Argentina Passes Milei’s Labor Reform Despite Strike

Argentina’s lower house of Congress passed President Javier Milei’s flagship labor reform early Friday in a 135-to-115 vote, pushing through the most sweeping overhaul of the country’s labor code in a quarter century. The vote came after more than ten hours of debate — and through a nationwide general strike that had shut down transportation, banks, schools, and most public services hours earlier.

To secure passage, the government removed Article 44, a clause that would have cut wages to 50% for workers on non-work-related sick leave. That change means the bill must return to the Senate, which passed the original version 42-30 last week, for final approval.

What the reform does

The law reduces severance costs by creating an employer-funded savings scheme to replace lump-sum payouts. It ends so-called ultra-activity — the automatic renewal of expired collective bargaining agreements — and gives precedence to company-level deals over broader union contracts.

Strike rules tighten significantly, requiring 75% minimum service in sectors now classified as essential, including health, education, transport, energy, and water. The workday can extend to twelve hours under a new “hours bank” system.

A country on pause

The CGT union federation’s 24-hour strike — the fourth under Milei — paralyzed Argentina on Thursday. Airlines canceled more than 400 flights, stranding around 64,000 passengers. Aerolíneas Argentinas alone grounded 255 at an estimated cost of $3 million.

The Argentine University of Enterprise estimated total losses at $489 million, equivalent to about 20% of daily output. Outside Congress, police used water cannons and pepper spray against protesters, detaining at least eleven people.

Ghosts of 2000

The last time Argentina passed a comparable labor reform was under President Fernando de la Rúa in 2000 — an episode that ended in a bribery scandal known as “Ley Banelco,” after the debit card allegedly used to pay off senators. The law was reversed, de la Rúa prosecuted, and all defendants eventually acquitted. Opposition lawmakers invoked that precedent throughout Thursday’s debate.

Milei watched the vote from Washington, where he attended Donald Trump‘s inaugural Board of Peace summit. He wants the Senate to ratify the bill before his March 1 state-of-the-nation address. Whether Milei can deliver what de la Rúa could not — a labor reform that sticks — remains the defining question of his economic agenda. This is part of The Rio Times’ daily coverage of Argentina affairs and Latin American financial news.