With a triple-digit year-on-year inflation which overshadows all economic variables, a particularly sensitive issue will be defined this Thursday: The Ministry of Labor has summoned the main unions and representatives of business chambers to the third meeting of the Minimum Wage Council of 2024.
The minimum wage is currently $234,215 and has not been updated since MayDuring Javier Milei’s government, income lost 32.1% of its purchasing power and has accumulated a loss of 43% since 2015. To recover the level of the minimum wage before the annual reductions, today it would have to reach $540,000, something that seems unlikely.
“In this way, the real loss of almost a third of the minimum wage was consummated.“, states a report prepared by the Research and Training Center of the Argentine Republic (CIFRA-CTA).
The question that arises is therefore where wages are going. According to data obtained by the Adecco Argentina Salary Guide 2024the salaries of workers outside the agreement will have a 137% adjustment for this year. For 2025, it is estimated that it will be 108%.
Where are salaries going this year?
The work carried out by the consultancy also determined that 46% of companies, “due to the current economic situation that the country is going through“, makes monthly adjustments (in 2023, less than 10% made adjustments every 30 days) and the average turnover is 8% (1.5% lower than last year).
And this is because within the framework of a complex economic situation and with a Consumer Price Index (CPI) of 145% projected by the Market Expectations Survey (REM) published by the Central Bank, “Inflation continues to be the variable that sets the wage agenda“, he adds Adecco.
Another important issue in the current context is the unemployment rate, which according to the REM (mentioned above) will be 7.5% by the end of this year.
What happens to non-contracted staff?
The data obtained in our Salary Guide 2024, show for this year, an average expected adjustment of 137% for workers outside the agreement. 42% of the companies that responded to the 2024 Salary Guide mentioned using several indicators when defining the adjustments. The most used is that of the collective bargaining agreements; However, many use a combination of inflation (CPI) + Paritarias.
According to data from Indec, in 2023, salaries were 26 points behind inflation. In this context, employees outside the collective agreement received, on average, a 185% increase, while inflation closed at 211.4%.
However, “due to the economic situation”, 46% of companies make monthly adjustments. In 2023, less than 10% adjusted the salaries of their work teams on a monthly basis. Similarly, 26% do so every 2 months, 13% every 3 months, while 15% follow the frequency of collective bargaining negotiations.
The document concludes that the salary outlook in the country ““continues to be a challenge for decision-making on adjustments”The country context is a fundamental factor in the negotiation of collective bargaining agreements and, together with the CPI values, remains decisive in defining the gains of those not covered by the agreement.
“The projections for the rest of the year and 2025 reflect continued uncertainty due to the fluctuating economy, which urgently requires stability for both businesses and workers,” he added.
Companies adjust
Marcela AngeliDirector of Work & Rewards at WTW, adds in a report that we are already beginning to see the reduction in the salary budgets of non-contracted staff for 2024. In line with the downward trend in monthly inflation rates, “We are beginning to see that companies are beginning to modify the total budget they had allocated for salary adjustments this year.“A little over a month ago, on average, companies were planning to grant adjustments of 190% throughout the year, and now it is already 170%.
There are some sectors that still keep them a little higher and others have already lowered them quite a bit, But we understand that as the months go by everything will even out.as it usually happens every year.
The sectors that lowered the annual budget the most were:
1) construction,
2) iron, aluminum, mining and metallurgy,
3) services
4) Communications / Entertainment (TV, Newspapers, Magazines).
With this reduction in the budget, which may continue in some points as long as inflation remains at similar percentages to the last two months, “It is also seen that companies are planning to give some salary increases on fewer occasions than they had planned at the beginning of the year.“.
It is now very clear that there will be between 4 and 6 opportunities throughout 2024. And now the figure for companies that planned to grant adjustments on a monthly basis went from 7% to 4%.
Source: Ambito
