On 11 December, President Milei celebrated his first year at the head of Argentina with an official speech broadcast from the “Casa Rosada” (the présidential palace) on all television channels. He boasted of the “economic successes” he had achieved, assured that the recession was over, and promised that “happy times” lay ahead for Argentines.

There were other voices on the international scene praising Milei. The British weekly The Economist, an international advocate of economic liberalism, declared that it was “fascinated” by his “philosophy” and felt that Trump should learn from it for his policies (1). While the IMF believes Milei has succeeded in preventing hyperinflation, its president declared earlier this year that Argentina represents “the most impressive case of a government implementing necessary reforms in recent history” (2). The IMF also predicts that the country's GDP will grow by 5% by 2025, higher than the Argentine central bank's forecast…

The official data clearly show a slowdown in inflation in recent months, which fell to less than 3% in December, compared to over 20% per month a year ago. In annual terms, however, it remained one of the highest in the world, exceeding 110%. As soon as Milei came to power, he devalued the national currency, the peso, by 54% and deregulated prices and rents: this immediately led to a sharp rise in inflation, which in January 2024 reached a 254% increase compared to January 2023 and more than 20.6% compared to December 2023.

The combination of Milei's shock measures not only caused a sharp rise in inflation, but also a sharp worsening of the economic recession: a 3.5% fall in GDP in 2024 after a 1.6% fall in 2023. If we add to this the devaluation of the peso, which continued at 2% per month throughout the year, and the end of price regulation, these measures consisted of a big reduction in state spending: the suspension of more than 90% of public works, a reduction in financial transfers to the provinces, a reduction in spending on health, education, etc., the abolition of certain ministries (environment, science, culture, women's rights, etc.) and the elimination of 34 000 civil service jobs (one of the 'achievements' Milei explicitly boasted of in his speech on 11 December), cuts in social spending, etc. (it is estimated that a large part of the savings in the state budget came from the freezing of pensions as inflation raged), sharp increases in gas and electricity prices and transport (3).

On the other hand, the budget for “internal security” and defence has increased significantly: the “endless contempt” for the state trumpeted by the “anarcho-capitalist” Milei does not apply to the army and the state police force…

These measures have led to the success of the government's policies: the state budget has gone into the black for the first time in more than a decade, and the country has recorded a trade surplus. The cause was the economic crisis: the domestic market collapsed due to a fall in the income of a large part of the population and a fall in investment and economic activity dependent on state spending, forcing companies to lower prices in an attempt to sell their goods, which contributed to a fall in imports (while the end of the drought brought an increase in agricultural exports).

As always, the successes of capitalists (whether “anarchist” or conventional) are defeats for the proletariat and the poor masses in general.

In addition to the job cuts in the public sector just mentioned, it is estimated that more than 130,000 jobs have been lost in the private sector since Milei came to power; these are jobs in the formal sector, as jobs have been created in the so-called informal sector. The official unemployment rate has risen from 6.2 to 7 per cent in one year: this is not a staggering figure (it was 20 per cent in 2002), but it should be stressed that it concerns only regular employees, with no less than 45 per cent of the population working in the informal sector, where employees have no social protection (no leave, severance pay, etc.) and where unemployment is difficult to estimate. However, unlike the great crisis of the early 2000s, it is wages, not jobs, that have so far been the hardest hit.

In fact, real wages have fallen sharply as a result of skyrocketing inflation: in April 2024, private sector wages had practically fallen to their 2003 level, which represented the historic minimum reached during the great crisis (4). However, according to official statistics, real wages in the private sector at the end of last year reached and slightly exceeded the 2023 level, while real wages for civil servants fell by 23%. The government did not oppose collective bargaining, but made it conditional on wage increases not exceeding official inflation, which the trade unions accepted. In the private sector, negotiations resulted in an average real wage cut of 8%, but with large variations depending on the sector: bank employees saw a cut of only 0.3%, while the hospitality and transport sectors saw cuts of 19% and 21% respectively.

Independent analyses provide results that differ from the official figures: real wages have fallen by an average of 10%, with a 27% fall in the public sector (25% in education); the fall is more significant for already low wages, with a 27% fall in the minimum wage (5). Pensions have fallen by an average of 15% in real terms (including the extra inflation bonus, which has been frozen since March), bringing their 'beneficiaries' below the poverty line.

Government decrees to make the labour market more flexible (the 'Bases' law) consisted in particular of abolishing employer sanctions for undeclared work, extending the probationary period before being fully employed to one year, and allowing to lay off civil servants for 12 months before making them redundant, furthermore, termination funds were created so that employees could finance their own unemployment benefits! The law also provides for a ban on pickets and road blockades, occupation of enterprises, etc. Income tax has been extended to an additional 800 000 people as previously untaxed income or benefits such as overtime, Christmas bonuses, employee clothing etc. have been included in its calculation, while an amnesty for tax evasion and a reduction in wealth tax for the wealthiest have been announced. Finally, the government is empowered to legislate on economic and social issues for one year without having to go through parliament.

An analysis by the Centre for the Study of the Argentine Economy (CEPA) of the economic and social situation in the country after one year of the Milei government concluded that the pursued policy “introduces mechanisms to shift income away from active and passive workers in favour of sectors of concentrated capital in an apparently regressive logic, given the recurrent tendency to draw income away from low-income sectors in favour of high-income sectors” (6). In other words, it is an anti-proletarian class policy.

As a result of the economic crisis and government policies, in one year 5 million people fell below the poverty line and 3 million below the extreme poverty line (destitution), making it impossible to meet basic needs (food); the poverty rate thus reached 52.9% of the population (i.e. 24.8 million people), 66% among children and teenagers, and the poverty rate exceeded 18% of the population (6.8 million), 27% among children and teenagers. Poverty has increased the most in the Gran Buenos Aires urban agglomeration, where it reaches 59.7% of the population.

Milei presents his policy as a radical break with all previous governments. However, ultra-liberal measures are nothing new in Argentina; recall that the slogan of the military dictatorship (which the current government would more or less like to rehabilitate), proclaimed by the then Minister for the Economy, was “to shrink the state is to grow the nation”; or that liberal anti-proletarian policies were also pursued by the Macri government. The brutal attack against the proletarians is therefore not only the work of Milei and his party; lacking a majority in Parliament, he has found agreement for the adoption of his laws with the parties representing the “caste” he demagogically denounces on a daily basis; at decisive moments, such as the June vote on the “Bases” law or the confirmation of his veto on the valorisation of pensions and the universities' budget, he has been supported not only by the right-wing bourgeoisie (e.g. Macri's “PRO” coalition), which shares his general orientation, but also a section of the Peronists.

However, the main support for the government has come from the big trade unions. The latter have tried to channel the anger of the proletariat by organising strikes and demonstrations, such as the general strike of 24 January 2024 (7) and that of 9 May, which were very large. In fact, they were concerned with negotiating with the government, having demonstrated that they were indispensable in preventing proletarian reaction from becoming a threat to the bourgeois order. The major CGT trade union organisation subsequently declared that it would stop organising protest actions, and agreed to participate in negotiations on labour market reform (arguing that there was no mood for conflict among the workers!). This open abandonment of the defence of proletarian interests in the name of defending national capitalism is not surprising from such a union with an old extreme collaborationist and pro-capitalist tradition: during the four years of the previous (Peronist) governments, for example, they never called for the slightest protest action; the slightly more “combative” unions, such as the two CTAs (Argentine Workers' Central), associated with left-wing Peronism, however, contented themselves with sporadic strikes that in any case could not force the government and the bosses to back down.

In his speech of 11 December, Milei loudly announced that in 2025 he would go “in depth with the chainsaw”, that is, that he would intensify his anti-social and anti-proletarian measures.

The Argentine proletarians have shown that they know how to defend and fight. But for their struggle to be effective, to thwart the capitalist attacks, it must be waged with class orientation, class methods and means, thus breaking with the defeatist line of the class collaborationist trade unions and with the tailism of the “extreme” Trotskyist left, which only intends to pressure the collaborationist trade unions to adopt a “plan of struggle”, when in reality they have no intention or can enter the struggle!

In the coming period, the problem facing the Argentine proletarians will become ever more acute: either to be crushed by the capitalists, relying in the process on perpetual saboteurs, or to take the path of anti-capitalist class struggle and revolutionary communist organisation, which alone can lead to victory.

(1) The Economist, 28 Nov. 2024. This weekly criticizes Trump for his protectionist tendencies towards foreign countries, which Milei lacks.

(2) Communiqué, 11 January 24. Argentina, already the most indebted country to the IMF, is negotiating a new loan with it.

(3) All these figures are from INDEC, the National Statistics Office. There is no doubt that they are manipulated according to the principles of “creative accounting” (sic!), but we can assume that the manipulations are more or less constant and that the overall trend is therefore unchanged. See “Las mentiras en la recuperación de la economia de Milei” https://www.eldestapeweb.com/economia/bicicleta-financiera/las-mentiras-en-la-recuperacion-de-la-economia-de-milei-2024115155854.

(4) See https://eduardogerman.com/2024/06/27/fuerte-caida-del-salario-real-en-el-sector-privado-registrado-en-argentina/; the crisis of the early 2000s erupted in late December 2001, after a banking market panic, when the economy was already in recession. The government froze bank deposits (“corralito”) and declared a “state of siege” in the face of shop lootings, general strike and violent demonstrations across the country (cacerolazos). In Buenos Aires, although the demonstrators were severely repressed (5 dead in the Plaza de Mayo), they forced President Fernando de la Rua (Radical Civic Union) to flee the Casa Rosada by helicopter. Thirty-nine people died throughout the country, and Argentina has had five presidents in as many months…

(5) See https://www.pagina12.com.ar/788652-radiografia-de-los-salarios-en-la-era-milei-el-impacto-de-la

(6) See https://centrocepa.com.ar/informes/592-el-primer-anio-de-gestion-de-milei-en-datos. CEPA (Argentine Center for Political Economy) is a university association close to the unions.

(7) See our newspaper El Proletario No. 31.