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Milei’s Labor Modernisation Bill cleared the lower house 135-115 on February 20, survived a 24-hour general strike and now returns to the Senate for a final vote — but in steel towns like Villa Constitución, where ArcelorMittal Acindar’s workforce cycles through rotating suspensions at declining pay rates, the gap between legislative victory and economic recovery keeps widening.
The Bill Clears Congress — Barely
Argentina’s Chamber of Deputies approved President Javier Milei’s flagship labor reform early on February 20 after an all-night session, sending the amended legislation back to the Senate for final ratification. The 135-115 vote marked the ruling La Libertad Avanza coalition’s ability to assemble a working majority by drawing support from the PRO, the Unión Cívica Radical and several provincial blocs — but the margin required a significant concession. To secure passage, Milei’s team stripped out Article 44, which would have halved sick-leave pay in certain cases, after it became clear the provision would sink the bill entirely. Because the lower house amended the text, the Senate must vote again; ruling coalition leaders have called a joint committee session to fast-track the bill to the floor by February 27, ahead of Milei’s state-of-the-nation address.
The bill rolls back labor regulations dating to the 1970s. Among the headline changes: employers can extend the workday from eight to twelve hours, a new “time bank” replaces paid overtime, and wage negotiations are permitted at the company level rather than exclusively through sectoral agreements. The Senate had passed its version 42-30 on February 12, attracting immediate investor attention as a test of whether Milei can sustain his reform agenda after his party’s midterm election victory.
A Strike That Paralysed the Capital
The CGT, Argentina’s largest umbrella labor federation, answered with the fourth general strike of Milei’s presidency. The 24-hour walkout on February 19-20 shut down Buenos Aires’s subway system, grounded 255 Aerolíneas Argentinas flights and halted buses, taxis and freight across the country. The confrontation unfolded two days after tire manufacturer Fate — an 85-year-old institution and the country’s only nationally-owned radial tire producer — announced the immediate and permanent closure of its Buenos Aires Province plant, laying off 920 workers without notice. The timing was not lost on either side.
Villa Constitución: The Rust Belt in Miniature
Three hours north of Buenos Aires, the port town of Villa Constitución distills Argentina’s industrial crisis into a single postcode. The Paraná River has grown so shallow from drought that ships run aground. Drug violence from nearby Rosario has spread into the community. And the ArcelorMittal Acindar steel complex — for decades the town’s economic anchor — has been operating at roughly half capacity since 2024, production collapsing from 1.2 million tonnes of rolled steel to an estimated 600,000 tonnes as public works spending froze, domestic demand cratered and subsidised Chinese imports undercut local pricing. The Federation of Santa Fe Industries reported that provincial steel output fell 45 percent year-on-year, reaching its lowest level in seventeen years.
Acindar’s approximately 2,500 direct employees have been cycling through negotiated rotating suspensions since 2024, a mechanism extended into 2026 under an agreement with the local UOM metallurgy union chapter. The deal maps out a descending pay scale: 83 percent of salary in January and February, declining to 75 percent in the final quarter. The plant shut down almost entirely between mid-December and January 11. Mayor Jorge Berti, now in his third consecutive term, has visited Casa Rosada twice in four months to press the case, warning that further job losses could trigger “a social conflict of unpredictable consequences.”
The Structural Damage
The numbers extend well beyond Villa Constitución. Formal salaried employment has fallen by more than 270,000 positions since Milei took office in December 2023, with the steepest declines in public administration, construction and manufacturing. The trade association Industriales Pymes Argentinos estimates more than 22,000 companies have closed in two years under a liberalisation policy that lowered tariffs, eased customs controls and reformed the anti-dumping regime. Argentine companies have the same number of formal payroll jobs they had a decade ago, even as the population has grown by three million. By some estimates, half of all Argentine workers operate off the books.
Villa Constitución has weathered repeated waves of layoffs since the 1990s — first under Menem’s market reforms, then after the auto-parts plant closure that followed Macri’s 2015 election. What distinguishes the current episode is scale: the combination of a strong peso, open trade borders and collapsed public investment is hitting multiple heavy industries simultaneously. The closure of Fate’s tire plant, where Chinese imports had captured a market share pattern echoing the tariff distortions reshaping global commodity flows, became an emblem of the friction.
What the Reform Does — and Doesn’t — Solve
Milei frames the legislation as essential to pulling Argentina’s vast informal economy into the registered workforce. Former labor undersecretary José Anchorena, who served under Macri, characterised the approach as a departure from the president’s usual style: “This isn’t the chainsaw. This reform is moderate, but it’s a start.” The IMF’s spokeswoman Julie Kozack endorsed the reform’s direction at a press conference on February 20, saying it should create jobs while cautioning that “properly mitigating” transition costs would be important.
The political backdrop favours passage. Milei’s coalition won more than forty percent of the popular vote in October’s midterms, and Trump reiterated his support publicly on the day of the lower house vote, having already backed Argentina with a $20 billion Federal Reserve swap line in September 2025. If the reform becomes law, it could lower borrowing costs and bring Argentina closer to its first international sovereign bond issuance since the 2020 default, though market analysts caution that steelmakers globally are contending with structural overcapacity that no single country’s labor reform can resolve.
But labor experts are not convinced the bill will trigger a hiring spree, even with a second consecutive year of above-four-percent GDP growth. The reform addresses the cost of formal employment; it does not address the strong peso crushing export competitiveness, the collapse of infrastructure spending that has idled steel and cement producers, or the Chinese import flood that shuttered Fate and is squeezing Acindar’s order book. In Villa Constitución, where workers report for shifts that may or may not materialise depending on the week’s production schedule, the debate over how governments wield trade authority is not theoretical. The reform may pass the Senate. Whether it reaches the factory floor is a different question entirely.
Sources: Buenos Aires Times, Al Jazeera, AP/The Hill
