The Macri administration has attempted to stem a downward economic slide throughout 2018, caused by the strengthening U.S. dollar and spiking inflation rates. In December 2017, inflation was projected at an annual rate of 18% for 2018, and by July the projection had climbed to 28.8%. The Argentine peso fell almost 50% against the U.S. dollar in August, driven by investor concerns over the Macri administration’s ability to control inflation rates, which climbed another 6.5% throughout September to peak at 40.5%. Latest estimates put the annual inflation for 2018 at 44.8% by year-end.

The central bank responded by raising interest rates by 15 points to a world-high 60%, as well as selling billions of U.S. dollars in foreign currency reserves to mitigate damage to the peso. The current state of inflation is expected to hinder GDP projections, currently at 2.3% compared with last year’s 2.5%.

As inflation estimates rose and the currency fell throughout 2018, companies reevaluated their salary review budgets and took actions to mitigate significant real wage losses. Many approved higher increases for 2018, and a majority also increased the number of salary review opportunities.


Willis Towers Watson is conducting periodic flash surveys to see how companies in Argentina are responding to the current volatility. Survey data only include nonunionized personnel. Here are the latest findings:

  • During the first six months of the year, the median salary increase granted to nonunionized personnel was 13.5%. This represented only a portion of the total increase for the year as almost all companies regularly grant two or more increases per year in Argentina.
  • Our January 2018 survey indicated that companies had budgeted 20% for 2018 increases. By midyear, most companies were reevaluating these budgets: 52% had already approved new budgets, and a majority of the others expected approval. By November, the revised salary increase budgets were:
    • Approved: 30% median increase.
    • Approved or under evaluation with a high or very high likelihood of approval: 33% median increase.
  • When reevaluating salary budgets in 2018, most companies considered a rate of annual inflation at 40% median.
  • It has long been market practice in Argentina to grant two salary reviews per year to manage high inflation; however, companies increased the number of salary reviews this year:
    • 46% of companies included additional opportunities for salary increases in the second half of the year.
    • Only 49% of companies will grant two salary reviews this year versus 70% in 2017. Thirty-five percent of companies will grant three reviews, 9% will grant four, and 4% will grant five or more. Only 3% will grant one review for the year.
    • The most common months for pay reviews are April and October (49% of companies).
  • For 2019, companies are projecting salary increase budgets of 26.5% as consumer price inflation is expected to be 26%.


Argentina’s economy is still under pressure as of the third quarter of 2018. Food prices, driven by a historic drought, unstable currency, utility prices and high inflation rates, have nearly caused a meltdown. The fate of the $57 billion IMF bailout package — of which $35 billion remains to be disbursed by the end of next year — remains a concern as it is contingent on the Macri administration delivering its promised balanced budget in 2019.

A new central bank governor, Guido Sandleris, who assumed the position in September, has inspired some confidence, with the Argentine peso gaining more than 10% since his arrival. Sandleris has stated that his key objective would be to lower inflation to a target 17% by the end of 2019, and that a tighter monetary policy is viewed as a solution to stop economic volatility. Combined with the anticipated cumulative effects of Macri's supply-side economic policies, Argentina’s rampant inflation could be brought under better control in 2019.

Multinationals with operations in Argentina should monitor these volatile conditions closely to protect their employees and investments. Clients may participate in future pulse surveys for Argentina by contacting Willis Towers Watson Data Services at wtwladata@willistowerswatson.com.