Argentine President Javier Milei hit by scandal over own pay rise

Argentine President Javier Milei has fired his labor secretary for overseeing a 48 percent presidential pay increase last month amid a government austerity drive, in the first scandal to hit the libertarian economist’s administration, Report informs via The Financial Times.

Milei’s gross monthly salary rose from just over 4 million pesos, ($4,700 at Argentina’s official exchange rate) in January to just over 6 million pesos in February.

At the weekend, members of the left-leaning Peronist opposition shared details of a decree mandating the increase that bears the president’s signature.

Milei said on Monday that he had ordered the dismissal of labor secretary Omar Yasín for “a mistake that shouldn’t have happened”, and reversed pay rises for himself and his cabinet. The president said the increases were triggered automatically under rules set by previous Peronist governments when salaries for public employees were uprated for inflation — at present running above 250 percent annually.

Analysts said the episode could prove damaging for Milei, who was elected in November on a dual pledge to solve Argentina’s worst economic crisis in two decades and scrap privileges for the political elite he blames for causing it.

The president, who has a small minority in Congress, has repeatedly said he will rely on his public popularity to put pressure on legislators to support drastic spending cuts and sweeping deregulation.

“The government has almost no margin for this kind of error, which undermines its narrative about austerity,” said Cristian Buttié, director of pollster CB Consultora, noting that research over the weekend showed a slight decline in the share of Argentines with a positive image of Milei compared with February.

“A negative image spiral [would be] especially dangerous for an outsider president who has [few] allies in Congress or among provincial governors.”

Last week, Milei’s vice-president and Senate leader Victoria Villarruel and lower house leader Martín Menem approved a 30 percent pay increase for legislators. Milei told local media on Thursday that he had asked them to reverse the rises.

Lucas Romero, director of Synopsis, a political consultancy in Buenos Aires, said the president’s “rapid reaction” to both episodes might help to stem the political fallout, although he noted that it was unclear whether Yasín was responsible for overseeing the presidential pay rise.

Public reaction to Milei’s first scandal was likely to be determined by how quickly he was able to show progress on the economy, Romero said.

Economists predict official inflation figures set to be released on Tuesday will show prices rose about 15 percent on average in February. Though an improvement from January’s 20.6 percent, this would still be among the highest monthly rates in the world.

“If people think things are not getting worse as quickly as before, these episodes can be minimized,” Romero said. “But if the government can’t show results, that’s when people start to get angry.”