate and prices produces a strong appreciation of the exchange rate,“ it added while underlining that under normal circumstances exchange rate appreciations are ”associated with real wage increases“. However, ”the paradox of the economic policy of these months is that it has led to a strong appreciation of the exchange rate with no real gain in wages, deteriorating the purchasing power“ thanks to ”the monetary adjustment resulting from the fiscal adjustment.“

”April showed a year-on-year variation in prices of almost 300% and a monthly variation of 8.8%, which has been decreasing,“ the UNDAV also stressed. Its study also found that milk, coffee, and noodles, the country topped the price lists measured in US currency.

”Argentina is going through a strong inflationary process which, although the final outcome is uncertain, is combined with a process of rising prices of goods and services, in hard currency, which is not accompanied by the population's income.“ Hence, an increase in the number of ”households living in poverty” is to be expected.