On February 19, workers throughout Buenos Aires staged a 24-hour strike to protest the lower house’s approval of libertarian Argentinian president Javier Milei’s labour reforms, which will extend working hours, limit the right to strike, and reduce severance pay. Thousands gathered outside parliament in defiance of the proposed bill, and the protests turned violent as police shot rubber bullets and deployed tear gas. On March 24th, the Labour Modernization Bill was passed in Congress following 15 hours of debate. While Milei argues that the reform will “standardize criteria”, curb labour lawsuits, and provide relief to small and medium-sized businesses, many workers’ unions maintain that this reform will act against workers’ interests, and could even be considered unconstitutional.
These reforms are part of Milei’s larger austerity plan, which he boasts has reduced inflation rates from 240% to 30% in 2 years. While the statistics show a promising story, they hide the many social services that have been cut in pursuit of this lower rate. These reforms are also being implemented during a particularly difficult period of unemployment, as around 300,000 jobs have been lost since Milei took office in late 2023. Thus, many Argentines are white-knuckling the labour protections that have been well-institutionalized in their country’s laws since the influential socialist Peron government of 1946-1955.
The reforms have extended the allowable workday from 8 to 12 hours, provided that the total workweek does not exceed 48 hours. In effect, this removes overtime pay for those working longer shifts. The bill reduces severance payments and allows them to be paid from company funds originally intended for employees’ pension plans. Thus, those who are laid off receive their severance pay from the pension fund to which they were originally entitled.
The law further allows employers to pay employees in foreign currencies or, in part, through non-monetary forms of compensation such as food, accommodation, or other goods and services. The new legislation lowers employer contribution rates to pension plans by 3%, with even greater reductions for newly hired employees. Lastly, the reform stipulates minimum service requirements of 75% during strikes across a range of sectors, including telecommunications, commercial aviation, and education.
The Informal Sector
Milei’s administration contends that the reform’s main purpose is to reduce the number of Argentinian employees in the informal sector, who are locally known as working al negro, or “in the dark.” Informal work is characterized by unbound contracts and under-the-table cash payments that circumvent tax laws. The percentage of the population informally employed reached 43% in 2026. Alongside these informal workers, there has been an influx of monotributistas, “self-employed” workers, who pay much lower taxes than those in the formal sector. This poses a serious issue for the Argentinian government and its economy, as it limits the government’s ability to effectively collect income taxes and places a greater tax burden on workers in the formal sector. For reference, it takes the contributions of 25 monotributistas to finance one minimum pension in Argentina.
The informal sector’s considerable size can be explained in part by the numerous disincentives for smaller employers to formally hire new employees. For one, the employer must pay 24-29% of a formal employee’s salary in taxes to the government — this tax includes an 18-21% contribution to the pension fund, and 6% to health insurance. On top of that, the employer pays out 2-5% to ART, a labour risk insurance program. Further, the employer must pay the aguinaldo, or “13th salary,” which amounts to an extra month of salary spread over 12 months.
What’s more, there is a high prevalence of lawsuits by fired employees who sue their employers for wrongful termination. In 2025, 350 new labour lawsuits were filed daily in Argentina, with the majority resulting in rulings in favour of employees who received significant compensation. In a country already racked by high inflation, the threat of a debilitating lawsuit after every dismissal (coupled with hefty severance payments) is enough to dissuade many small business owners from taking the financial risk of formally hiring a new employee. By reducing severance pay, softening rules on firing employees, extending probationary periods, and reducing employer taxes, the labour reforms aim to shift employers’ incentives towards formal hiring.
The Opposition
Argentines are divided on the bill — polls found the 48.6% percent were in favour of the reforms and 45.2% were against. Thousands of those against the reforms rallied in the streets in a general strike called by the Confederación General del Trabajo (CBT), arguing that none of the labour reforms actually benefit labourers, and that the bill sets the country back 100 years. 3 days after the bill’s adoption, the CGT challenged the reforms in court on grounds of unconstitutionality. “The misnamed ‘modernization’ bill seriously affects collective and individual rights, expressly violating constitutional principles,”, the CGT shared in a statement released on social media. They contend that this bill violates international codes of non-regressivity that Argentina has ratified, which state that new bills cannot remove previously granted labour rights.
The claim filed by the CGT has resulted in a partial suspension of 80 of the 200 articles listed in the reform, following judge Raul Ojeda’s decision on March 30th. These include the changes to severance pay and working hours. This suspension will remain in place until the “underlying constitutional challenge is resolved.”
Weakening Union Power
Historian Victoria Basualdo writes that this bill is the “most audacious and extreme in regressive reform ever enacted in Argentina,” but can be understood within a context of liberalization that began in the 1970s: “This must be interpreted as successive stages in a capital offensive against labor that has evolved over time: dictatorships, the reforms of the 1990s, and the business and technological transformations of the 21st century. It is not just a law, but an attempt to reconfigure the relationship between capital and labour.”
Indeed, previous right-leaning governments have attempted to enact labour reforms but to no avail; Milei’s unprecedented capacity to enact labour reforms can be understood as the product of the increasingly diminishing number of formal workers that make up “formal” unions, weakening the union power that historically has opposed these changes.
Further, Milei’s administration has unprecedented financial backing from recent IMF contributions and Donald Trump’s $20 billion loan. Combined with a stagnant economy that invites radical change, these two factors have enabled the labour reforms to pass in Congress, a reality once unimaginable in a country with a political history rooted in protecting workers’ interests.
This deregulation follows global trends of weakening union power throughout OECD (Organization for Economic Cooperation and Development) countries. Argentina’s application for OECD membership has been under review since 2022, and its new labour laws follow trends within this association: since 1985, union density has halved across 28 OECD countries, from 30% to 15% in 2023-2024. As Argentina sits on the cusp of development, it is using a tactic common to developing economies seeking growth: deregulation to promote investment.
However, economic consultant Ivan Carrino points out that “the necessary condition for job creation is that the economy begins to grow.” Carrino warns that labour market deregulation on its own does not necessarily create jobs — he recalls the labour market deregulation carried out by Carlos Menem in the 90s, which accelerated job destruction, and led to unemployment rates reaching 20% after the 2001-2002 crisis. Will Milei’s libertarian economic experiment result in a more formalized and productive economy? Or will it lead Argentina down the same dark path it has walked before with Menem,, always sending its most vulnerable into the shadows first, and this time, with fewer protected rights?
Edited by Noe Beaudoin
Disclaimer: This is an article written by a Staff Writer. Catalyst is a student-led platform that fosters engagement with global issues from a learning perspective. The opinions expressed above do not necessarily reflect the views of the publication.
Madeleine Landon is a U2 student pursuing an Honours International Development with a minor in Environment. She is interested in writing about Latin American Politics during her semester abroad in Buenos Aires.