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Argentina’s Senate approved President Javier Milei’s Labor Modernization Bill early Thursday morning after more than 13 hours of debate, with 42 votes in favor and 30 against. The bill, backed by La Libertad Avanza and several provincial blocs, now moves to the Chamber of Deputies for final consideration. Outside Congress, thousands of union members clashed with police, with security forces deploying tear gas, water cannons, and rubber bullets against demonstrators throwing stones and Molotov cocktails. At least 15 people were injured and around 30 detained.
Key Labor Market Changes
The bill fundamentally alters how wages are negotiated in Argentina. Companies would be able to bargain directly with workers, with company-level deals taking precedence over broader sector-wide collective agreements. This shift from industry-wide to company-level negotiations represents a major departure from Argentina’s traditional labor framework, where unions have historically represented all workers within a given sector.
Severance payments face new limitations under the legislation. The bill caps severance calculations at the average wage per year under collective agreements, excluding bonuses, paid vacation, and the thirteenth salary (aguinaldo). Currently, calculations are based on an employee’s best monthly payment with no maximum limit.
A new FAL (Fondo de Asistencia Laboral) fund would cover layoff costs, financed by deductions of one percent from major companies and 2.5 percent from smaller firms. The bill also introduces flexibility in severance payment schedules, with small and medium-sized enterprises (PyMES) able to spread payments over 18 installments and larger companies given 12 months.
Workplace Flexibility and Working Hours
The legislation creates an “hour bank” system allowing companies to compensate overtime with extra days off rather than additional pay. It also opens the door to workdays of up to 12 hours, with employees able to agree to longer shifts in exchange for reduced future hours. Vacation scheduling gains new flexibility, with holidays permitted between October 1 and April 30 and divisible into periods of at least seven days.
Union dues are now capped at two percent. The union-operated obras sociales healthcare schemes continue with employer contributions set at six percent, up from the government’s originally proposed five percent — a concession to labor groups. Banks retain exclusive authority to process wage payments after the government dropped a clause that would have allowed salaries to be paid through digital wallets, following pushback from traditional banks.
Workers who suffer non-work-related injuries or illnesses would face sick pay reductions of 25 percent for non-risky activities and 50 percent for risky ones. Unions would also need to request permission for workplace assemblies, with disruption of non-participating employees considered a sanctionable offense.
Strike Restrictions and Union Opposition
The bill introduces minimum service requirements during strikes, mandating that unions maintain 75 percent of operations in essential services such as health, education, energy, and transportation, and 50 percent in sectors including banking, mining, industry, and e-commerce.
Argentina’s General Confederation of Labor (CGT) condemned the Senate vote, calling the bill a step backward for both collective and individual labor rights. The International Trade Union Confederation described the reforms as an attack on democracy that would deepen inequality and increase informality. Senate floor leader Patricia Bullrich defended the bill, arguing that Argentina’s current labor framework is outdated and has failed to create new formal jobs for 15 years.
New Business Incentives
The bill extends beyond traditional employment relationships to address modern work arrangements. Digital platform workers, including delivery personnel, would be classified as independent service providers. Platform companies must provide accident insurance and road safety training for these workers.
The government’s RIGI investment incentive scheme expands to include small and medium businesses through a new RIMI program, offering income and IVA value-added tax benefits for new ventures. Companies hiring new staff would receive reduced employer contribution rates as an additional hiring incentive.
Next Steps
The bill now heads to the Chamber of Deputies, where the opposition has signaled further resistance and has not ruled out court challenges. The ruling coalition aims to secure final approval before the start of the ordinary legislative session on March 1. Labor courts would face new restrictions under the bill, limiting interest rate increases on labor credits to inflation plus three percent annually.
Sources: Batimes
