Argentina’s Senate has approved a sweeping labor reform bill, but modifications are anticipated during its passage through the Chamber of Deputies, particularly concerning sick leave provisions. Senator Patricia Bullrich, a key figure in the ruling coalition, has indicated a willingness to adjust the legislation to ensure continued full salary payments for workers facing severe, degenerative, or irrecoverable illnesses.
The proposed reform initially outlined a reduction in sick leave pay to 50% for illnesses resulting from “voluntary activity and aware of the risk,” with 75% pay for unintentional illnesses. This sparked considerable controversy and prompted the ruling party to reconsider its approach. The government illustrated the “voluntary activity” clause with the example of injuries sustained while playing football.
Bullrich explained that the planned modifications will specifically address cases involving “severe, degenerative or irrecoverable diseases,” guaranteeing 100% salary continuation with “concrete and reliable corroboration” from medical records. This adjustment aims to alleviate concerns raised about the potential financial hardship for individuals battling serious health conditions.
The impetus for the original proposed cuts, according to Bullrich, stems from a perceived “mafia of fraudulent certificates” that she claims is exploited to falsely claim sick leave benefits, harming businesses. She emphasized the need to dismantle this alleged system of abuse and improve national productivity, citing a goal of reducing absenteeism to 15%.
The debate surrounding the labor reform has been fraught with tension, as evidenced by clashes between protestors and police outside the Congress building. Reports indicate at least 13 arrests and 40 individuals being held for identification following demonstrations against the bill. Security Minister Alejandra Monteoliva issued a warning that demonstrations must remain peaceful and security forces would intervene to prevent violence.
The bill’s passage in the Senate, achieved with 44 votes in favor, represents a significant step forward for President Javier Milei’s pro-market economic agenda. However, the anticipated changes in the Chamber of Deputies highlight the ongoing negotiations and compromises necessary to secure the legislation’s final approval. Bullrich stated that discussions are underway with political leaders, including Martín Menem, to determine the best method for incorporating the modifications – whether through regulation or a separate article of law.
The proposed reform has been a long-standing goal, with Bullrich stating it has been attempted since “the beginning of democracy” to “adapt labor regulations to balance a system that is unbalanced.” Some senators have expressed concerns about the potential impact on workers, with one Peronist senator questioning how he could vote for a law that primarily benefits employers.
The debate also touched upon contributions to union-run health funds. The original proposal considered cutting employer contributions from 6% to 5%, but this has been retained at 6% with provisions for auditing the use of those funds. A provision allowing employers to act as withholding agents for union membership dues has been removed.
the bill sets caps on levies for collective bargaining agreements, limiting contributions from business chambers and employer-linked entities to 0.5% of wages, and those from workers’ associations to 2%. From January 1, 2028, employer contributions to business chambers will become “strictly voluntary.”
The removal of Article 190, which would have reduced the corporate income tax rate for large companies from 30% to 27%, was a key concession made to secure the bill’s passage in the Senate, preserving revenues for provinces and the federal government. The focus now shifts to the Chamber of Deputies, where the proposed modifications regarding sick leave and other potential adjustments will be debated and ultimately determine the final form of the labor reform.
