Low minimum wage no longer lifts Argentina’s lowest pensions

Argentina’s minimum wage has become too low to support the pension guarantee it was meant to underpin. At 383,800 pesos, it sits below the minimum pension of 428,633.20 pesos, making the 82% minimum-wage rule irrelevant in practice.

The guarantee dates back to a law passed under Mauricio Macri’s government in 2017, but it applies only to people who retired without using pension moratoriums. The article notes that Cristina Kirchner vetoed an earlier version of the rule in 2010. Under Javier Milei, the provision has become “a dead letter” because the minimum wage remains below the basic pension.

Around 3 million retirees and pensioners receiving the minimum benefit entered retirement through a moratorium. In December 2023, by contrast, the minimum wage stood at 156,000 pesos, above the 105,713-peso minimum pension. Eligible retirees with 30 years of effective contributions therefore received an additional 22,207 pesos to bring their pension up to 82% of the wage.

The minimum wage also constrains unemployment insurance. The benefit is supposed to equal 75% of a worker’s best monthly pay during the six months before dismissal, but it cannot fall below 50% or exceed 100% of the minimum wage. That means the current floor is 191,900 pesos and the ceiling is 383,800 pesos, regardless of the worker’s previous salary. Some 116,000 people received the benefit in June, with an average payment of 316,945 pesos.

The Progresar scholarship program also uses the minimum wage, limiting eligibility to families with income below three minimum wages. The article says the wage is scheduled to rise to 437,000 pesos by April 2027, still below the minimum pension, while pensions continue to track inflation.

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a dead letter