Milei’s Austerity Cuts Jobs as Poverty Reaches 32.3%

By early 2026, urban poverty in Argentina had reached 32.3%, while the government’s austerity program had fired 51.218 federal employees and 23,000 workers at state companies. President Javier Milei’s cuts helped turn chronic deficits into budget surpluses and reduce inflation from roughly 250% to 30%. Workers and poor households have borne the cost, Jeremy Adelman wrote in an article published Sunday, October 25, 2026.

Who Pays for the Cuts

Many displaced workers entered the informal economy. Before public trash collection, people search for recyclable metal and paper, then haul scrap by shopping cart or horse-drawn carriage to depots for a few pesos. Informal work generally brings no labor contract, unemployment benefits or pension contributions, and workers tend not to return to formal jobs.

Adelman said 40–50% of the labor force now survives on precarious work. Nearly 70% of Argentines aged 18 to 25 work informally, and young people have lost hope of public-sector or even formal jobs. At a university in a downwardly mobile district of outer Buenos Aires, Adelman said, all his students had jobs but few prospects. They worked as teachers for near-minimum wage, street vendors, Uber drivers, domestic workers, or food and medicine couriers.

By early 2026, extreme deprivation affected more than 7% of the population. Personal indebtedness has also grown as poor families turn to fintech apps, digital wallets, local moneylenders, emergency credit cards and other products to make ends meet. Delinquency rates are soaring. Almost six million Argentines were at least 90 days behind on debt payments, while central-bank officials sought to prevent a wave of small bankruptcies.

The State Shrinks; Private Businesses Move In

Milei’s Chainsaw Plan, unveiled in June 2022, aimed to halt hyperinflation, shrink a public sector viewed as a source of political patronage and make Argentina a primary-goods exporter. Upon taking office, Milei halved the number of government ministries to nine, froze public works and cut welfare spending. Adelman wrote that the austerity playbook also informed Elon Musk’s short-lived, “far from successful” DOGE effort.

The government offered tax incentives to foreign investors and promised a large private insurance regime to replace state functions. Cuts shifted capital and workers toward for-profit health, security and education companies. More than 10% of scientists and technicians at CONICET, Argentina’s national science agency, left for the private sector after salary reductions and research-budget cuts. They were primarily biologists, geologists, agronomists and physicists under 40; Adelman wrote that the agency’s laboratories had previously been world-class.

New commodity frontiers generate growth but few jobs, Adelman wrote, even as investments in lithium fields in northern Argentina and hydrocarbons in Patagonia have fueled economic recovery and raised the country’s strategic importance. The arrangement directs investment toward resource exports while more people rely on precarious work.

Austerity’s Political Backers

Milei calls government intervention to promote recovery “Keynesian garbage.” Further inflation reductions from 30% will require more austerity, Adelman wrote, but there’s less left to cut and poor households are running out of options.

The program has influential admirers. Brazil’s right-wing presidential candidate, Flávio Bolsonaro, is promising a policy modeled on Milei’s, and US President Donald Trump calls Milei his “favorite president.” Last year, Trump extended Argentina an unprecedented $20 billion currency swap line to halt the peso’s free fall on the eve of legislative elections; Milei’s party then won a surprising victory. With elections due in 2027, Adelman wrote, Milei may not be able to rely on another free-spending Trump stopgap.

Milei also plays a role in Trump’s “Shield of the Americas,” a security umbrella intended to ward off US rivals and turn Latin America into a resource-rich hinterland of US-compliant partners. Adelman wrote that Milei’s political base is outweighed by people slipping into a low-income, low-productivity trap. The surpluses and falling inflation sit alongside mass informality, debt delinquency and deepening deprivation; the figures describe who is left carrying the adjustment. Almost six million Argentines were at least 90 days behind on debt payments.