Milei’s labor reform: understand what changes and what the next steps are

Protest in Argentina has confrontation between police and protesters The labor reform promoted by Argentine president Javier Milei was approved by the Senate in the early hours of last Thursday (12), by 42 votes in favor and 30 against, and now goes to the Chamber of Deputies for analysis. The government’s expectation is that the proposal will be voted on in the plenary on February 25th and approved by March 1st, when Milei will open the period of ordinary Congress sessions. 📱Download the g1 app to see news in real time and for free The text may still undergo changes in the Chamber, but it is already considered one of the biggest changes in Argentine labor legislation in decades, as it revises rules that, for the most part, date back to the 1970s. The vote was marked by strong political and social tension. On Wednesday (11), protesters against the reform clashed with the police in Buenos Aires. Unions and opposition parties claim that the proposal weakens workers’ historic rights. Experts interviewed by g1 state that the reform is broad, brings together dozens of articles and is part of a larger package of structural changes aimed at macroeconomic stabilization and stimulating employment and investment in Argentina. Protests against the government in Argentina But what changes? To guarantee political support and speed up the process, the government negotiated around 30 changes to the original text. Among the last-minute changes, Milei removed the article that would allow the payment of salaries through foreign currency or digital wallets, such as those from Mercado Pago. This is because these platforms do not offer the same guarantees as traditional banks, which are supported by the Argentine Central Bank. Even with the setbacks, the proposal maintains major changes. The project makes employment contracts more flexible, modifies vacation and working hours rules, facilitates dismissals and imposes limits on strikes, with the aim of reducing labor costs and encouraging the formalization of employment in a market where around 40% of workers are informal. In practice, the main points of the reform provide for: More flexible holidays, which can be divided into minimum periods of seven days and negotiated outside the traditional period (normally from October 1st to April 30th); Restrictions on strikes in sectors considered essential: the reform requires a minimum service provision of between 50% and 75%, which limits the power of unions to strike; Expansion of the trial period to up to six months — reaching eight or 12 in some cases —, with reduced compensation; Flexibility in working hours, increasing from 8 to up to 12 hours per day, as long as the minimum rest period is respected, allowing compensation depending on periods of greater or lesser demand, without paying overtime; Changes in collective bargaining, with permission for direct agreements between companies and local unions, to the detriment of national conventions; Changes in compensation and dismissals, with a reduction in the calculation of compensation and the possibility of payment in installments (up to six installments for large companies and up to 12 for small and medium-sized companies); Sick leave and work accidents, currently covered by the Aseguradora de Riesgos del Trabajo (ART) insurance system, which now have payment limits in cases of injuries occurring outside the work environment; Combating informality: the proposal eliminates fines for lack of labor registration and creates mechanisms for “regularizing” employment relationships, but prohibits the hiring of monotax workers (regime for self-employed people) in roles that should be formal work, with a dependency relationship. In the digital market, platform workers are now formally recognized as independent, with specific rules and protection insurance, and teleworking (home office) no longer has additional obligations imposed during the pandemic. The reform does not apply to national, state or municipal public servants, with the exception of the rules on strikes in essential services, which also affect areas such as health, transport and security. The Argentine labor market According to data from the Permanent Household Survey (EPH), from the National Institute of Statistics and Census of Argentina (Indec), for the third quarter of 2025, Argentina had 13.6 million employed people and around 1 million unemployed, which corresponds to an unemployment rate of 6.6%. The economically active population totaled 15.4 million people, just over half of the country’s total population (51.4%). Of the total number of workers, 71.9% were salaried, but only 63.3% of them had formal employment, with social security deductions, while 36.7% worked without a formal contract. Also considering self-employed workers (which is around 24.5%), informality affects around 43% of the labor market. The services sector concentrates the majority of jobs, around 70%, followed by industry and construction, with approximately 22%, and agriculture, with around 8%. Despite relatively low unemployment, the data show a market marked by high informality, underemployment and long working hours, with more than a quarter of those employed working more than 45 hours a week. What changes can the reform bring? According to Francisca Vila, Public Affairs coordinator at Prospectiva, there is consensus in Argentina on the need to update labor legislation due to the stagnation of the job market, but the proposal causes strong social division. “It is a very broad reform, with many articles, and one of the most important since the redemocratization of Argentina. The scope is large and affects several aspects of labor relations”, he states. Some points of the reform generate a lot of concern, especially among unions and workers, who see a risk of loss of rights — which was reflected in protests and mobilizations. According to Juliana Inhasz, professor and economist at Insper, the reform can bring benefits such as greater economic dynamism, reduced costs for companies in hiring and firing, in addition to encouraging the formalization of employment. On the other hand, there are risks of weakening labor relations, increasing job insecurity, precarious working conditions and weakening the power of unions, especially for less qualified workers. She warns that this could result in collective negotiations that are unfavorable to workers. Furthermore, there is concern about possible impacts on the social security system if the new compensation funds replace traditional contributions. “The reform could lead to longer working hours, lower pay for overtime and greater ease of dismissal”, explains the professor and economist at Insper. According to professor Paulo Renato Fernandes, from the Rio de Janeiro School of Law at Fundação Getulio Vargas (FGV), the Argentine labor reform seeks to update legislation created in the 1970s, which did not keep up with developments and transformations in the labor market. In the expert’s assessment, the proposal seeks to reduce bureaucratic obstacles, enhance negotiation between the parties and adapt labor relations to contemporary economic dynamics. “It is not possible to enter the 21st century with legislation designed for another reality”, he states. Fernandes also assesses that the changes can also bring benefits to workers by making the business environment more predictable and safe for companies. According to him, legal uncertainty and high costs discourage hiring and contribute to informality. With more flexible rules and greater respect for contracts, the expert says the objective is to encourage the generation of formal jobs. “When the business environment stops being hostile and becomes more stable, entrepreneurs are less afraid of hiring, which increases access to formal work”, he says. Milei after legislative election in Argentina Luis Robayo/AFP Who is Javier Milei An economist by training, Javier Milei is the current president of Argentina. He presented himself to the electorate as a figure outside traditional politics, with a critical speech towards the political system and the structures of the Argentine State. Before entering public life, he worked in the private sector, working in banks and a retirement and pension management company. He was also chief economist at the Acordar Foundation, linked to Peronist and former presidential candidate Daniel Scioli. A university professor, he gained national notoriety through frequent appearances on radio and television programs, where he commented on economic topics. Milei entered politics in 2021, when he was elected federal deputy for Buenos Aires for the A Liberdade Avança party. In 2023, he won the presidential election with a liberal speech in the economy and conservative in customs, defending privatizations, public spending cuts, flexibilization of labor rights and a drastic reduction in the role of the State. Analysts often compare him to leaders of the international far right, such as Donald Trump and Jair Bolsonaro, especially due to his aggressive style, frequent use of social media and open opposition to traditional institutions. Next steps in Congress According to the Clarín newspaper, the text will be analyzed in committees of the Chamber of Deputies after the Carnival holiday. The government is working to approve it before March 1st, but there is still no official date. Francisca Vila states that in Congress, the government is working to speed up approval at the beginning of the year. There are three possible scenarios: quick approval in the Chamber, approval with changes (which would require a return to the Senate) or delay if the vote is postponed to the regular period, after February. Since Milei assumed the Presidency, in December 2023, around 300 thousand formal jobs have been lost, especially in construction, industry and regional economies. While the government argues that the reform can help reverse this scenario, unions and industry entrepreneurs claim that the opening to imports led to the closure of 18 thousand companies in the last two years. “The real problem is the destruction of companies due to the indiscriminate opening of imports,” said Daniel Rosato, president of the Association of Small and Medium-sized Argentine Industrial Companies (IPA). Despite the differences, the government maintains the goal of transforming the proposal into law in the coming weeks. “It is the possible law,” said Senator Carolina Losada, an ally of Milei, when defending the agreement built in the Senate. President of Argentina, Javier Milei, participates in a meeting during the Mercosur summit in Foz do Iguaçu, Brazil, on December 20, 2025. REUTERS/Kiko Sierich *With information from Reuters, AP and Bloomberg news agencies.

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