Wages in Argentina suffer record drop after Milei devalues peso

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. 

Pay-cheques plunged 11 percent in December from November when adjusted for inflation, the largest monthly loss in income since the government’s labour 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 December 10. Although markets and economists view his swift policy changes as long overdue, Argentina’s powerful labour 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 percent 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 percent this year.