The premise for this article is the diagnostic appraisal that the lack of a government income policy is one of the main reasons that Argentina’s economic strategies have swung back and forth between extremes over the last ten years. The authors, Sebastián Etchemendy and Federico Pastrana, hope to contribute to the debate on Argentina’s need for an income policy with buy-in from all stakeholders in order to coordinate wage bargaining and manage the distributive struggle better.
The authors briefly review the different forms of income policy that are agreed upon by the state and social stakeholders in today’s world, distinguishing between social pacts (which include price and wage paths for a limited period) and wage coordination (which develops shared parameters for wages and stable bargaining conditions).
The high inflation that Argentina has experienced over the last decade includes a fundamental cost component that relates to exchange rate dynamics, regulated prices, tariffs, and the distributive struggle (which does not cancel out the need for consistent fiscal and monetary policies). Any strategy that does not focus on all these dimensions at once is doomed to failure.
This study proposes two consecutive scenarios: a temporary social pact to help stabilize the excessively high inflation the country is experiencing, and another for permanent wage coordination with “medium or moderate” inflation.
Argentina is the only country in the world where union and corporate representatives negotiate agreements for large numbers of workers at the national level but where there is no organization or body for intersectoral coordination.
The greatest increase in real wages in recent years in Argentina took place during the period in which nominal wages grew least, and the greatest losses occurred when inflation accelerated and not when nominal wages were more moderate. Plummeting purchasing power was connected to macroeconomic crises, increasing inflation, and wage increases not keeping up with prices.
Etchemendy and Pastrana conclude that it is vital for the State to promote a proactive wage policy that establishes common parameters between sectors, seeks to stabilize expectations, and leads to a more forward-looking debate around real wages that is based not on past inflation but future inflation, thereby circumventing struggles that are merely nominal.