Milei’s Labor Project Aims to Boost Investments but Will Put Argentine Unions in a State of War

FILE PHOTO - Argentina’s President Javier Milei speaks during the Conservative Political Action Conference (CPAC) in Balneario Camboriu, Santa Catarina, Brazil. July 7, 2024. REUTERS/Anderson Coelho · Reuters

By Nicolás Misculin

Wed, February 11, 2026, 3:37 a.m. GMT+9 4 min read

In this article:

VCCTF -2.98%

NIOUSD=X -0.00%

NIO=X 0.00%

USD=X 0.00%

By Nicolás Misculin

BUENOS AIRES, Feb 10 (Reuters) - Javier Milei’s ultraliberal government has promoted a labor reform to encourage private investments that will drive economic growth, but the project has set the powerful Argentine unions on a war footing, threatening massive strikes and protests to derail it.

The labor reform is a key step in Milei’s plan to steer the Argentine economy toward a deregulated free-market model, a plan that could be affected if the project is not approved by Congress, which will begin debating it this Wednesday amid a protest by workers that could be massive.

Argentina’s main unions, which believe the law strips workers of rights, have warned that protests — which in the past have paralyzed the country — could intensify if the Senate approves the project, which will then be considered by the Lower House.

“Starting today, the government must begin to worry because a new cycle of confrontation with workers is opening,” Rodolfo Aguiar, secretary-general of the State Workers’ Association (ATE), told Reuters, opposing Milei’s public spending cuts.

“The reform completely destroys the rights of individual and collective workers; the arguments that it will improve productivity or company competitiveness are false, and it certainly won’t create jobs,” he added.

Milei’s “labor modernization” proposal seeks to incentivize formal employment — currently over 40% in Argentina — while reducing severance pay and the number of dismissal lawsuits, which many employers see as a headache.

It also modifies the payment of “overtime,” creates a dismissal fund, and limits the scope of strikes by setting minimum benefits that unions must guarantee during protests, as well as restricting their funding by limiting workers’ contributions to unions.

“The current labor system makes you think twice before investing and hiring. The main idea of the new law is not to change labor relations much, but to generate predictability in the system,” said Senator Patricia Bullrich, a government supporter, on her X account.

BUSINESS COMPLAINTS

“The labor reform is necessary in Argentina because for decades there has been little formal employment growth in the private sector… To create more jobs, what you need is more investment and growth,” explained analyst Aldo Abram of the Freedom and Progress Foundation.

One of the main complaints from small and medium-sized business owners is the high number of costly legal disputes they face due to a legal and judicial system they consider harmful.

“Small and medium enterprises (SMEs), which lack the structure of large companies to handle labor lawsuits, can’t win any cases, and that really threatens the existence of the SME that suffers from it,” described Salvador Femenía, press secretary of the Argentine Confederation of Medium Enterprises (CAME).

Milei, who took power at the end of 2023 after a surprising electoral victory over the center-left Peronism, has promised to open the economy and reduce taxes and regulations to promote private investments.

His public spending cuts have so far balanced state accounts and reduced high inflation, but he has not yet succeeded in boosting the economy or lowering the unemployment rate, currently at 6.6%.

“What greatly affects companies is the high cost of labor due to taxes and labor lawsuits. I don’t know if the reform project will fully address this, but I think it’s positive,” said Gustavo Del Boca, businessman and president of the Córdoba auto parts manufacturers’ chamber (CIMCC).

Although the ruling party is the main force in Congress, it lacks a majority in either chamber, which is why weeks ago it engaged in sensitive negotiations with opposition legislators and leaders who might support the project. The Peronists have openly opposed it.

Experts believe the government will have enough support to pass the reform if it is willing to make the changes the more moderate opposition requests.

“It is a regressive project with a negative impact on the labor market. It doesn’t modernize anything and doesn’t have a real impact on small or large companies,” said Cristian Jerónimo, a leader of the powerful CGT union federation, on a local radio. “We don’t rule out escalating conflict if our demands are not heard.”

(Report by Nicolás Misculin; Edited by Jorge Otaola)

Terms and Privacy Policy

Privacy Panel