President Javier Milei has launched his most confrontational bid yet to reshape Argentina’s economy, pushing a sweeping labour reform bill that has brought him into direct conflict with the country’s powerful trade unions. The proposed overhaul targets one of Argentina’s most politically sensitive areas, workers’ rights, long regarded as the backbone of Peronism and a defining feature of the country’s social contract since the 1940s.
As reported by the Financial Times, Milei argues that Argentina’s rigid employment laws, combined with high taxes, have discouraged formal hiring and fuelled widespread informality. Nearly half of Argentine workers are employed off the books, while the number of registered private-sector jobs has barely increased since 2011 despite significant population growth. Announcing the reform last year, Milei said legal uncertainty, high costs and fear of litigation had pushed hundreds of thousands of workers into the informal economy.
Under Argentina’s current system, wages are largely set through national, industry-wide negotiations, and many labour agreements date back to the 1970s. Studies cited by critics of the system show that small and medium-sized businesses face frequent lawsuits, making it costly and risky to hire formally. Business owners interviewed by the Financial Times said large severance payouts and payroll taxes create disincentives to expand, reinforcing a culture in which employers avoid registering workers altogether.
The proposed reform would significantly rebalance labour relations. It would restrict the right to strike, extend probation periods for new employees, allow working days of up to 12 hours, curb judges’ discretion over severance awards and prioritise company-level or regional wage agreements over national ones. The bill would also make it easier for workers to opt out of paying mandatory union dues and dismantle the permanent status of labour agreements struck decades ago in many sectors.
Union leaders say the changes go too far and amount to a direct assault on workers’ rights. Jorge Solá, co-leader of the General Confederation of Labour, Argentina’s largest union group, told the Financial Times that the bill had been drafted by law firms acting for large corporations and described it as a “Frankenstein” proposal that weakens both individual and collective protections without offering workers anything in return. Other union figures have warned the reform would roll back rights by a century and have called for strikes and legal challenges.
The clash carries major political significance for Milei. Past rightwing governments have failed to push through lasting labour reform in the face of union resistance, and analysts say success would signal a decisive break with Argentina’s Peronist legacy. Failure, by contrast, would expose the limits of Milei’s power as he relies on centrist lawmakers to pass legislation in congress. While polls show broad support for labour reform in principle, specific measures such as longer working hours and changes to severance pay are less popular.
Unions remain influential, overseeing not only wage negotiations but also health insurance schemes and member services, yet they have been weakened by voter anger over Argentina’s prolonged economic crisis and corruption scandals linked to Peronism. Analysts note that union-led protests under Milei have so far been smaller than in past confrontations, though opposition is hardening as the bill moves closer to a congressional vote.
Business groups largely back the reform, particularly proposals to limit compensation payouts, which entrepreneurs cite as a major obstacle to hiring. However, some chambers have expressed concern about shifting wage negotiations to the company level, warning that small firms may lack the expertise to bargain individually with workers. Economists also caution that labour reform alone may not deliver a surge in formal employment unless payroll taxes and social security contributions, among the highest in the region, are also reduced.
Milei has recently toned down his rhetoric toward union leaders as he seeks broader political support and may ultimately be forced to dilute parts of the bill. Even so, the legislation represents the most ambitious attempt in decades to curb union power and liberalise Argentina’s labour market, making it a defining test of Milei’s free-market agenda and his ability to break with the country’s entrenched political traditions.
