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The libertarian proposal will weaken unions and generate greater gender inequality. Once approved by the Senate, President Javier Milei’s “Labor Modernization Law” must now be taken up by Argentina’s Chamber of Deputies.

Possibly through the end of February, lawmakers will bear the ultimate responsibility of approving or rejecting a libertarian proposal that changes severance pay, eliminates overtime, weakens collective bargaining and restricts the right to strike.

What Argentina’s far right calls “modernizing the labor market” is, however, a deterioration of working conditions. To show that this is indeed the case, the feminist newspaper LatFem published an extensive analysis of Milei’s reform, whose main aspects are summarized below.

The Essence of the Reform

The far-right Argentine government is seeking a labor reform that is deeply regressive in terms of workers’ rights and aims to sweep away protections won by workers under democracy.

The “Labor Modernization Law” promotes changes in labor relations, weakens unions’ capacity for action and alters the calculation of severance pay. Far from updating legislation to reflect transformations in the contemporary labor world, Milei’s bill is a deliberate attempt to roll back decades of labor gains in Argentina.

The project is tailored to large economic groups — which view unions and labor laws as obstacles to investment and economic growth — and reduces protections for formal workers while completely ignoring the reality of informal workers — about 5.6 million people — and those in the popular economy.

Instead of generating greater formalization of employment, the libertarian government’s proposal deepens deregulation and job insecurity. Among the bill’s central features are changes to severance pay, the creation of an “hours bank,” the possibility of paying wages in dollars and through digital wallets, and restrictions on the right to strike.

The text reads, “Outrageous. They want to push through this reform by force of repression. We must redouble our mobilization, launch a plan of action, and call for a general strike!”

Cheaper Severance, Paid in Installments

The libertarian labor reform proposes replacing the current severance system with a Labor Assistance Fund (FAL), a mechanism allowing companies to contribute 3% of their workers’ salaries to a fund that would be used to pay future dismissal compensation.

Creation of the FAL would mean the state would stop collecting employer contributions and redirect them to cover the cost of layoffs. In practice, the state would finance part of the cost of private-sector dismissals.

Luis Campos, a researcher at the Institute of Studies and Training of the Argentine Workers’ Central Union (CTA), defined it bluntly: “A mandatory termination fund financed 100% with public resources. Yes, the state in charge of paying severance.”

Labor attorney Natalia Salvo says “the termination fund is unconstitutional because it runs counter to protection against arbitrary dismissal,” provided for in the Constitution’s Article 14.

According to Salvo, by eliminating the punitive cost of dismissals, the reform fails to protect workers from possible arbitrariness and deprives them of their jobs without cause and, therefore, of the human right to work.

“With this reform, high turnover would become the rule: anyone who has contributed to the termination fund could fire a worker, and unjustified dismissal would become much more frequent,” Salvo warned.

In addition, the bill changes the calculation of severance and excludes the year-end bonus, vacation pay, tips, bonuses and other nonmonthly benefits. If approved, severance payments would be lower than they are today and, if the case goes to court, could be paid in 12 installments.

Fewer Rights, More Flexibility

Milei’s bill introduces changes that give employers greater leeway at the expense of workers’ rights. Among them:

Hours bank: The measure introduces an hours bank allowing companies to compensate extended workdays with later time off instead of paying overtime.

Vacations in installments: The vacation system would be made more flexible, allowing employers to split vacation time into segments of at least seven days and extending the legal period for granting vacation to any time of year.

If approved, this change could make it harder to take time off during the summer season and complicate coordination with the school calendar and family life.

Weakening of collective bargaining: The government’s proposal seeks to decentralize collective bargaining over working conditions, strengthening company-level negotiations over sectorwide agreements.

As a result, minimum wage floors established by collective agreements by activity would no longer be guaranteed, and workers would have to negotiate their minimum salary with employers.

The bill also ends union ultra-activity, meaning collective bargaining agreements would no longer be automatically extended if they expire without a new deal. These measures weaken unions’ bargaining power and facilitate downward adjustments in wages and working conditions.

Restrictions on the right to strike: By broadening the definition of essential services, which would require mandatory service levels of between 50% and 75%, the bill limits the possibility of strikes to demand better wages and conditions.

It also imposes limits on workers’ assemblies, requires prior employer authorization and establishes that assembly time is unpaid.

“We are facing a reform made to suit the market, whose sole purpose is to weaken union tools and discipline workers,” said Johana Duarte, secretary of the Union of Workers of the Popular Economy (UTEP).

The Maze of Informality

The labor reform proposed by the far-right Freedom Advances party establishes a special regime for platform workers, keeping them classified as self-employed or single-tax payers and rejecting the existence of an employment relationship with the apps, which would only be required to guarantee road safety equipment and insurance.

In that sense, the reform not only fails to solve the problem of high informality — which affects 43.3% of the economically active population — but facilitates it.

“This bill directly excludes platform workers and those providing services as ‘collaborators for independent employers’ from the application of the Labor Contract Law,” Salvo said. For her, the absence of penalties for failing to register workers and the creation of categories that exclude vast sectors from labor legislation pave the way for greater lack of protection.

“What should be discussed is how to register and grant rights to the more than 10 million workers who are currently informal. Instead, the government’s reform seeks to strip rights from those who have formal employment,” Duarte warned.

A Reform Without a Gender Perspective

In Argentina, women face a structural disadvantage in the labor market: unemployment stands at 8.5% for women and 6.8% for men, while the gender pay gap is 29.5% and widens to 38% among informal workers. Far from addressing this inequality, the libertarian labor reform would deepen it.

“One of the most regressive cores is the flexibilization of working time: hours banks, individual negotiation and flexible compensation of workdays. In a country where, according to the National Time Use Survey, women perform three times more unpaid work than men, these schemes do not expand freedoms but punish already limited availability. The result is lower wages, less predictability and greater expulsion from formal employment for those who cannot adapt to variable or extended hours due to double or even triple workdays,” said Sol Bajar, a parliamentary adviser.

The reform also directly hits the most feminized and precarious sectors of the economy, such as services, retail, care work and domestic work, where informality is highest: 97.3% of domestic workers are women, 77.7% work informally and 40% are the primary breadwinners in their households.

“By facilitating dismissals, weakening the presumption of an employment relationship and reducing corporate responsibility, the bill reinforces a precariousness with a woman’s face: more turnover, intermittent contributions and fragmented work trajectories that later translate into lower or nonexistent pensions,” Bajar said.

Another gender impact of the labor reform is its attack on “labor rights with a gender perspective,” most of which are not recognized in the Labor Contract Law but in collective agreements, such as leave for gender-based violence, anti-harassment protocols, lactation rooms and caregiving leave.

“If lower-level agreements are enabled and ultra-activity is eliminated, those rights will be the first to disappear. This reform is not progressive at all. It is a model designed for a worker available 24 hours a day, without caregiving responsibilities and without collective organization. That subject does not exist. And for women, this regime is simply unlivable,” Bajar said.