March 12, 2014
Argentina no longer has top wage in LatAm
Devaluation has pushed country to second place after Venezuela
Not too long ago, President Cristina Fernández de Kirchner liked to celebrate that Argentina was home to the highest minimum wage in Latin America, but with the recent devaluation of the peso — the steepest since the 2001 financial crisis — the panorama for the country’s basic wage is no longer so black and white.
The second installment of the adminstration’s minimum wage hike came into effect this month, pushing basic pay to 3,600 pesos.
After the first installment in August to 3,300 pesos per month, workers boasted a wage equivalent to US$667 per month at the offical rate and US$429 at the illegal exchange rate — otherwise known as the “blue dollar — establishing a significant difference with the country’s nearest minimum wage rival Uruguay, whose minimum was US$405 at the time.
Based on today’s exchange rates, a minimum monthly wage of 3,600 pesos equates to US $448.60 at the official exchange rate of 8.025 pesos to the dollar, while on the black market a rate of 12.55 pesos per dollar turns over US$286.85. Uruguay’s mininum wage as of January was US$405.8.
This comparison represents a 32.7-percent drop (US$218.40) in the offical dollar value of the minimum wage and a 29.2-percent drop (US$142.15) in its black market value.
Earlier this month, Chilean newspaper El Mostrador ran a story highlighting Argentina’s minimum wage as offering worker’s the strongest purchasing power in the region, and used Coca Cola cans — among other items — as a form of measurement. Argentines could buy 590 350ml cans, while Brazilians a mere 299.
However, with prices rising on the back of the recent devaluation of the peso and the steep January inflation, the purchasing power of Argentines is now much less certain.
A panorama of minimum wages in South America, excluding the Guianas, puts the current basic salary floor in (Argentina according to the offical exchange rate) second only to Venezuela, where workers earn a minimum of US$502.06 based on the official exchange rate there of around 6.29 bolivares to the dollar.
However, with a black market itself, a certain grey cloud hovers over the value of local wages in Venezuela.
The black market rate, as reported by dolartoday.com, of 80 bolivares to the dollar converts a minimum wage of 3,270 bolivares to a mere US$40.87 per month. On that basis, Argentina would take the top prize for minimum wages in the region.
But this is precisely where things head south for the country.
Argentina’s own black market rate, which converts the basic salary to US$286.85, puts it ahead of just Bolivia (US$173.60) and Peru (US$265.72) in terms of minimum wage.
The country joined Uruguay, Venezuela, and Brazil in increasing the minimum wage in 2014 in a region where inflation has traditionally haunted economies. Paraguay is the only country in South America to have not increased its minimum wage since 2011.