The lack of updating of the SMVM poses a significant challenge in the current economic scenario, since inflation projections, as well as the basic basket, vehemently hit the pockets of Argentines.
Wait. It is estimated that at the end of this month the possibility of an increase in the minimum wage will be discussed.
The Minimum, Vital and Mobile Wage (SMVM) experienced a significant drop in December, accentuating the loss of purchasing power that was evident in previous years. With a value of $156,000, the SMVM is facing an inflation of 25.5%, and taking into account that the January data will be around that figure, its loss will extend. Despite the expectations and the announcement of the general strike for January 24, The Government has not yet established a date for the convening of the Salary Council and the discussion of a new increase.
The close monitoring of inflation by salaries, thanks to the reduction in the validity of joint ventures during much of 2023, was cut short in the last two months with an inflationary acceleration.
This led to most unions ending the year in the red. It is projected that, between December and March, with an average inflation of 20% monthly, real salaries will fall around 10%, according to a report by Ecolatina. This situation raises the crucial question: will wages be indexed to the growing nominal value or will the recession resulting from the loss of purchasing power contain the advance of prices?
A combination of both is anticipated, the consulting firm maintains, where the recession will coexist with wage agreements that will slow down the eventual deceleration of inflation. This process will not be free of social and political costs, and there is a latent risk of spiralization. “if the ruling party faces difficulties in implementing its fiscal-monetary plan or in obtaining part of the proposed reforms.”
Minimum wage measured in kilos of bread
Without the update demanded by the unions, the minimum wage will continue to lag behind, remaining significantly below the basic basket and, even more worrying, below the indigence line. The base income is in a marked situation of backwardness, with the prospect that this gap will deepen if the necessary update is not carried out.
Economist Jorge Barreto evaluated the purchasing power of the minimum wage, using kilos of bread as a measure. According to his analysis, The current SMVM allows you to buy 87 kilos of bread, 63% less than a year ago. This drop represents a 40% loss in purchasing power measured in kilos of bread during the period.
oatmeal bread.jpg
The disparity in relative prices is also evident in the comparison with gasoline. At the beginning of 2024, the salary allows you to buy 17% more gasoline than in 2000, according to Barreto’s study. However, the relationship with the total basic basket, which defines the poverty threshold for a family of four people, shows the need for 3.2 minimum wages to cover it.
With inflation prospects exceeding 200% by 2024, the recovery of the purchasing power of the minimum wage does not seem imminent. This salary is crucial in the macroeconomy, serving as a reference for formal and informal jobs, as well as for social programs such as Potenciar Trabajo, whose beneficiaries receive half of the minimum wage. Lack of updating poses a significant challenge in the current economic scenario.
Source: Ambito
