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The Labor Reform Approved in the Argentine Senate Provides Changes in Compensation, Creates the FAU, Flexibilizes Overtime, and Limits Strikes, While Provoking Protests in Buenos Aires and Now Moves to the Chamber.
The labor reform of President Javier Milei advanced last Thursday after approval in the Argentine Senate. The text includes daily hours of up to 12 hours, flexibility in overtime payment, the possibility of salary in foreign currency, and a variable part called dynamic salary, based on productivity or merit.
While the government celebrates what it classifies as a turning point to modernize a market considered obsolete, the labor reform was met with protests in the streets of Buenos Aires. According to reports, at least four security agents were injured and two people were arrested. Now, the project moves to the Chamber of Deputies, where it may undergo changes before eventual sanction.
What the Senate Approved and Why the Labor Reform Became a Focus of Dispute
The proposal is presented as a “labor modernization law” and, in practice, reorganizes rules on dismissal, work hours, remuneration, and strikes.
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For the Executive, the labor reform aims to provide predictability to costs, reduce legal disputes, and address informality, pointed out in the text as affecting 40% of the workforce in the country.
On the other side, unions and critics see the labor reform as a package that reduces protection and expands companies’ adjustment power in a recession scenario, without guaranteeing the creation of formal jobs.
Termination and Compensation: How the Labor Reform Affects the Cost of Dismissal
One of the central axes of the labor reform is in the termination of contracts. The rule described simplifies and reduces the cost of compensation for dismissal without just cause by altering what is included in the calculation of the fine.
According to the text, 13th salary, bonuses, and vacation are excluded from the calculation, which tends to decrease the final amount received by the worker when leaving the company. The government treats this change as part of the effort to reduce litigation and make costs more predictable.
FAU: The Mandatory Fund That Changes the Logic of Protection and Savings
The labor reform creates the FAU, Workers’ Assistance Fund, described as a kind of mandatory savings. The structure provides for management fees charged by administrators, which, in this design, would be the banks.
The fund would be fed by salary deductions linked to social security. The official justification is to replace a more variable compensation model with a more standardized mechanism, aiming to reduce lawsuits in court and stabilize costs for employers.
12-Hour Shift and Hour Bank: What Changes in Routine
Another point of high impact in the labor reform is the expansion of the daily limit. The standard 8-hour shift coexists with the possibility of working up to 12 hours a day.
Additionally, the payment of overtime can be replaced by hour bank, exchanging money for days off.
In practice, the labor reform allows more room for time compensation agreements, which may directly change the monthly income of those who depend on extra hour benefits.
Salary in Foreign Currency and Dynamic Salary: New Remuneration on Paper
The labor reform also changes the payment method. The text mentions that salaries can be paid in foreign currency and provides for a variable portion, called dynamic salary, linked to productivity or merit.
This design tends to increase the difference between sectors and companies, as performance criteria and goals may vary significantly.
For critics, the risk is to turn part of the salary into an unstable component; for the government, it would be a way to align remuneration to results.
Government Defends Formalization; Unions and Industry Point to Job Losses
The government argues that the labor reform is the way to combat informality. However, the report itself presents numbers that fuel the controversy: since Milei took office in December 2023, about 300,000 formal jobs have been eliminated, especially in construction and industry, along with approximately 38,000 job losses in the public sector.
There is also a warning from Daniel Rossato, president of the Association of Small and Medium Industrial Enterprises of Argentina (IPA), that the problem is not only in labor costs but also in the closure of 18,000 companies in the last 2 years, associated with the opening of imports.
The general secretary of the State Employees Union, Rodolfo Aguiar, criticizes the labor reform as regressive and aimed at weakening individual and collective rights, arguing that it would not create jobs in a recessionary environment.
More Limited Strikes: Essential Sectors and Mandatory Percentages
The limitation of the right to strike appears as one of the most sensitive points of the labor reform. The list of essential sectors expands to include education, commerce, ports, and telecommunications, which are required to maintain 75% of operations during strikes.
For security forces, the requirement increases to 100% of activity. In the view of critics, this rule reduces workers’ leverage; in the government’s view, the labor reform seeks to ensure the continuity of services considered critical.
Next Steps: Labor Reform Moves to the Chamber and May Change
Despite the approval in the Senate, the labor reform is still not definitive. The text moves to the Chamber of Deputies, where it may be altered before any eventual sanction.
The government’s expectation is to expedite the process to sanction the law before March 1, when the ordinary session of Congress begins, according to the narrative presented.
Labor Reform in the Regional Context: Comparison with Mexico and Debate in Brazil
The report contrasts the Argentine direction with movements in other countries. In Mexico, the Senate approved the reduction of the workweek from 48 to 40 hours.
In Brazil, the debate in Congress is cited as focused on ending the 6×1 shift and reducing working hours to improve quality of life.
This contrast helps explain why Milei’s labor reform became a political symbol: it touches on rights, costs, and productivity at the same time, but in a direction contested on the streets and in unions.
In your opinion, does the labor reform approved in the Senate tend to generate more formal jobs or to worsen conditions and reduce rights?
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