Arya News - Argentine President Javier Milei`s government has presented the framework for broad labor reform it hopes Congress to pass in early 2026.
BUENOS AIRES, Dec. 10 (UPI) -- Argentine President Javier Milei"s government presented the framework for broad labor reform it hopes to pass in early 2026.
The proposal would reduce severance pay and employer contributions paid per worker. It also seeks to limit the right to strike and make wage negotiations between companies and unions more flexible.
Although not all details of the initiative are finalized, it is expected to be sent to Argentina"s Congress this week.
Cabinet Chief Manuel Adorni presented a document Tuesday in Buenos Aires that outlined a set of structural reforms for Argentina"s economy.
The 68-page report compiles recommendations from the May Council, an advisory body that operated for 1 1/2 years with representatives from the national government, provincial governments, businesses and labor unions.
One proposal calls for a "modern labor reform that promotes formal employment." The document notes a "broad consensus" that labor relations in Argentina face excessive cost burdens and rigid regulations.
The report also identifies two fundamental problems: The Argentine economy is not creating jobs and labor informality rates have exceeded 50% for more than a decade.
The document points to three areas that need improvement main shortcomings: a high tax burden and other employment-related costs; significant hiring and firing costs that hinder creating formal jobs; and wage negotiations that remain rigid and are conducted at national and sectoral levels.
Among its priorities, the report calls for a review of collective bargaining agreements, which regulate working conditions by sector, and in many cases date to 1975.
José Gustavo Perego, the director of consulting firm Abcef, said the reform would help improve competitiveness by giving companies greater ability to organize, with clear rules governing disciplinary authority.
"This reduces operational friction and lowers the risk of litigation," he told UPI.
The reform focuses on new wage rules and the expansion of nonwage benefits, he said.
"It significantly broadens the range of non-salary social benefits [health care, child care, internet, gym access, training, transportation, among others]. These are not considered part of wages and do not generate payroll charges. This represents a re-engineering of labor costs," he said.
In addition, the proposal seeks to modify labor regulations and medical leave rules, which together would create a more productive and flexible framework.
"This reform basically aims to reduce non-wage labor costs and legal costs in labor proceedings in Argentina. It means lower taxes, greater flexibility in hiring and work arrangements, and a reduction in litigation over dismissals," he said.
Walter Mañko, a lawyer and partner at Deloitte Legal, told UPI the labor overhaul aims to align Argentina"s labor system with those of advanced economies.
He highlighted greater flexibility in working hours and aspects related to unions, particularly how they are financed. Under the reform, that would no longer be defined by law.
Mañko said that while formal employment has not grown over the past decade, informal employment has increased, reflecting problems in the labor system.
"The reform seeks to reverse this trend by offering predictable rules on hiring and firing costs," he said.
He added that in Buenos Aires alone, more than 300,000 lawsuits are open over dismissals without just cause, some still under dispute even after severance payments were made.
"The labor reform will be complex and widely debated, especially in negotiations with strong unions. But if it is approved, it will be one of Argentina"s most important reforms of the past two or three decades," he said.
Political scientist Agustín Pineau, who is affiliated with the University of Buenos Aires, offered a critical view of the labor reform.
"The government is seeking to reduce labor costs through more flexible hiring, changes to severance pay and adjustments to working hours. Everything this legislation seeks to do is make the labor market more flexible," he said.
In his view, this type of reform aimed at encouraging the creation of formal jobs has already been implemented before and has failed to meet its objectives.
Pineau said real growth in formal employment occurs during periods of strong economic expansion, accompanied by investment and real wage growth, not through reforms that make work more precarious and reduce labor rights.
"What this seeks is to weaken workers" bargaining power," he said.