Milei Takes on the Unions: Major Reforms are Coming to Argentina's Labour Market
Can structural deregulation outpace social resistance?
We are pleased to continue our new series: What is Happening in Argentina! Each month, Fighting for a Free Future Associate, Luke Lucas, will report for Voices for a Free Future on what has been happening under the world’s only libertarian presidency.
In the last article on Argentina, I concluded that we should remain optimistic for the future liberalisation, fiscal responsibility and reduced government intervention. Since then, Argentina has been consolidating its transition from emergency stabilisation to early-stage recovery. The country had just secured a fiscal surplus, repaid its U.S. currency swap drawdown, signed the Mercosur-EU trade agreement and posted steady year-on-year growth. Macroeconomic credibility was improving, inflation was falling, and Argentina was regaining policy autonomy.
Since last month, Milei has proposed major reform in the labour market. The lower house approved his landmark legislation with a vote of 135-115. The reform is still one of the biggest overhauls to Argentina’s economy in decades. With the aim to roll back rules from the 1970s around hiring, firing, severance and collective bargaining, with the goal of bringing the informal labour sector into formal employment. As an example, Argentine companies have the same number of salaried payroll jobs that they did a decade ago, despite a three million increase in population without an increase in unemployment.
In the wake of this legislation being debated, unions across Argentina have coordinated strikes. A 48-hour strike brought agro-export activities to a complete standstill, felt across the world, as Argentina is the largest exporter of soybean oil and meal. Transport services and public administration have also faced intermittent disruption. What began as a stabilisation program has now become a test of the government’s ability to sustain liberation amid organised resistance.
It must be noted that Milei remains immensely popular in Argentina. The contrast between Milei's standing and that of our own Prime Minister is stark, and speaks volumes about the political rewards of pursuing structural reform with conviction. According to Morning Consult's global leader approval tracker, Milei is one of only seven democratically elected leaders in the world currently holding a net positive approval rating, standing at +20 among his electorate. Keir Starmer, by contrast, sits right at the very bottom of that same global table. His net favourability rating is currently at -45; that puts him in territory comparable to Theresa May in the days before her resignation. Where Milei pursued bold, deeply controversial economic reforms and has been rewarded with a strengthened mandate through the October 2025 midterms and enduring popularity, Starmer has paid the political price for this government failing to pursue any semblance of a strategy or economic reforms.
In his Labour market reforms, Milei is digging into the long-entrenched workers’ rights that form the bedrock of Peronist opposition. José Anchorena (former labour undersecretary of President Mauricio Macri, who was Argentina’s first democratically elected non-Radical or Peronist president since 1916) said, “this reform is moderate”. But this is because Milei has already removed controversial articles that would have diminished financing for labour, marking a potential shift from the chainsaw-wielding outsider to a more pragmatic politician. Accession in the upper chamber would likely lead to lower interest rates and position Argentina to return to the international bond market after a sovereign default under the Peronists in 2020.
Despite the contention, the macroeconomic picture remains mixed. Macroeconomic credibility is improving, but credibility is fragile. Argentina has stabilised before, only to relapse into fiscal expansion under political pressure. The difference this time will depend on institutional reform. Milei believes changes to Argentina’s half-century-old labour code are crucial to his efforts to lure foreign investment, increase productivity and boost job creation. This is echoed with oil production reaching record levels, which can be attributed largely to the Vaca Muerta shale formation. Agro- industrial exports have strengthened, bolstered by improved harvest conditions and a more competitive exchange framework.
Argentina’s lower house has approved the Mercosur-EU trade deal, but requires ratification from the whole bloc first. It may take a long time to ratify because the agreement faces legal challenges, as the European Parliament has sought a review at the EU’s Court of Justice.
The past month marks an intriguing transition. Argentina is no longer defined by its stabilisation metrics to achieve fiscal balance, accumulate reserves and reduce inflation, but by a deeper political economy question: can structural deregulation outpace social resistance?
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