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Argentina Advances Labor Overhaul as Economy Weighs Payroll Charge Cuts

Government signals a push for digitized rules with flexible contracts to entice formal hiring.

Overview

  • A circulated draft described by adviser Julián De Diego centers on system-wide digitization, an expanded bank of hours, a 48‑hour weekly cap with averaged shifts, and severance kept at one month per year with an optional severance fund alternative.
  • Economy Minister Luis Caputo said he is evaluating lowering employer payroll charges and channeling contributions to a severance fund to boost formalization, a move observers warn could strain pension financing and tax revenue that IARAF pegs at 19% of collections.
  • Business voices back modernization conditional on federalized and sector‑specific rules, streamlined procedures, and legal certainty, with governors drawn into talks and SMEs highlighted as the core engine for job creation.
  • Labor lawyers flag a risk of “coexistence” inside firms where new hires fall under revised rules while existing staff retain prior conditions, raising prospects of uneven treatment and litigation alongside questions over how courts will apply changes.
  • The Milei administration aims to send its package to Congress after December 10 as unions mobilize—ATE called a national strike and the CGT keeps cautious dialogue—while a separate bill (4989‑D‑2025) proposes redefining employment presumptions, repealing LCT Article 80, and narrowing Repsal listings.