Brazil & Southern Cone - July 2026

After two years of regular student-backed protests against spending cuts in higher education, the government of President Javier Milei in mid-June agreed to increase pay for university workers. While the increase may have defused some of the social discontent, it fell far short of the sector’s demands and again highlights Milei’s delicate balancing act between fiscal austerity and political survival. It is that uphill battle that has some investors questioning whether Milei will even be around after next year’s election.

The government’s concessions to public universities included an increase of 24.33% for workers’ wages by between June and October; of 20% for operating expenses; and of 50% for university scholarships. The deal provides an additional Ar$50bn (US$34m) in funding for university hospitals.

But all that falls far short of what is needed in higher education, which has been squeezed by Milei’s austerity measures since late 2023, according to the national inter-university council (CIN) and higher education workers’ unions. They demand automatic spending increases in line with inflation as established in the law of university financing., which the Milei administration has done everything possible to ignore.

The university financing law was approved by congress in August 2025 but vetoed by Milei. Legislators then overruled the veto. Then there were several court rulings on the matter that the government challenged or ignored until a supreme court ruling on 25 June that upheld a lower court injunction forcing the administration to comply with the law.

The government’s handling of the whole episode is symptomatic of how Milei is antagonising an increasing share of the population, including legislators and judges, with his apparent indifference to widespread concerns, from deteriorating public services to the cost of living.

On paper, the right-wing libertarian continues to score a number of victories in fixing the country’s economy. GDP is growing for the second straight year and expanded more than expected in the first quarter. Public finances are in better shape than they have been in decades. And in June, the World Bank provided guarantees for commercial loans of up to US$2bn, a key measure to sidestep capital markets and seek cheaper financing through banks.

But in practice, such advances are not generating enough noticeable improvements for common citizens. Despite rising economic growth, unemployment is increasing as well, while real, or inflation-adjusted wages, have fallen again this year. Since Milei took office in December 2023, roughly half a million workers have lost their jobs. Unemployment has ranked among voters’ top concerns for the past year, according to a survey conducted by polling firm AtlasIntel. 

Despite a slight recovery in June, the government’s approval as measured by the government confidence index (ICG) compiled by the Universidad Torcuato Di Tella, a private university in Buenos Aires, showed monthly decreases in January-May, with the largest monthly drop in confidence registered in April (-12.1%), before a monthly rise of 3.9% in June. The ICG registers a score of public confidence ranging from 0 to 5, and Milei’s score 30 months into his term stood at 2.07, which is higher than most of his recent predecessors at the same point in their presidencies, with only Néstor Kirchner (2003-2007) registering a higher score of 2.42 after 30 months in office.

Lack of confidence

Economy Minister Luis Caputo acknowledged that the government’s credibility had been tarnished and that the lack of confidence made economic policy more difficult, but he blamed it on an historic predisposition of Argentines. “Naturally Argentines think they will end badly because they always have,” Caputo said during a TV interview in May. “That is the part that is incredibly difficult for us because we inherited the worst economic situation in history and we lack the basic raw material any policymaker needs, which is credibility,” he said.