Milei’s labor reform seems tailor-made for companies. Business leaders have doubts

The Argentine Congress is set to begin extraordinary sessions in February with a full docket. Among the bills set to be debated are changes to the Glaciers Law, the lowering of the age of criminal responsibility, and the recently signed EU-Mercosur agreement. The sessions are set to be a test for the government’s legislative muscle, as it intends to pass all of them in one month. The most awaited bill, however, is President Javier Milei’s ambitious labor reform, which is slated for a Senate vote on February 11.  Dubbed the “Labor Modernization Act,” it was drafted by Deregulation and State Transformation Minister Federico Sturzenegger.  At first glance, it reads like a bill tailor-made for companies: curbs on the right to strike, more flexible working hours, and stricter requirements for leave, as well as limits on union power, among other measures.  Faced with such sweeping changes, unions came out against it. Less predictable, however, were the objections raised by the other side. While many business associations welcomed the initiative, a slew of heavyweight players have voiced concerns over key provisions of the bill. The objections, which center around five articles, are based on the claim that instead of fixing existing problems, they will instead create new ones. “[These articles] create anarchy in a system that is currently orderly. In other words, you bring in a problem where none exists,” said Juan Pablo Diab, legal adviser to the Argentine Confederation of Medium-Sized Enterprises (CAME), regarding the articles in contention. CAME is a business federation representing more than 400,000 small and medium-sized enterprises. The protesting parties are not sitting still. On January 7, CAME — together with the Argentine Chamber of Commerce (CAC) and the Argentine Association of Metallurgical Industrialists (Adimra) — sent a letter to Vice President Victoria Villarruel and senators from all political parties, urgently requesting that five articles be removed from the bill. The points of contention One of the disputed provisions is Article 126, which seeks to modify the ultra vires effect of expired collective bargaining agreements.  Ultra vires is a legal principle that allows a collective agreement to remain in force after its agreed duration has expired, meaning it is automatically extended until a new one is negotiated.  Along these lines, Milei’s bill would keep only “normative clauses” (those governing individual employment rights) in place, excluding what are called “obligational clauses” (reciprocal obligations between unions and employers that do not regulate the worker–employer relationship). “The law has not been able to definitely settle which clauses are normative and which are obligational,” Diab said, adding that this would bring “chaos” into the system.  “And how do you solve chaos? Through legal conflict. If the goal is to reduce litigation, why introduce provisions that could generate more of it?” Critics also point to Articles 130 and 131. Also related to collective bargaining, they establish that wages and benefits negotiated at a lower level (the company) prevail over sector-wide agreements.  According to Diab, while these provisions weaken unions, they could empower company labor councils, which are often more confrontational.  “When you remove the order and hierarchy that currently exist, different groups emerge, often more radicalized,” he explained. Diab added that company-level bargaining had already been tested in Germany, Spain, and Chile and failed. He went on to say the intention of the article is to push wages below the existing floor set by collective agreements, which is unconstitutional.  Another controversial provision is Article 132, which grants the Labor Secretariat the power to unilaterally call for the renegotiation of agreements and even suspend those already approved. The grounds for the move are if it determines that an agreement “generates serious economic distortions that affect the general interest.” For Diab, the criterion is “far too broad” and could vary from one administration to another.  Finally, CAME, CAC, and Adimra criticized Article 128, which makes contributions to business chambers “strictly” voluntary.  Since union dues would remain mandatory, Diab argued, the law “clearly breaks the balance of power between the parties” and undermines business representation.  The supporters’ view The stance of these three organizations is far from universal within Argentina’s business community.  The Argentine Industrial Union (UIA) expressed explicit support for the reform and submitted a document to the Senate defending the bill. Meanwhile, the Argentine Business Association (AEA) hosted Central Bank President Santiago Bausili in December, where they said the initiative is one of “a set of policies aimed at boosting the competitiveness of the economy.” Exequiel Chapur, a supermarket owner from Córdoba and a leading figure in the National Union of Entrepreneurs, SMEs and Producers (UNEPP), told the Herald that a new labor law is crucial because current legislation “condemns SMEs to operate under rules from 40 or 50 years ago — rules that are impossible to apply in the digital, modern economy of 2026.”  According to its official website, UNEPP represents “4,000 entrepreneurs, SMEs, and producers.” Incidentally, it was founded in 2023 to support Milei’s labor reform, as well as the “Bases Law,” which was approved in 2024. Chapur flat out dismissed CAME’s arguments against the five articles.  “Far from bringing peace, [their position] would guarantee the continuation of the litigation industry, labor rigidity, and the crushing burden of non-wage costs that prevent hiring new staff,” he said. Ending the so-called “litigation industry” is a key demand from many sectors — a derogatory term for lawsuits filed by workers against companies, which, according to business leaders, harm them financially and prevent them from taking new employees. Chapur also called for additional provisions not included in the current bill: eliminating mandatory notice periods for dismissal, capping severance payments, and liberalizing hiring costs.  A historical reading Luis Campos, a researcher at the CTA-Autonomous Institute for Studies and Training, said that debates within the business sector over decentralizing union power are nothing new — and that some of the proposed solutions have already been tried as early as in 1956, with mixed results. According to Campos, the first attempt in Argentina to fragment the labor movement came in 1956 under Pedro Eugenio Aramburu during the so-called Revolución Libertadora that deposed Juan Perón.   “The result was an explosion of labor conflict, and the authorities had no one to negotiate with,” he said. Further attempts – like those made during the 70s and 90s — did not break national union structures. But the current bill goes back to the recipe that failed in the 1950s.  According to Campos, Milei’s proposal opens the door for local unions to adopt more confrontational stances, or to be led by more confrontative factions of the labor movement.  “For companies operating in those areas, that can be a very serious problem.” Despite their disagreements, there is one thing on which both sides agree: no one believes the bill will lead to job creation, as the government has suggested.  “It won’t put an end to the litigation industry… certainly not if the articles CAME wants removed are taken out,” Chapur said.  Campos, on the other hand, argued that the underlying goals of the reform are to reduce labor costs and strengthen discipline over unions and workers. “They aim to reinforce discipline in workplaces. For many sectors, the ability to strike within the legal framework will become extremely difficult,” he said.