President Javier Milei seeks to eradicate left-wing policies rooted in Argentina with a series of reforms since arriving at the Casa Rosada in December 2023. The most recent of them is the labor reform, which has already won a victory in the Chamber and has a great chance of being definitively approved this Friday (27), in the Senate.
If confirmed, the new legislation will not only reverse decades of a Peronist agenda that has dominated the country, but will also be a severe blow to unions, which maintain strong political and social influence in Argentina.
The new labor reform, for example, ends a rule that kept collective contracts in force indefinitely until a new agreement was signed. With the change, these contracts now have an expiration date, which forces unions to negotiate more quickly. The proposal preserves clauses relating to working conditions, but benefits provided exclusively in the collective contract may be lost if no new agreement is signed in time.
The project also affects the right to strike by expanding the list of sectors considered essential, which now require a minimum operation of 75% during strikes, with security forces required to maintain 100%. The occupation of companies by workers becomes a serious infraction, with more severe punishments for participants and organizers, although the right to strike is preserved.
As for mandatory union contributions, the reform does not eliminate them, but limits the worker’s payroll deduction to 2% of the salary and its renewal depends on an agreement between unions and employers.
The protection of labor rights in Argentina has a history that goes back more than a century. However, it was between 1943 and 1955 that then Argentine president Juan Domingo Perón turned unions into a political and social force. In 1946, with his election to the presidency, the unions became an institutionalized force and practically the “backbone” of the Peronist movement.
Since arriving at Casa Rosada, Milei has promised to weaken the unions and has been successful in his objective. The unions even called a general strike last week to block the vote on labor reform in Congress and organized street protests that ended with arrests and injuries after clashes with the police.
For Eduardo Galvão, professor of Public Policy at the Brazilian Institute of Capital Markets (Ibmec) and author of the book Political Risks in Latin Americaif confirmed, the labor reform will significantly change the way capital and labor relate in Argentina.
“The country has always had a model with a strong union presence, centralized collective bargaining and strict rules for dismissal. In practice, this tends to reduce the institutional power of unions in Congress and in major national negotiations, but it does not mean that they will disappear. They may lose formal strength, but gain prominence on the streets, especially if workers feel a loss of protection or a drop in income.”
Strengthening in Congress and division of Peronism gave agility to Milei’s reform
The proposal created by Javier Milei’s government was voted with surprising agility in the Chamber of Deputies last week, when it was approved by 135 votes in favor, 115 votes against and no abstentions.
In addition to the points already mentioned that directly affect unions, the text modifies the compensation system for contract termination and allows for flexibility in the vacation and overtime system.
The project had already obtained the green light from the Senate on the 11th, where it will return for a final analysis, after changes to the text by deputies, and subsequent sanction.
The government agreed to eliminate one of the articles that generated the most controversy among congressmen, which dealt with sick leave and defended the reduction of sick workers’ wages to 75% or 50%, depending on the case.
The Milei administration argues that the reform will generate more formal jobs, in a context in which more than 40% of Argentine workers are employed informally.
Since October’s legislative elections, when Milei’s La Libertad Avanza (LLA) party won an important victory that renewed a large part of the Argentine Congress, the left-wing alliance led by Peronists has increasingly lost strength due to internal divisions.
At the time, the president’s base managed to reduce the majority of the progressive opposition (which went from 34 to 26 seats), while the right-wing force went from six to 19 seats in the Senate. The result left Peronism with its lowest representation in the National Senate since 1983. In the Chamber, growth was also significant: the LLA went from 44 to 93 deputies.
For Marcelo Bermolén, director of the Institutional Quality Observatory at the Austral University of Argentina, the political and parliamentary crisis of Peronism began in the 2023 elections, when the left-wing candidate Sergio Massa lost to the libertarian Javier Milei.
“The political deterioration was accentuated after the failure of the government of former president Alberto Fernández, an administration that liquidated the aspirations of eventual successor Sergio Massa. […] The misfortunes were worsened by the conviction of former president Cristina Fernández de Kirchner for corruption committed during her presidency and her subsequent house arrest”, he points out.
The vote on labor reform this month was strongly influenced by this political turmoil. Milei’s management managed to garner support from senators and deputies from the opposition bloc Unión por la Patria (left-wing), who ended up supporting the initiative despite political differences, in exchange for greater benefits.
Peronist governors negotiated with the Milei administration to approve the measure in Congress, seeking federal resources that would be allocated to their provinces, and pressured congressmen from their states to vote in favor of the reform. The minority support from representatives of the left bloc was sufficient for the proposal to advance.
Professor of International Business and International Relations at the Pontifical Catholic University of Paraná (PUCPR) João Alfredo Lopes Nyegray highlights that, in this scenario, the vote on labor reform becomes an impossible test of loyalties.
“Part of Peronism needs to respond to the union base and the historical narrative of labor rights; another part, especially more pragmatic provincial and parliamentary actors, responds to fiscal restrictions, the need for governability and electoral calculation in districts where anti-Peronism/anti-Kirchnerism (or anti-“caste”) started to yield more than loyalty to the center”, explains the analyst.
In this way, Milei’s group, which does not have its own majority, is able to exploit this split in the left-wing political movement by offering specific agreements and legislative positions, rewarding dissent and making it costly for Peronism to vote as a bloc, which accelerates internal decomposition.
The return of the reform text to the Senate also occurs at a time of structural crisis for Peronism in the legislative house, in which three senators broke with the bloc led by José Mayans, reducing the alliance to just 25 members. The rupture occurred precisely because they disagreed with the agreement signed between provincial Peronist governors and the government, motivated by fiscal and political needs. They are considering creating a new force in the Upper House.
Since 1983, Peronism has maintained control of the Senate and functions as a veto power. The constant internal frictions and unfavorable results in the last legislative elections, however, created space for a scenario of weakening of the base.
For professor Eduardo Galvão, the reform vote acts as a political divide in Argentina, which will still depend on the practical results of the measure in society and the economy.
“Se [a reforma] is perceived as a necessary step to modernize the economy and create jobs, it can consolidate Milei as a president who delivers on what he promises and manages to approve structural changes. On the other hand, if it is accompanied by an increase in unemployment, a drop in income or a feeling of loss of rights, it can fuel social wear and tear”, he assesses.
For the analyst, the agile approval from Congress signals that the government currently has a real capacity to approve difficult projects. However, this does not eliminate the need for political agreements to keep their agenda in place. “Milei depends on alliances with centrist parties and provincial blocs, and each issue requires negotiation”, says Galvão, adding that the government has the strength to continue guiding changes in the State, but does not have carte blanche.
Professor João Nyegray highlights that, despite the structural shock of Peronism in the current Argentinean moment, this is a “specific rupture”, which targets the “social infrastructure of Peronism — the centrality of formal work, the union and collective bargaining as organizers of the system — more than Peronism as a cultural and electoral identity”.
