Argentina's Senate on the 27th (local time) passed a sweeping labor reform bill that lowers dismissal expense and eases regulations on working hours. President Javier Milei, who has pushed structural reforms since taking office, called the bill's passage a "historic moment."
The Senate approved the labor modernization bill with 42 votes in favor, 28 against, and 2 abstentions. On the day of the vote, protests were held around Congress, and authorities deployed a large police presence to tighten security.
The core of the reform is a sweeping overhaul of the existing labor law system enacted in 1974. By changing the severance compensation structure and increasing flexibility in working hours while also touching union powers, the Milei administration aims to reduce hiring burdens on corporations and increase formal employment.
One of the key mechanisms is the introduction of the Labor Assistance Fund (FAL). It sets aside part of the employer contributions paid by corporations to be used as severance resources in case of dismissal, operates as an investment account managed by financial institutions, and any shortfall is covered by the employer.
The opposition objected, saying the system is effectively a means of lowering dismissal expense and could weaken worker protections. Concerns were also raised that running social security resources separately could shrink the public safety net.
The bill also introduced a working-hours bank (banco de horas). Instead of immediately paying overtime premiums, excess hours can be banked and later compensated with time off, while allowing a maximum of 12 working hours per day, and maintaining the minimum 12-hour rest between shifts and 35-hour weekly rest rules.
Vacations can be split into minimum units of seven days, and it also guarantees summer leave at set intervals. The bill also abolishes the system of automatic extension after a collective agreement expires, which the opposition and labor groups criticize could weaken industry-level bargaining power while strengthening company-level negotiations.
Telecommunications, hospitals, waste collection, commercial aviation, port control, customs and immigration, and primary and secondary education were designated as essential public services. These institutional sectors must maintain at least 75% of normal operations even during strikes.
The government said it would open a temporary voluntary reporting channel for unregistered workers and pursue employment formalization by offering tax incentives to corporations that hire the unemployed and simplified-tax regime registrants. However, the opposition argued that the reform could roll back labor rights and increase job insecurity, and some economic experts also noted that in a phase of long-term low growth and high inflation, it is difficult to expect job expansion through institutional changes alone.
Labor groups plan to challenge the bill through legal action during the forthcoming process of drafting enforcement decrees. The Senate also passed a bill that lowers the age of criminal responsibility from 16 to 14 on the same day.