Labor reform: Government bets to streamline costs to attract investment

The labor reform promoted by the government of Javier Milei has become one of the central pillars of its economic strategy to reposition Argentina as a more competitive destination for both domestic and foreign investment. In a regional context where capital compares regulatory frameworks, labor costs, and legal predictability, the administration seeks to send a clear signal: reduce the uncertainty surrounding hiring and termination.

At the core of the bill is a revision of rules that, according to the Executive’s assessment, increase costs and rigidities in formal employment. The new severance formula, which excludes non-wage items and replaces the highest salary reference with an average, aims to limit judicial discretion and provide greater certainty over exit costs. This is complemented by a single adjustment criterion for labor claims, linked to inflation plus an annual add-on, intended to address one of the main sources of litigation.

In parallel, the creation of the Labor Assistance Fund (FAL) is presented as an attempt to shift away from the traditional severance model toward a predictable scheme financed in advance. For the Government, this mechanism is particularly relevant for labor-intensive sectors and for investors assessing long-term projects, especially in industries where macroeconomic volatility has historically discouraged new hiring.

Another relevant aspect for the business climate is the flexibilization of work organization. The introduction of hour banks, the possibility of extending the daily workday, and the creation of part-time contracts seek to adapt labor regulations to more dynamic production models. Along the same lines, authorizing salary payments in foreign currency or in kind introduces a degree of flexibility long requested by the private sector, particularly in activities exposed to foreign trade or regional competition.

The reform also addresses the system of collective labor relations, a key consideration for foreign investors. The elimination of ultra-activity in collective bargaining agreements, the prioritization of company-level agreements, and the removal of the so-called solidarity contribution alter the balance within collective bargaining and aim to reduce indirect costs associated with union financing and representation. From the Government’s perspective, these changes are necessary to align local legislation with standards applied in other regional markets.

Equally important is the redefinition of platform-based work. By creating the figure of the “independent delivery worker,” the bill seeks to provide a legal framework for activities that currently operate in a gray area, a move that could prove attractive to technology companies considering expanding operations in Argentina.

Within this framework, the bill also advances measures to ensure operational continuity in strategic sectors and to formalize new forms of employment, including platform-based work. Expanding the list of activities considered essential and defining specific contractual figures are intended to reduce gray areas in the labor market and offer clear rules for companies operating in critical services and digital economies, two segments that are key to attracting new investment.

With a favorable Senate committee ruling issued in December, the labor reform is now expected to be debated in February during extraordinary sessions of Congress. For the Government, the bill represents a concrete signal to the private sector: an effort to build a more predictable labor framework, aligned with regional standards and focused on reducing regulatory risk.

In an increasingly competitive global environment, the initiative seeks to consolidate conditions that encourage productive investment, formal job creation, and the sustainability of long-term projects in Argentina.