Cordoba province reduced laboral lawsuits by almost 80% - IDESA

Report Nº: 79405/02/2019

Cordoba province reduced laboral lawsuits by almost 80%

In the crisis, there is a proliferation of unhelpful proposals since they generate more public expenditure or less revenue. With innovative ideas and coordination between jurisdictions, the reform of the labor risk system shows that social protection and competitiveness can be improved without raising the fiscal deficit. In response to the economic crisis, business chambers, […]

In response to the economic crisis, business chambers, trade unions and opposition parties are insistent with proposals and demands that involve the reduction of fiscal revenues and/or the increase of public spending. In this way, what may be a benefit for certain sectors ends up harming the rest of society to the extent that it conspires against the goal of achieving fiscal balance. Out of egoism or lack of imagination, initiatives that go against the general interest are proposed.

An alternative path is to devise and implement reforms that contribute to improving welfare and competitiveness without conspiring against the goal of reducing the fiscal deficit. A concrete example in this sense is the reform on the labor risk system with the Law 27.348 enacted in 2017. The objective of this law is to address the problems generated by the proliferation of lawsuits for occupational accidents and labor diseases. The massification of spurious judicialization is one of the main factors conditioning the creation of formal salaried jobs and the level of wages.

Comparing similar provinces that followed different strategies in relation to the application of the Law 27.348 some results can be extracted. According to official data, it is observed that between 2016 (the year prior to the sanction of the reform) and 2018 (the first year in which the reform is fully in force):

  • At the level of the country as a whole, there was a fall from 10 to 7 lawsuits per 1,000 workers.
  • In Cordoba, the number of lawsuits was reduced from 19 to 4 per 1,000 workers.
  • In Santa Fe, on the other hand, the rate went from 23 to 22 lawsuits per 1,000 workers

These data show a significant drop in judicialization but with different intensities between provinces. In Cordoba, which was the province that most quickly and comprehensively incorporated the guidelines of the reform approved by Congress, the rate of judicialization due to occupational hazards was reduced by almost 80%. On the other hand, the province of Santa Fe –which did not adhere to the new law and, therefore, did not put it into operation– maintains a high number of lawsuits to such an extent that it became the province with the highest rate of judicialization due to occupational hazards.

The reform basically stipulated that claims for occupational accidents and illnesses must be evaluated in the first instance by the Medical Commissions dependent on the Superintendence of Labor Risks. If, after this administrative instance, there are still disagreements between the worker and the occupational risk insurance company (ART), the judicial route is enabled. The scheme generates benefits for all parties. The worker does not have to wait for the years the lawsuits are extended, but in about 3 months he has an answer guaranteed by a professional and state entity such as the Medical Commissions. The State manages resources more efficiently since it reserves the mobilization of the costly judicial structure for the most complex and conflictive cases. The productive sector sees reduced costs due to less lawsuits and lower ART prices.

The first results in Cordoba, although they are not definitive, are auspicious. The substantial decrease in the number of lawsuits indicates that most of the controversies are being resolved in the administrative instance. This implies that the worker receives in much shorter terms than the judicial ones a response that satisfies him or that leads him to desist from the claim accepting that his claim does not correspond. The decongestion of the judicial offices is also very positive. For the productive sector, the most suggestive evidence is that the average cost of ART in Córdoba fell from 4.4% to 3.7% of salary.

The implementation of the reform required a determined effort of coordination between the federal and the provincial state in its three levels (Government, Legislature and Judicial). The reward is the improvement of the welfare of workers and the competitiveness without increasing public spending or reducing fiscal revenues. Instead of insisting on unhelpful proposals, because they imply increasing the fiscal deficit, the challenge is to consolidate and replicate experiences like the one in Cordoba province.


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