President Javier Milei’s signature labour reform has successfully passed its final obstacle in the Senate, marking a crucial triumph in the libertarian’s bold agenda that may assist the South American nation in re-entering global markets. The upper chamber passed the significant legislation with a 42-28 vote late Friday, following a prolonged campaign against deeply rooted labor interests that ignited numerous protests and a nationwide strike. Two senators chose to abstain from the vote. Both houses had already passed the bill by comfortable margins; however, it required a final approval from senators after Milei removed a contentious article that limited sick-leave pay, which posed a risk to the legislation’s success. The bill underwent substantial modifications during discussions with both allies and opponents, particularly eliminating provisions that would have reduced tax revenue and imposed mandatory fees on labor unions. Milei also introduced another article that would have allowed Argentines to have their salaries directly deposited into digital wallets, following resistance from local banks against the measure.
Despite the last-minute changes, the labor reform is poised to be one of the most significant overhauls to Argentina’s economy in decades. The legislation dismantles laws established in the 1970s, which are so inflexible that, by certain estimates, nearly half of Argentines are employed in the informal sector. The legislation seeks to bring those workers into formal employment. The legislation seeks to reduce the costs associated with hiring and firing workers by shifting wage negotiations from nationwide sectoral agreements to the company level, redefining severance criteria, and simplifying labor lawsuits. It also establishes a mandatory fund for employers to cover severance payments. The measures address a labor lawsuit landscape in Argentina that can render the termination of employees a financially burdensome process. The legislation, however, coincides with a decline in formal, well-paid jobs in Argentina, while informal gig work is increasingly prevalent. This shift occurs as Milei dismantles long-standing protectionist policies that had previously shielded local businesses from an influx of cheaper imports from countries like China.
According to government data, more manufacturing employers are expecting layoffs in the coming months than were anticipated during the peak of the Covid-19 pandemic. A survey, published Thursday, reveals that unemployment has surpassed inflation as the primary concern for voters since last September. According to the poll, disapproval for Milei currently stands at 55 percent, while approval is at 41.5 percent. Milei secured power with a decisive victory in the midterm elections of October, aided by the support of US President Donald Trump. The labour reform will serve as the initial assessment of his ability to realize his vision.
Milei needed to persuade legislators from more centrist factions to secure their support for the reforms, ensuring their passage through the legislative bodies. The endorsement of the plan could result in reduced interest rates and enable the government to re-enter international bond markets following a sovereign default in 2020. Investors are closely monitoring developments, as the approval of the bill will serve as a clear indication of Milei’s political strength and elevate hopes for economic stability. The president travels to New York in March to persuade Wall Street banks and funds to invest in Argentina, aiming to boost the influx of foreign capital into the country to stimulate growth.