Important post, clarifying the good and bad of Milei's new law reforms in Argentina
First and foremost the objective of the bill aims to establish clear and predictable rules, reduce litigation opening up better investments in Argentina in theory, create more dynamic and modern frameworks for productivity and ease the ability to create formal employment across the board.
A quick summary,
Hiring and Firing is easier
The law makes it both easier to hire part time workers and fire people as well. This is an important point in understanding the possible abuses of the law. In the past hiring was slow because there was a complex legal requirement that employers must provide high severance packages. It lead to most Argentinians working off the books and outside legal framework of taxation.
Extension of the standard workday
Employers have the option to extend a legal workday to 12 hours instead of 8 provided (and this parts important), the employee and employer agrees on work hours schedule and compensation for extra hours outside of the normal work week hours. More on this later.
New limits on the ability to Strike ( Union or individual )
The reform sets minimum requirements for services to continue during work stoppage or disagreements between the state and workers.
---------------+---
I will now go into a more detailed look at changes that allowed previous loopholes against employers
1.) Certain things are not included as severance or workers pay
Healthcare insurance, Equity through stocks, cellular and Internet services are no longer required to be paid by employer
Tips are also no longer considered defined as compensation
Performance bonuses are still considered compensation but is no longer legally enforced by the unions. It's no longer a right that a bonus needs to be paid by employers for extraordinary achievement for example.
This should a) reduce employment claims for underreporting wages b) narrow severance payments to reflect true wages c) restore greater flexibiy to employers to design compensation structures.
In the past lawyers of plaintiffs would extract greater severance pays from employers to it's maximum using these benefits
2.) Enabling wages in foreign currency
This change makes a common practice in Argentina now legal, by retaining and attracting workers formally by offering to pay in US dollars. Perhaps an important step towards dollarization of Argentina long term, a goal by the US in any case
3.) Deregulating vacation days
There used to be guaranteed statutory control over when an employee can take vacation days. This now defaults to agreement between employer and employee.
4.) Overtime
Overtime is now negotiable, including forms of payment and does not necessarily need the Unions approval
5.) Deregulating Remote work benefits
Covid laws were now repealed that benefited workers that can do certain jobs at home
The concerns and criticism of the laws:
In general the law strips power away from unions and gives power to private employers. Removing certain benefits that were ultimately being abused by some workers in general.
However there are serious concerns about the ability to hire someone easily as a part time worker and negotiating 12 hour work days. Theoretically an employee can hire 10 people instead of 6 full time workers with overtime. They all work 12 hours per day for the same cost of 6 workers for example and get more productivity and work hours without having to pay overtime
In the situations where there are overtime, employees may be compensated with other things besides money.
Other changes such as Foreign currency law gives more power to multi corporate organizations, the best jobs, best productivity and ultimately the best products will be by American and probably Israeli firms and institutions like Google, Amazon, Tesla and BlackRock like investments.
First and foremost the objective of the bill aims to establish clear and predictable rules, reduce litigation opening up better investments in Argentina in theory, create more dynamic and modern frameworks for productivity and ease the ability to create formal employment across the board.
A quick summary,
Hiring and Firing is easier
The law makes it both easier to hire part time workers and fire people as well. This is an important point in understanding the possible abuses of the law. In the past hiring was slow because there was a complex legal requirement that employers must provide high severance packages. It lead to most Argentinians working off the books and outside legal framework of taxation.
Extension of the standard workday
Employers have the option to extend a legal workday to 12 hours instead of 8 provided (and this parts important), the employee and employer agrees on work hours schedule and compensation for extra hours outside of the normal work week hours. More on this later.
New limits on the ability to Strike ( Union or individual )
The reform sets minimum requirements for services to continue during work stoppage or disagreements between the state and workers.
---------------+---
I will now go into a more detailed look at changes that allowed previous loopholes against employers
1.) Certain things are not included as severance or workers pay
Healthcare insurance, Equity through stocks, cellular and Internet services are no longer required to be paid by employer
Tips are also no longer considered defined as compensation
Performance bonuses are still considered compensation but is no longer legally enforced by the unions. It's no longer a right that a bonus needs to be paid by employers for extraordinary achievement for example.
This should a) reduce employment claims for underreporting wages b) narrow severance payments to reflect true wages c) restore greater flexibiy to employers to design compensation structures.
In the past lawyers of plaintiffs would extract greater severance pays from employers to it's maximum using these benefits
2.) Enabling wages in foreign currency
This change makes a common practice in Argentina now legal, by retaining and attracting workers formally by offering to pay in US dollars. Perhaps an important step towards dollarization of Argentina long term, a goal by the US in any case
3.) Deregulating vacation days
There used to be guaranteed statutory control over when an employee can take vacation days. This now defaults to agreement between employer and employee.
4.) Overtime
Overtime is now negotiable, including forms of payment and does not necessarily need the Unions approval
5.) Deregulating Remote work benefits
Covid laws were now repealed that benefited workers that can do certain jobs at home
The concerns and criticism of the laws:
In general the law strips power away from unions and gives power to private employers. Removing certain benefits that were ultimately being abused by some workers in general.
However there are serious concerns about the ability to hire someone easily as a part time worker and negotiating 12 hour work days. Theoretically an employee can hire 10 people instead of 6 full time workers with overtime. They all work 12 hours per day for the same cost of 6 workers for example and get more productivity and work hours without having to pay overtime
In the situations where there are overtime, employees may be compensated with other things besides money.
Other changes such as Foreign currency law gives more power to multi corporate organizations, the best jobs, best productivity and ultimately the best products will be by American and probably Israeli firms and institutions like Google, Amazon, Tesla and BlackRock like investments.
