BUENOS AIRES (CN) - In a consequential win for libertarian President Javier Milei, Argentina's Senate a sweeping reform to the labor system Friday night, marking a sharp turn of the country's traditionally worker-friendly policies toward one that's anchored to the rules of the free market. 

The bill, called officially the "Labor Modernization Act," will extend workdays to up to 12 hours, adjust the severance calculation, make it cheaper for employers to fire workers, and restrict union activity, among other changes. In all, it seeks to transform the legal system that has structured employment in the country for more than 50 years.

The measure passed Friday afternoon, including libertarian votes, right-wing allies and center-leaning legislators who have gradually shifted from the opposition to increasing partnership with the government.

It had passed the lower house of Congress Feb. 20 despite union-led strikes.

That system was in much need of a reformulation, according to voices across the political spectrum. But while many countries, like neighboring Brazil, are discussing ways to reduce workload, critics say the Argentine legislation increases pressure on workers, while increasing the volatility of their jobs. 

The libertarian supporters argue the core of the bill is to curb informality, a growing issue in Argentina in recent years, accounting for more than 40% of Argentina's workforce, according to the U.N.'s International Labour Organization. Over half of total workers in many sectors are unregistered, meaning employers don't cover work insurance or pay holidays, overtime, pension contributions or severance if they're laid off. 

The issue has increased since Milei took office two years ago. A recent report by CIFRA, a local research center, shows while formal employment dropped by more than 200,000 jobs between 2023 and 2025, more than 450,000 informal positions were registered, mostly of "self-employed" workers. 

Meanwhile, formal workers' average monthly salary is slightly above $1,000, while minimum wage remains below $250 - numbers that make it hard for average Argentines to make ends meet, especially as prices have increased for most essential products and services. 

However, some believe the reform could turn the tide on under the table work. Flavia Royon, an opposition senator tied to Peronism, the labor movement that shaped Argentina's political history over the last 70 years, chose to support the bill. She argued the measure makes it easier for employers to register workers. 

"Owners are not hiring because of potential legal issues, conflicts, the cost of work accidents - this bill seeks to ease those obstacles," she said, deeming it "a work formalization project." 

"The modern world demands more flexibility to settle agreements," Royon said. "It updates work conditions." 

Juan Manuel Ottaviano, a labor lawyer, thinks otherwise. "The government argues that the easing in conditions for hiring and layoffs will create jobs," he said. "But it doesn't work like that in Argentina, or any other place in the world for that matter, but especially here - such an unstable context with a lack of economic growth." 

The reform, Ottaviano said, "validates informal employment," eliminating paths for informal workers to demand their employers abide by labor laws. "Now, they'll be considered self-employed." 

For decades in Argentina, unions have been a crucial intermediary to balance employer-worker relations. But in a shifting world, and an economically vulnerable country, workers worry changes could deprive them of job safety. 

Alejandro Assumma, 49, had worked for Fate, a national car tire factory, for 21 years until he and his more than 900 colleagues were laid off after management announced the company was shutting down, unable to compete against Chinese imports. 

The situation of the Fate workers, who have remained in a peaceful occupation inside the factory since the layoff, became a symbol of what the libertarian era has brought for Argentine workers. 

"We were making 5,000 tires a day, it was stable production," he said. "But our daily manufacture was 10,000 just two years ago." 

Assumma and his factory workmates had been demanding better work conditions for a while. Their demands included matching their salaries to inflation and reducing weekly work hours from 48 to 40, allowing the creation of more positions. 

Now, as he and his co-workers await a resolution from inside the factory, they worry work conditions could get even worse. "I just can't find a single point where this reform improves conditions for people like us," he said. 

"They say it's a 'modernization bill'," said Assumma. "But if every prosperous country is reducing work hours and we're increasing them, it sounds like a backtrack to me." 

Milei won the presidency in 2023 after pledging to transform the country radically. He said decades of instability stemmed from the country's "abhorrent" large state and social justice policies. 

The chainsaw president, who slashed public spending and has lifted hundreds of regulations so far, promised to introduce dozens of bills this year to deepen his reforms after winning last year's midterms and securing more Congressional support. 

Federico Garcia, 33, an engineer working for a data center company, said he thought some changes could be positive, such as the loss of union power within work environments, sometimes seen as extortion to workers. But, he said changes could also be too drastic. "Some things about this government scare me: their crazy projects, some really out of it," he said. 

But the debate in itself could be worth it, Garcia said. "I like that they're shaking things, testing what works and what doesn't." 

Lucia Cholakian Herrera is a Courthouse News correspondent based in Buenos Aires, Argentina.

Source: Courthouse News Service