The Industrial Union of Santa Fe has drawn attention to what it describes as Argentina’s elephant in the room: the erosion of the middle class. Job losses, falling income across all segments and restricted consumption are among the indicators of a broader deterioration. Despite accelerating inflation, the government continues to pursue a policy of using wages as an anchor and refuses to approve collective bargaining agreements that exceed the official guideline set by Caputo.

“The decline of the productive system is the decline of the middle class,” the chamber representing Santa Fe’s industrialists said in a document published in recent days. Business leaders argue that “a country cannot sustain itself solely on extractive or financial sectors — it needs a vibrant industrial fabric.”

Production data are alarming. Industrial capacity utilization rate is not picking up, and hovers around 50%, with some activities even below 30%. The number of active companies continues to fall, and in manufacturing there are already 2,380 fewer firms than in December 2023.

“There is an actual danger of consolidating a scheme where financial returns are more attractive than the effort of transforming raw materials into added value. A country with its accounts in order but with its industrial plants emptying out is, ultimately, a country mortgaging its future,” said the harshly-worded text released by the firm led by Cristian Fiereder.

Looking ahead, expectations are not positive. Incoming consumption and sales data are discouraging. A leading industrialist who spoke with Ámbito urged attention to a particular phenomenon: the breakdown of the payment chain. The number of bounced checks hit another record in December, totaling 119,285 — tripling the figure from a year earlier — according to Central Bank data.

Meanwhile, the income crisis continues. The latest report by Fundación Pro Tejer illustrates this clearly. Over the past year, registered private-sector wages, public-sector salaries, pensions at the minimum level and the minimum wage itself all lagged behind inflation. No one was spared.

Much of the phenomenon can be explained by unilateral government decisions, such as in the case of pensions, whose indexation and bonuses were decided by decree. Authorities also intervened in setting the minimum wage after negotiations failed to produce agreement. President Javier Milei tipped the balance consistently in one direction, resulting in a real decline of 9%.

In the case of wages, Caputo maintained a rigid 1% guideline throughout 2024 in an effort to curb inflationary inertia. The economy minister undermined private agreements exceeding that threshold by delaying — and in some cases denying — formal approval by the Labor Secretariat.

With inflation accelerating for seven consecutive months and the consumer price index advancing closer to 3% than 2%, the libertarian administration remains determined to restrain wages. A current example is branch 17 of the metalworking sector, which reached an agreement between companies and unions in December but has yet to receive government approval.

Originally published in Ambito.com

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