Bending to pressure from labor unions, Argentine President Raul Alfonsin granted a 5 percent across-the-board pay raise today to private and public workers.
The general raise is the first to be approved since a freeze on wages and prices was imposed as part of a drastic anti-inflation program that Alfonsin launched in June.
Analysts say it is unlikely to damage the stabilization program, which has brought inflation down to a 33 percent annual rate from 2,000 percent in June and prompted commercial banks to refinance part of the $50 billion foreign debt.
The size of the raise, they point out, is small compared to the estimated 10 to 15 percent that real wages here have declined this year as a result of inflation. Also, government officials say they have won assurances from business leaders that firms would not boost prices to compensate for the increase.
But the pay increase comes amid concern about the Alfonsin administration's ability to keep wage and price controls intact, especially in the face of increasing belligerance by the opposition-led labor unions.
This month, unions have temporarily slowed or shut down service in hospitals, post offices, airports and banks nationwide. The leader of the powerful General Confederation of Labor, Saul Ubaldini, said yesterday that unions will step up protest action no matter whom it affects.
Since June, many private-sector unions have won under-the-table wage increases in the form of improved benefits.
Business leaders, meanwhile, are speaking out against the price controls. They argue that high interest rates for loans and hefty tax increases that came as part of the anti-inflation effort have boosted their costs intolerably. They also complain about union pressure.
But members of the administration say they will not grant further pay increases that are not offset by demonstrable improvements in productivity. Alfonsin, in a televised speech last week, intimated that he is determined to face down both businessmen and union leaders.