It has deteriorated 1.9% monthly since July and 42.5% from its maximum. The INVT measures the evolution of the purchasing power of private wages (registered and unregistered) in terms of access to the Total Basic Basket reported by INDEC, which in turn is used to measure the poverty line in Argentina. If the indicator drops, it means that they are getting closer to being poor and that more of them are. The opposite happens when the index shows a rise.
According to the latest data available, the standard of living showed a monthly fall of 1.9% in July, the second largest monthly fall in the entire Fernández Administration (the most pronounced had been in 2020). With this, the Index reversed the recovery of the second half of 2021 and returned to the levels it had in December 2019, the month in which President Alberto Fernández took office.
Furthermore, since its peak in September 2013, a series high and also an all-time high, the Index fell 42.5%. In other words, in a decade the purchasing power of private wages practically fell by half.
According to Eugenio Marí, Chief Economist at Fundación Libertad y Progreso “the acceleration of inflation in 2022 hit hard the purchasing power of wages, especially in terms of access to the basic food basket. Hence, we are seeing a generalized process of reopening joint ventures.” Marí added that “however, the real problem is that the Argentine economy has not grown for more than a decade. We often hear that this crisis is growing, but if reforms are not applied to recover investment and innovation, then we will not see a change in the trend in the standard of living of workers”.
Libertad y Progreso’s Executive Director Aldo Abram considers that “the inflationary tax with which the Central Bank finances excess State spending is regressive; since, in proportion, it takes more from those who have less, impoverishing them even more”.
On the other hand, the economist asserts that it is not the only factor that led to decades of growth in poverty among Argentines and exemplified: “Imagine a businessman who sets up a factory and hires us to manage a state-of-the-art machine. Since we produce a lot, we can earn a lot. However, governments begin to squeeze the factory owner with taxes and overwhelm him with regulations, most of them absurd; so, tired, he will stop investing. Our machine will get older and older and will start to be “tied up with wires”; so it will produce less. That implies that our salary will begin to drop; because they cannot pay us more than what we produce or the company would go bankrupt and we would all be left without income. That is what is happening to Argentines and, for this reason, we see how we are getting poorer with the passage of time.”
Finally, he added that “if we want this to change, structural reforms must be made that allow our economy to be cured of the terminal illnesses that take us from crisis to crisis. For this reason, the foundation has developed proposals to be able to implement them that can be read on its website”.
