Argentina Senate Approves Milei's Sweeping Labor Modernization Law

Argentina's Senate formally approved President Javier Milei's comprehensive labor modernization law on Friday, February 27, 2026, marking a significant legislative victory for the libertarian administration. The final passage, which incorporated amendments from the lower house, clears the path for substantial structural changes to the nation's labor framework, potentially reshaping worker-employer dynamics for the coming decades. The vote concluded with 42 senators in favor, 28 against, and two abstentions, advancing a core component of Milei's agenda to transition the economy toward free-market principles.

The government intends to formally enact the legislation by March 1, 2026, despite continued strong opposition from organized labor groups. The reform fundamentally alters established labor relations by introducing greater flexibility in hiring and dismissal processes, alongside modifications to vacation entitlements. A key provision permits extending the standard workday from eight to twelve hours through a voluntary 'hours bank' system, a measure critics suggest could circumvent traditional overtime pay structures. Furthermore, the new law imposes restrictions on the right to strike, specifically mandating minimum operations in essential services.

Supporters of the overhaul argue the measure is necessary to address the high costs associated with labor lawsuits, which they contend constrains productivity and deters formal employment. This legislative success allows President Milei to showcase administrative momentum during his Sunday address opening the ordinary sessions of Congress, following a period of intense political friction. The legislative process was marked by significant public demonstrations, including a 24-hour nationwide strike called by the General Confederation of Labor (CGT) and clashes between protesters and police outside the Parliament building during earlier debates.

The opposition, often aligned with the Peronist movement that established many current protections since the 1940s, contends the law severely weakens worker safeguards. One significant concession made to secure passage involved removing a contentious clause that would have halved salaries for workers on injury or illness leave unrelated to their jobs. However, the underlying structure remains transformative, allowing for direct wage bargaining at the company level, potentially overriding broader collective agreements. A new severance mechanism includes the creation of a state-financed FAL (Fondo de Asistencia Laboral) fund to assist firms unable to meet dismissal costs, capping severance based on the collective agreement's average wage, excluding bonuses.

Proponents, including Senator Patricia Bullrich, assert the measure is a 'work formalization project' necessary to adapt to the modern world and limit union influence. Conversely, opponents view the changes as a regression; unionist teacher Sergio Emiliozzi stated the law facilitates easy firing rather than job creation. This debate occurs against a backdrop of persistent economic challenges, including a high rate of informal employment, which currently comprises over 43% of Argentina's approximately 13 million workers, operating outside formal tax and social security frameworks. Labor lawyer Juan Manuel Ottaviano has described the bill as potentially unconstitutional due to its limitations on individual workplace rights, and the CGT has confirmed its intention to challenge the law in court, signaling a protracted legal battle ahead.