Austerity is for Europe: Argentina’s income policy

Pay rises in an era of austerity – it sounds like an oxymoron, or a triumph of hope over experience.

But as Argentina’s annual wage bargaining season prepares to kick off this month, Cristina Fernández, the president, has come up with a potentially novel approach that other countries might like to consider: tie wage rises to productivity.

Fernández said she was setting up a ministerial commission to study productivity and job creation sector-by-sector so that when pay talks got into trouble, as they inevitably do “we have the numbers to know whether what they are asking for affects competitiveness, or that profits don’t exceed international standards”.

She said companies had a duty to distribute income fairly ““because they have earned a very great deal of money, maybe more than ever in these past years, so I think they should understand that they must maintain this virtuous circle”. How exactly the government would assess productivity and competitiveness was not explained.

However, she said the tax agency was helping her take a long, hard look at the issue of executive pay – her implication being that if bosses were compensating themselves heartily, they should pay their minions better too.


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