Milei’s radical reforms risk rolling back labour rights and rule of law in Argentina

Ruth GreenTuesday 30 July 2024

President Javier Milei of Argentina. World Economic Forum/Flickr 

After months of protests and political opposition, in June President Javier Milei’s sweeping economic reforms were finally approved by Argentina’s Senate. 

It comes against a backdrop of growing discontent from certain sections of Argentine society, who feel Milei’s efforts to drive down inflation and spur economic growth have gone too far, having already devalued the Argentine peso, slashed subsidies, shuttered ministries, defunded cultural and social programmes and made mass public sector lay-offs.

The omnibus bill has drawn criticism from workers and trade unions who argue that the legislation, which allows the president a one-year period in which he can reform or adapt the new laws without having to go through Congress, will give him too much executive power and risks rolling back labour rights in Argentina by decades. 

Milei himself says the reform bill is necessary to ‘get Argentina out of the quagmire that it has been in over the last few decades’.

In April, the lower house of Argentina’s Congress approved a significantly slimmed-down version of the draft legislation. As clashes between protesters and police swelled on the streets outside the Senate on 12 June, the bill was finally passed with the narrowest of margins, 37-36. The Senate’s President cast the deciding vote. 

Marino Vani, the Regional Secretary of union federation IndustriALL, described the vote in the Senate as ‘an affront to democracy’ and said the reforms violated the country’s constitution and the principle of separation of powers. 

However, many believe the changes are long overdue, says Ignacio Funes de Rioja, Senior Vice-Chair of the IBA Global Employment Institute and a partner at Bruchou & Funes de Rioja in Buenos Aires. He argues, that decades of legislation that purportedly protected workers have actually stymied formal employment growth. ‘The legal “protections” became obstacles for the creation of formal jobs’, he says. ‘The productivity was not increased, and therefore, many workers lost access to the formal market’.

He welcomes the new measures, which he says will help inject much-needed flexibility into the labour market, including removing regulations that historically incentivised litigation, streamlining employee registration processes for start-ups and granting pregnant employees more say in how they take maternity leave.

As well as the omnibus bill, a separate fiscal reform package that lowers the income tax threshold was also passed, although lawmakers rejected the Government’s original proposal to restore income tax for high earners. The bills were both signed into law on 8 July.  

It marked a critical legislative victory for Milei, who assumed office in late 2023 on a wave of popular support to shake up Argentina’s economy, which has earned the unenviable accolade of being the biggest debtor to the International Monetary Fund. 

The economic aspects of the latest legislative package are ‘absolutely necessary for the economy and legal framework of Argentina’, says Roberto Durrieu, Latin American Regional Forum Liaison Officer of the IBA Rule of Law Forum and managing partner of Estudio Durrieu in Buenos Aires.

However, Durrieu recognises that valid concerns are being raised about how some of the reforms could adversely affect the rights of workers in the country. ‘There are several statements from labour lawyers and judges serving in the labour courts that have already said that specific articles are against our constitutional law’, he says. 

Points of contention include measures to give private companies greater discretion in hiring and firing workers, increasing employee probation periods from three to eight months and reducing compensation for dismissal claims. 

Mariela Puga, an expert in discrimination and a constitutional law and researcher at the National Council of Scientific and Technical Research in Argentina (CONICET), is particularly concerned about the drastic change to discriminatory dismissal law, which now places the burden of proof on the employee claiming discrimination against their employer. ‘We don’t think this is compatible with our culture of labour rights’, she says. ‘In a moment of such high unemployment and precarious jobs, this is a worry’.

Puga also expresses alarm at the Government’s closure of several vital public service programmes, including the shuttering of 81 centres providing access to justice nationwide. Puga, who was previously in charge of coordinating the Ministry of Justice’s regional Access to Justice programme, says the closure of these centres, which provide free legal services to citizens, will deprive a ‘very important […] service to poor people, especially for women in a situation of violence’.

The Milei administration has been critical of the costs of running the centres and described their closure as ‘taking care of taxpayers’ money’.

Christopher Sabatini, Senior Research Fellow for Latin America, US and the Americas Programme at Chatham House, says much of the electorate is adopting a wait-and-see approach as to whether the short-term pain of Milei’s so-called ‘chainsaw economics’ strategy will lead to longer-term gains. ‘What Milei is doing is completely trying to rewrite market incentives into the system’, he says. ‘That’s going to hurt protected industries as well as hurt consumers on what they pay for everything from bus fares to cooking gas’. 

Sabatini says there’s still much work to be done if Milei is to reassure voters that he can live up to his campaign promise to eradicate corruption amongst the political ‘elite’. ‘Market reforms are not an answer to every ill’, he says. ‘Certainly, if you reduce the scope for state activity in the economy, you reduce the scope for corruption, but you still have to strengthen the judiciary and other checks and balances’.

The President faced criticism in June, when he nominated two male judges to the Supreme Court, which has been functioning with just four members since 2021 when its only female justice, Justice Elena Highton de Nolasco, resigned. While having the Court consist only of male members isn’t against the Argentinian Constitution, it appears to contradict a 2003 presidential decree calling on authorities to consider ‘gender diversity’ in the judicial selection process.