BUENOS AIRES, Argentina (AP) — Argentina's Senate early Thursday gave its overall approval to a labor overhaul that is considered crucial to President Javier Milei’s shock therapy program after hours of debate that unfolded in the shadow of a mass protest outside Congress.
Thousands of workers mobilized by powerful trade unions converged on a central square of downtown Buenos Aires earlier Wednesday, blocking traffic and clashing with police as the marathon session got underway.
The fiery standoff underscored the sensitivity of labor rights in this nation dominated since the 1940s by Peronism, a populist movement that has swung right and left ideologically, but has always claimed to champion workers’ rights.
At around 1:30 a.m., senators backed the labor bill in principle by a vote of 42-30 after 13 hours of debate, handing Milei an initial victory that underscored the radical libertarian’s newfound leverage in Congress and more pragmatic approach to legislating. After granting the bill general approval, lawmakers began a lengthy article-by-article vote.
The bill still faces a test next month in the lower house, where some Senate amendments could be changed or reversed.
Supporters of Milei's revamped labor law say high severance payouts and taxes make it almost impossible to fire employees, constraining productivity and discouraging business from formal employment. Almost half of Argentines work off the books. Private sector job growth has remained stagnant for 14 years.
“With the modernization of the labor system, more people will have access to formal, legal employment,” Milei’s La Libertad Avanza party said in a statement as the debate kicked off. “We are rebuilding Argentina from the ground up, starting with employment.”
The bill has drawn fierce opposition from labor unions and their Peronist allies, who argue it would roll back measures that protect workers from abuse and the nation’s notoriously frequent economic shocks.
“If severance pay, overtime and vacation time — in other words, all the protections workers have gained over time — are up for grabs, it won’t make things better for anyone,” said Axel Kicillof, the governor of Buenos Aires province and the most powerful elected official in the Peronist opposition.
Milei hopes to overcome a history of failure
Successive governments, as well as a military dictatorship, have promised to overhaul Argentina’s labor legislation and have failed.
“This is the most important reform in the last 50 years,” said Sen. Patricia Bullrich, leader of the La Libertad Avanza bloc in Congress. “No government has achieved it, and I believe we will.”
One far-reaching reform came tantalizingly close in 1984 only to collapse in the Senate by a single vote. Another cleared the Peronist-dominated Congress in 2000, only to be discredited by a vote-buying scandal and promptly overturned. Yet another attempt in 2017 didn’t even make it to a vote due to union pushback.
Milei himself used an executive order to muscle through an overhaul after entering office in 2023, only for it to get tied up in court after unions filed for injunctions.
But after clinching a big midterm victory last year, with help from his ally U.S. President Donald Trump, Milei has a fresh mandate to enact reforms that for decades businesses have desired and international financial institutions have demanded.
The bill under discussion would curb the right to strike, extend trial periods during which companies can fire unproductive new employees, defang national trade unions by allowing collective bargaining at company level and unwind a byzantine system of severance payments by narrowing grounds for wrongful dismissal.
Experts said that even if the government is forced to make concessions in Congress, the passage of anything called “labor reform” would be a huge achievement in Argentina, where many current clauses have been in place since the mid-1970s.
“I’m skeptical about whether it’s going to induce a massive formalization of workers in the labor market. That’s why I think the importance is much more political, symbolic,” said Ignacio Labaqui, a Buenos Aires-based senior analyst at risk consultancy Medley Global Advisors. “For Peronism, it would definitely be a huge defeat.”
Violent scenes and pragmatic talks
Milei and his officials lashed out at left-wing opponents as security forces struggled to control protesters outside Congress, firing water cannons and rubber bullets. Demonstrators lobbed petrol bombs, stones and water bottles. Authorities said they made at least 15 arrests, among them protesters accused of attacking police officers.
“The stale old union establishment is calling to ‘set the country on fire’ because they don’t like labor modernization,” government spokesperson Javier Lanari wrote on X. “They choose to protect their sectoral privileges at the expense of harming Argentines.”
Despite the show of force, some doubted that Argentina’s old-school trade unions would put up much more of a fight.
With their Peronist backers weakened in Congress and reputation long sullied by allegations of corruption and cronyism, the trade federations are not the force they once were. Mass protests petered out in the last year as both Milei and union bosses shied away from frontal assaults in favor of negotiations.
Some initial proposals that threatened to bankrupt the unions — including one requiring employees to opt in to membership, rather than having members’ dues taken automatically — were watered down in the final version that passed early Thursday.
“The unions needed to protest today to reinforce their base and show them that they're fighting, but the true negotiations happened behind closed doors,” said Ana Iparraguirre, an Argentine political analyst and partner at Washington-based strategy firm GBAO.
“They were smart enough to negotiate to preserve the things that were important to them.”
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Associated Press writers Clara Preve and Débora Rey contributed to this report.
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