Milei's overhaul of Argentina labor law advances in Congress as unions strike in protest

BUENOS AIRES, Argentina (AP) — A general strike protesting Argentine President Javier Milei’s flagship overhaul of the country's labor law disrupted public transport, hospitals, ports and schools across Argentina on Thursday and intensified a standoff between the libertarian leader and long-powerful workers’ unions.

The lower house of Congress approved the bill, which grants employers greater flexibility in matters of hiring, firing, severance and collective bargaining, in a 135-115 vote early Friday.

The legislation won initial support from the Senate last week but must be sent back to senators for a final vote before becoming law. That's because the government was forced to scrap a clause that halves salaries for workers on leave due to injury or illness unrelated to work after an outcry from opposition lawmakers.

As lawmakers debated the reform, bus lines and subways ground to a halt. Factories paused production, banks closed, airlines canceled hundreds of flights and public hospitals postponed all but emergency surgeries. Uncollected garbage lined streets and shopping areas. A march to Congress by radical left-wing unions briefly turned violent as police fired water canons at protesters throwing stones and bottles.

Milei considers the changes to Argentina’s half-century-old labor code crucial to his efforts to lure foreign investment, increase productivity and boost job creation in a country where about two in five workers are employed off the books.

Unions argue that the law will weaken the workers' protections that have defined Argentina since the rise of Peronism, the country’s dominant populist political movement, in the 1940s.

Roughly 40% Argentina’s 13 million registered workers belong to labor unions, according to union estimates, and many are closely allied with Peronism.

The bill limits the right to strike, reduces the bargaining power of unions and makes it easier for companies to fire workers by extending their probation periods and curbing their ability to sue employers when they are dismissed.

The legislation also cuts Argentina's traditionally high severance pay and empowers employers to mandate 12-hour workdays, up from the current eight.

Fierce union backlash has derailed previous government attempts at shaking up Argentina’s archaic labor system, widely seen as among the most costly to companies in Latin America.

“Members of Congress, hear this message: Voting against working people does not come without consequences,” the General Confederation of Labor, or CGT, Argentina’s largest trade union group, posted on social media alongside photos showing Argentina’s capital of Buenos Aires deserted because of the strike.

“Jobs are not up for negotiation; hard-won gains are not raffle prizes to be given away.”

Most shops and offices remained open across the city, but traffic was light as plenty of workers who did not strike stayed home because of the breakdowns in transportation — something that Milei’s chief of staff and government spokesperson, Manuel Adorni, denounced as "perverse.”

“If they cut off your transportation, no matter how much you want to go to work, you can’t,” he told a local streaming channel. “There's nothing more extortionate, nothing more against freedom and democracy than what the unions are doing.”

The show of force from labor unions Thursday comes as economic frustration simmers. Milei's drastic campaign to slash the size of the state has brought fiscal stability to a nation once plagued by runaway inflation but struggled to address stubborn unemployment, stagnant wages and sluggish growth.

“To grow, we need more than just labor legislation. We need infrastructure, energy, universities,” said lawmaker Pablo Outes during Thursday's debate, criticizing the uneven economic recovery under Milei even as he endorsed the labor bill. "Milei’s model is failing. It is showing cracks.”

The reform marks the first big test of Milei’s political strength since his upstart libertarian party won Argentina’s midterm elections last year — with $20 billion in backing from key ally U.S. President Donald Trump.

In Washington Thursday for the inaugural meeting of Trump’s Board of Peace initiative, the Argentine leader seemed unconcerned with the unrest back home as he basked in the praise of his most powerful backer.

At the start of the event, Trump reiterated his support for Milei, saying, “I endorsed him. I’m not supposed to be endorsing people, but when I like people ... I endorse foreign leaders.”

The legislation faces its final hurdle in the Senate next week before Milei's government can celebrate the accomplishment of a milestone that almost no other Argentine government can claim. In 2000, then-President Fernando de la Rúa passed a similar overhaul but later saw it reversed and faced prosecution on charges that he had bribed senators to approve the bill.