Milei's Argentina: Energy Sector Surges While Construction, Industry Lag Behind

Eighteen months into Javier Milei's presidency, Argentina's economy is moving in sharply different directions depending on which sector you work in. The wage picture tells the story most clearly: some workers are substantially better off than they were a year ago, while others have fallen further behind. The gap between winners and losers has become one of the defining features of this administration's economic landscape.

According to analysis from the consulting firm Invecq, the sectors thriving under Milei—agriculture, energy, mining, and financial services—are running roughly 11 percent ahead of where they stood in November 2023. Construction, manufacturing, and other service industries, by contrast, are trailing about 9 percent behind that same baseline. Employment across the board remains depressed compared to a year ago, but the wage story is more complicated. Real wages overall have climbed 2.5 percent, a modest gain. Yet the winning sectors have captured most of that growth, posting a 5.8 percent increase in real wages, while the losing sectors have managed only a 1.9 percent recovery.

No sector illustrates this divide more starkly than oil and gas extraction. Workers in crude petroleum and natural gas production earned an average of $6,779 per month in 2024, according to data from the Chamber of Hydrocarbon Exploitation and Resources, citing official employment figures. That represents a 55 percent jump from 2021, when the same workers averaged $4,386 monthly. The increase has been consistent across all provinces. These are substantial gains, and they reflect both the global energy market's strength and Argentina's own push to expand hydrocarbon production.

But the oil sector's advantage extends beyond wages. For years, petroleum workers have enjoyed exemptions from Argentina's income tax, known as Ganancias. During the previous administration under Alberto Fernández, these exemptions were broadly applied—so broadly, in fact, that even administrative staff working in downtown Buenos Aires office towers qualified. Florencia Fernández Sabella, a tax partner at LFS Tax, noted that the benefit has since been narrowed to apply only to workers at the wellhead itself, excluding office-based employees. Still, the exemption remains a significant perk.

The government has signaled that tax policy may shift. Economy Minister Luis Caputo has indicated that upcoming tax reforms, to be introduced during extraordinary congressional sessions, will include changes to the Ganancias deductions. He suggested the administration wants to move away from sector-by-sector or union-by-union benefits toward a more uniform approach. What that means for oil workers remains unclear, but the direction suggests the current arrangement may not survive intact.

Measuring wage trends in Argentina is itself a contested exercise. The government relies on data from the National Institute of Statistics and Census, or Indec, which reported a 2.2 percent wage increase in September—marginally above inflation at 2.1 percent. But the underlying numbers are disputed. Indec's figures rest partly on a survey of informal workers that lags five months behind, making it difficult to assess current conditions with precision. One economist quoted in the analysis called the indicator unrepresentative.

Looking ahead, Invecq expects economic activity to remain volatile through year's end, with irregular ups and downs rather than sustained growth or decline. After a small positive reading of 0.3 percent following three consecutive months of contraction, the firm anticipates a decline near 1 percent in September, driven by weakness in credit and retail sales. The real test comes this week, when Indec releases its monthly economic activity index. That figure will determine whether Argentina has entered a technical recession—defined as two consecutive quarters of contraction—a threshold the country appears to be approaching.