Significance: Annual collective salary negotiations in Argentina always cause a major political headache, principally because inflation is perennially high, but there is much more at stake this year than most. The government led by President Mauricio Macri has made containing inflation one of its principal economic policy goals because it is a surrogate tax on the poor and constrains the purchasing power of the middle class. Unless there is clear evidence of inflation coming down in the months ahead the ruling centre-right coalition Cambiemos is likely to suffer at the hands of the electorate in midterm legislative elections due in October. Macri has been insisting in recent weeks that his government has brought inflation “under control” but the teachers’ unions, as well as other trade unions negotiating annual salary increases, point to annualised inflation of some 37% to argue that the government’s proposed ceiling of 18% for wage increases is insufficient.
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