Argentine Senate poised to pass controversial overhaul of labor laws

The Argentine Senate is poised to approve a sweeping overhaul of labor laws intended to weaken unions and reduce labor costs for businesses.

President Javier Milei’s administration contends the initiative will revive formal employment following the loss of 290,600 registered jobs since he took office. Informal labor in the country currently sits at its highest level since 2008, accounting for more than 43% of the workforce.

The bill would allow companies to negotiate directly with employees, a move that could effectively void industry-wide collective bargaining agreements. Other measures include cutting severance pay and extending the maximum workday from eight to 12 hours.

Opposition leaders argue the reforms will fail to increase employment or improve job quality. The proposed changes have already sparked widespread protests and a general strike, resulting in violent clashes between demonstrators and police.

This legislation serves as the cornerstone of President Javier Milei’s economic "shock therapy," a high-stakes experiment in libertarian capitalism aimed at dismantling Argentina’s decades-old legacy of Peronist protectionism. At its core, the administration is wagering that sweeping labor market deregulation—making it significantly easier and less costly for firms to hire and terminate employees—will incentivize a shift toward formal job creation.

The strategy, however, is fraught with systemic risk. By curbing the power of labor unions—historically the country’s most potent political and economic brokers—and sanctioned extensions of the workday to 12 hours, the government risks deepening an already volatile social divide. The surge in nationwide strikes and street protests underscores the friction this transition has ignited.

Ultimately, the viability of Milei’s reform will be judged not only by macroeconomic indicators or the expansion of the formal workforce, but by the government's capacity to manage the resulting social fallout. Global policymakers and institutional investors are monitoring the situation as a litmus test for radical liberalization. If Milei succeeds in revitalizing Argentina’s embattled economy, his model could become a blueprint for emerging markets; if he fails, it will serve as a definitive cautionary tale on the political costs of unfettered economic restructuring.