October 25, 2014
Minimum war waged
For a pay guideline which has risen 2,389 percent in the last decade, 13 months seems a long time between minimum wage announcements, especially given the brisk inflation in between (virtually everybody’s obsession, including all the presidential hopefuls debating on Monday), but President Cristina Fernández de Kirchner started the week by announcing a two-phase increase from the current 3,600 pesos to 4,400 immediately and 4,716 at the New Year. This 31 percent increase resists most comparisons with inflation estimates pretty well — thus it is the highest minimum wage in the region (as CFK was at pains to stress on Monday) and also well ahead of the 198 pesos/dollars throughout most years of the convertibility decade (1991-2001), no matter which of the multiple exchange rates is used. Nor should the impact be underestimated — while as few as 113,000 registered workers currently earn 3,600 pesos, this figure is a key benchmark for the informally employed (fully 4.5 million and estimated as high as eight million when including the self-employed, those working at home, etc.) while within the mainstream of regular workers it has historically provided the base for the pyramid of wage differentials.
Given that CFK is averse to be seen as bowing to pressure, this announcement was never going to come before last Thursday’s nationwide strike by opposition trade union groupings — perhaps the indifferent success of that protest made it easier for CFK to announce the increase now. A new minimum wage also had to clear the hurdle of tripartite negotiations between government, business and labour but these seem to have been less difficult than their 12-hour duration might suggest. While the government has urged restraint throughout this year’s collective bargaining, it can also find virtues in higher pay levels if this helps to revive a domestic consumer market badly hit by real wage erosion among other factors. The trade unions are so anxious to protect jobs that they hesitate to inflict dramatically higher wage costs on companies — by pushing the increase slightly above 30 percent instead of slightly below as initially proposed, their honour was already satisfied. Business seems to have been the most passive of the three sides with various existential aspects at stake in the consumer legislation going through Congress, timidly and unsuccessfully requesting a three-phase increase below 30 percent.
The importance of the minimum wage should not be underestimated but it remains only one among several parameters.