Argentine Justice Overturns Javier Milei’s Labor Reform

The Argentine court has overturned the labor reform included in President Javier Milei’s mega-decree. The court has ruled that the mechanism used to approve the changes is unconstitutional, and has ordered the government to process these reforms as an ordinary law. Thus, it will have to be presented, discussed and approved in the Argentine Congress.

The law had already been provisionally suspended by the courts on January 3, at the request of the General Confederation of Labor (CGT), the same labor union that called a national strike last week to protest against the new government’s reforms.

In the sentence, the judges consider that this reform “is contrary to Article 99 of the National Constitution”, which defines the powers of the President, since the modification of the labor protections of the most disadvantaged workers “requires an essential debate and specific decision of the Legislative Power”.

Arguments of the judgment

As explained by the judges, “the admission of the exercise of legislative powers by the Executive Branch is made under conditions of strict exceptionality” and provided that “the rule does not regulate criminal, tax, electoral or political party regime matters, and that there is a state of necessity and urgency”.

The judges reminded the president that he may only exercise legislative powers if one of the following conditions is met: the Chambers of Congress cannot meet to pass laws for reasons of force majeure that prevent it; or the situation that requires a legislative solution is of such urgency that it must be solved immediately, in a term incompatible with that required by the normal processing of laws.

“These exceptional circumstances have not been verified in this case”, they remarked, and added that even before the Decree of Necessity and Urgency (DNU) had come into force, the executive branch called for extraordinary sessions in Congress, on December 26, and that the agenda included the omnibus bill.

Impeachment or political debate

The Argentine president now faces two choices: appealing the decision to the Supreme Court or initiating a parliamentary debate. The latter option is complicated by the president’s lack of a clear majority in the chamber.

Thus, he will have to negotiate with possible allied deputies and even with the Peronist opposition, in order to obtain 50% of the support. Freedom Advances, the ruling party, obtained 38 representatives in a chamber with 257 members. Likewise, in the Senate, Milei’s party has 7 out of 72 seats. With the alliances, the government has approximately 30% of the support, still far from the majority needed to pass laws.

The court has clarified that the labor-related articles in the decree will only become officially valid if the Argentine Parliament ratifies them during the current extraordinary sessions. If not ratified, their validity will automatically expire.

Labor reform overturned

The labor reform, which the courts have now annulled, primarily aimed at lowering compensation for employee dismissal and significantly extending “trial periods” before a position is made permanent. Under the reform, these periods would have increased to eight months.

The legislation also incorporates a decrease in maternity leave before childbirth, cutting it from 30 to 10 days. This measure aims to address the issue of high labor costs, which, when compared to productivity, rank among the highest in Latin America.

The labor reform was included in the Omnibus law, so called because of its size. There are 664 articles on various topics, such as declaration of public emergency, deregulation of the economy, privatization of public companies, tax changes, money laundering regimes for undeclared capital, security, defense, health and justice, among others.

The Omnibus bill entered its parliamentary debate on Wednesday, January 31. During the initial session, which spanned 11 hours, the government endeavored to rally support from potential allies. Yet, securing backers to vote in favor of the legislation proved challenging.

“Today, politicians have the opportunity to begin to reverse the damage they have caused to the Argentine people,” said Milei’s office in a statement released on Wednesday, January 31, urging legislators to support the bill.

Protests persist in the streets: on Wednesday, outside Congress, clashes occurred between demonstrators and the security forces stationed in the area.