6 months since Javier Milei (La Libertad Avanza) assumed the presidency of Argentina, the effect of the economic measures runs through the entire social pyramid. Whether in the popular sectors and the middle class, as well as in the high-income population.
In this special made by Checked Different variables are analyzed to find out what happened with the different economic indicators in these 6 months. In this note, we evaluate data related to purchasing power: the salaries of registered workers, minimum living and mobile wage, pensions and universal child allowance.
The minimum retirement fell by 17.5%
In June 2024, the last month with available data, the minimum retirement reached $276,932 if the bonus granted by ANSES to those who earn the minimum salary is included. This represents a real drop (that is, considering inflation) of 17.5% compared to the same month last year, and 9% in relation to December 2023, the last month of the government of Alberto Fernández (Frente de Todos ).
In February 2024 it had reached its lowest point in real terms. This is due, to a large extent, to the acceleration of inflation registered in the months of November and December 2023 and in January and February 2024, and the delay with which the formula put into effect during the government of the Frente de All of them already lack updating due to inflation.
That formula established that the increase in salaries arose from the sum of 50% of the quarterly increase in ANSES collection and 50% from the salary variation of the same period. The calculation was made on the previous quarter. For example, to determine the increase in March, the evolution of these variables between September and December was taken into account.
Milei modified the formula through Decree No. 274/2024, which provides that pensions will be updated every month according to inflation, with the latest data available (for example, for June, April inflation was considered). The changes will begin to be fully applied with the salaries collected in July, updated according to May inflation. Between April and June, the Government decided to grant inflation increases plus a compensation of the initial 12.5% to incorporate part of the January inflation (which was 20.6%).
The minimum wage had a real drop of 29%
The minimum wage in May 2024, the last month with available data, was $234,315. This represents a real drop of 29% compared to the same month last year, and 15% compared to December 2023, the last month of Alberto Fernández’s government. The SMVM is guaranteed by article 14 bis of the National Constitution and was regulated by the Employment Contract Law, which defines the minimum wage as the floor of income that an employee can receive as remuneration for their work.
But the minimum wage also defines the value of other benefits, such as some social programs and, in some cases, the value of child support for separated parents. For example, the beneficiaries of the Potenciar Trabajo program receive the equivalent of 50% of the SMVM, while in other cases it serves as a limit to determine the right or not to receive a benefit, such as the case of the Progresar Scholarships, from which the students whose families have income of more than 3 SMVM.
Meanwhile, as of October 2023, Income Tax is only paid by those who receive income of more than 15 minimum wages.
So far in Milei’s management, the SMVM went from $156 thousand in December 2023 to $180 thousand in February 2024. From that month on it increased every month: $202 thousand in March, $221 thousand in April and $234 thousand in May, although it is still below the purchasing power it had in December 2023.
“The minimum, vital and mobile wage has not worked in this context to reduce or reverse wage losses. On the contrary, the real fall in the minimum wage was even greater than that of the average wage,” says a recent report from the CIFRA Center, which depends on the CTA led by Hugo Yasky.
The Universal Child Allowance rose 11%
The Universal Child Allowance (AUH) and the supplement charged with the Alimentar Card recorded a value of $122,479 in May 2024, the last month with available data. This is a real increase of 11% compared to the same month last year, and 62% in relation to December 2023, the last month of Alberto Fernández’s government. It is one of the few indicators that registers increases above inflation in the current administration.
At the beginning of January, ANSES announced a 100% increase in the amounts of the AUH starting that same month. In this way, the value of the benefit went from $20,661 (last increase granted by the Frente de Todos management) to $41,322 per child. In March, with the application of the mobility formula, it rose to $52,553. The last increase was recorded in June 2024 and was 41%, so the AUH is $74,354 in the current month.
The Alimentar Card is received by those who receive the AUH with children up to 14 years old. For the month of June, this benefit is $52,250 for families with a child up to 14 years old. The sum of the AUH and the Alimentar Card gives a monthly total that exceeds $120,000. As the chart shows, its current real value is the highest since January 2020, after hitting its lowest point in December 2023.
Registered salaries fell 20%
The recorded salary, in April 2024, the last month with official data available, was $819,501 on average. This represents a real drop of 20% compared to the same month last year, and a recovery of 2.6% compared to December 2023, the last month of Alberto Fernández’s government. The data comes from the Average Taxable Remuneration of Stable Workers (RIPTE), which is prepared by the Ministry of Labor of the Nation based on the salaries of formal workers.
According to RIPTE data, in March salaries increased by 2.7% in real terms (that is, above inflation for the month) and in April, they grew by 6.7% in real terms. However, if a longer period of time is analyzed, the purchasing power of salaries still remains below the values prior to Milei’s arrival to the Presidency: a real drop of 16.5% is recorded compared to October 2023, 11.4% compared to November and 20% compared to April 2023.
Eugenio Marí, Chief Economist of the Libertad y Progreso Foundation, indicated to this medium in this note that “when there is a shock in the economy, some prices react faster than others. Due to the rigidities in the labor market, salaries are among those that take the longest to adapt to the new conditions. This is how we saw that they rose less than the CPI and, then, they began to rise above it to recover the lost ground.”
According to the CIFRA report, the largest loss was recorded in December and January, after the devaluation and acceleration of prices: “In effect, between November 2023 and January 2024 the real drop reached 21.3 %, and reached 23.8% if purchasing power is measured in food. In a scenario in which significant currency devaluations have not been caused again, the deep recession has functioned as a partial brake on price increases. In this framework, some joint negotiations were able to recover part of what salaries lost at the beginning of the new government, which is shown on average as a minimal relative recovery.
Inflation as of April 2024
In April 2024, the last month with data so far under Javier Milei (LLA), inflation was 8.8%. This is a drop of more than 2 points compared to March 2024 and the fourth consecutive month of decline in monthly inflation after the peak of 25.5% registered in December 2023.
