Analysis. The passage of the bill in the chamber is the result of the support that the government has secured from a not-insignificant part of the Argentine trade union world.

Milei will privatize state companies and give tax benefits to foreign investors

Last week, after weeks of negotiations with its center-right allies, Javier Milei’s government managed to secure its first victory in Parliament, with the approval in the Chamber of Deputies of the new state reform law. The law will allow the president to restructure a great part of the public institutions and privatize as many as 11 state-owned companies, including the national airline, Aerolíneas Argentinas, as well as the state TV and radio stations. In addition, the law offers extensive tax benefits to foreign investors and changes labor rules.

It’s true that this is a “light” version of the initial draft that was rejected in February by the same Chamber, but it is no less aggressive for it. The chapter devoted to labor reform is perhaps the most striking example: it eliminates fines for companies that hire undeclared workers; it abolishes the rights of workers in companies with five employees or less, deemed to be subcontractors and not employees going forward; it extends the “probationary period” from 3 to 9 months for new contracts, and companies will also be able to negotiate the abolition of severance pay for layoffs, replaced by an unemployment fund to be maintained by each employer. All this was passed on the eve of May 1, and just days before the nationwide general strike announced by the trade union centers for Thursday.

“There is another item that was passed and hasn’t been talked about much, although it is extremely serious,” adds Luis Campos, a researcher at the Institute of Research and Training of the Central de los Trabajadores Argentinos, one of the country’s two national union confederations, and author of La Fortaleza, a book that reconstructs the history of Argentine trade unionism from 1945 to 2001. “Very strong obstacles have been set up to prevent workers fired for union-related reasons from getting rehired,” he explains.

Campos points out that current Argentine legislation has special provisions for cases in which a company fires an employee for union-related reasons, and allows workers to appeal to be rehired. “In Argentina there have been many such cases over the past 20 years, especially at large companies, which have been convicted in the courts for anti-union behavior. However, the new bill simply says that in case of such discrimination, the employer must pay double the severance pay, but is not required to rehire the fired worker. It is clear that the text has been written by lawyers from a number of law firms who work for large corporations and are very familiar with these kinds of issues.”

The law also opens the door to a reform of the pension system: “They are saying it’s moving towards a system that would guarantee a very low basic universal pension, which every worker will have to supplement with a system built on private capitalization.” The text of the bill also repeals the so-called prospective moratorium, a provision that allowed those over 60 who did not have enough contributions to qualify for a pension to still access the system by paying the difference to the state treasury in installments for the years not worked. The reform will force 1.5 million Argentines – of whom 90 percent are women – to enroll in a universal old-age benefit after age 65. “A veiled increase of the retirement age,” Campos points out.

According to Campos, the guiding principle of the reform voted on Tuesday lies in making the labor market more flexible so that industrialists can adapt as quickly as possible to Argentina’s fluctuating economy. “If business grows, the package approved allows companies to hire very quickly, very precariously and without too many commitments to the future. And if, on the other hand, business shrinks, the new legislation allows for rapid, low-cost, and in some cases even no-cost layoffs. The idea is that the current uncertainty in Argentina’s business cycle will be shifted from entrepreneurs to workers.”

The passage of the bill is the result of the support that the government has secured from a not-insignificant part of the Argentine trade union world, which, in exchange for abandoning the reforms that Milei had initially wanted to cut the funding of trade unions, considered part of the “caste” of parasites on the state, gave its approval to the package passed in the Chamber. “It is a situation that is very similar to the 1990s,” Campos points out, recalling the support given by leading trade unionists to the ultra-neoliberal government of Carlos Menem (1989-1998) in exchange for a number of concessions from businesses.

Because of this, as well as the renewed support garnered by Milei among the governors of many of Argentina’s provinces, approval of the bill in the Senate in the coming weeks is considered a done deal.

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