Report Nº: 106412/04/2024


One of the 10 points that the government proposed for the May Pact is the updating of labor regulations. The deep and chronic deterioration of the labor market makes this reform unquestionable. However, its implementation will require much more technical and political expertise than what has been shown so far.

The Argentine economy has not grown in the last 10 years. According to the Ministry of Economy, in the 4th quarter of 2023, the Gross Domestic Product (GDP) was $280 billion, an amount similar to that of the 4th quarter of 2013, which -adjusted for inflation- was $282 billion. As the population grows at a rate of approximately 1% per year, in a decade, the GDP per capita fell by 10%. In the face of such economic decline, the fall in real income and the deterioration in the living conditions of the majority of the population are not surprising.

In order to overcome this decline, the government is promoting the May Pact. It contains a decalogue to advance toward institutional modernization. It includes respect for private property, fiscal balance, lower public spending, tax, co-participation, labor and social security reforms, political reform, integration into the world and promoting the provinces to exploit their natural resources. These are all essential transformations that must be addressed simultaneously. Among them, a very important one for the recovery of employment and one that raises more political resistance is labor reform. 

The question is whether the conditions are in place for a serious, dispassionate and conducive discussion towards the modernization of labor institutions. To answer this, data from the Ministry of Labor and INDEC may help. According to these sources, it is estimated that as of the 4th quarter of 2023 in Argentina there are 20 million urban employed of which:

  • Wage earners registered in private companies are 31%.
  • National, provincial and municipal public employees account for 17%.
  • The remaining 52% are registered self-employed (Monotributo) and informal workers.  

These data show that less than one-third of workers are covered by private-sector labor legislation. This suggests that not only it is urgent to update labor legislation, but also that there should be less resistance to doing so. Inertia and conservatism are generally based on the argument that the labor law conquests achieved over time should be untouchable. But evidence is showing that these conquests are enjoyed only by a minority. The majority of workers are Monotributo and self or salaried employed unregistered. Since labor regulations cover only an elite, it should be less politically complicated to update them.

The government, as soon as it took office, provided –through Emergency Decree DNU 70/23– important transformations in labor institutions. It eliminates the multiplication of the severance payment due to failures in administrative labor registration, typifies self-employment to give security to the hiring of services, stipulates that labor credits will be updated by inflation plus 3% per annum to replace the very burdensome interest rates applied by the labor courts, enables SMEs to pay severance payments in up to 12 installments, among other measures. Probably its main weakness is that it preserves the corporative and centralized collective bargaining.

As expected, the DNU was denounced in courts and the labor courts ruled in favor of the suspension request. Although the arguments for the denounce are varied, the main points of conflict are the prohibition for the employer to withhold union dues without the express consent of the worker, the suspension of the validity of union dues in expired collective bargaining agreements (ultra-active) and the objective cause for dismissal of blockades, takeovers or impediments to other workers to work. In other words, measures that directly affect the interest of union leaders, not the workers. 

The failure of the labor chapter of the DNU shows the relevance of having technical suitability and political expertise to implement such disruptive reforms. The lack of effective strategies for implementation reduces the government proposals to mere voluntarism. The main conclusion is to implement the labor reform and the rest of the agenda of the May Pact, much more technical and political capacity is needed than the government has shown so far.


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