Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Argentina’s government sees 2026 as its “golden opportunity” to pass major economic reform ahead of the following year’s presidential election, according to the minister tasked with enacting President Javier Milei’s ‘chainsaw’ deregulation agenda.
Milei, who has relied heavily on executive powers to slash spending and regulation, lost dozens of congressional votes in 2025 as campaigning for October midterm elections frayed alliances between his La Libertad Avanza and moderate parties.
But having more than doubled its congressional bloc at those elections, the government believes it can now pass labour and tax overhauls, as well as a hardline new penal code. Such reforms have long been resisted by the country’s leftwing Peronist opposition, which scored 32 per cent at the midterms compared with 41 per cent for LLA.
“There is a new political climate,” deregulation minister Federico Sturzenegger, who wrote many of the planned reforms, told the Financial Times. “The rest of the political system is looking to the party that won 40 per cent and that will make it easier to deal with congress.”
“The focus has to be on getting things done in 2026 because 2027 is already an election year again,” Sturzenegger, 59, a former central bank chief who is seen as a hardliner in Milei’s team, added. “Next year is the golden opportunity.”
At its first test in congress since the midterms, the government last week won lower house approval for its 2026 budget bill. But it failed to reverse spending increases approved under the previous congress, suggesting fierce negotiations will still be required to pass reforms.
The first target is Argentina’s labour market, where the number of formal private sector jobs has been almost flat for 14 years. Roughly half of workers are employed off the books.
Businesses blame high payroll taxes, sometimes outsized severance payments and national level wage agreements between unions and business chambers that can override company-level talks.
The proposed labour bill would reduce union dues paid by non-members, limit labour courts’ discretion on severance payments and make company wage negotiations supersede nation-level accords. It would also allow a working day of up to 12 hours and limit the right to strike by expanding the category of jobs deemed essential.
Sturzenegger said the changes would “correct the rigidity that has expelled people from the formal labour market”. Greater flexibility in wage negotiations, he argued, would allow smaller companies and those in poorer regions to hire more and fuel a 15-20 per cent increase in formal jobs.
Critics say the bill would benefit businesses more than workers. The labour research centre at Buenos Aires’ National University of San Martín, called it a “regression” that would reduce Argentines’ already low salaries. They also criticised a move to redirect money from Argentina’s social security agency to a new fund that helps companies make severance payments.
Milei’s opponents also note that his moves to slash public spending and scrap protectionist trade barriers have so far hurt formal employment. The country has 280,000 fewer formal jobs than when he took office, according to analysis of government data by left-leaning think-tank CEPA.
The government says fast-growing exporting sectors, including mining, energy, agribusiness and technology, will expand to fill the gap, though they currently account for just 14 per cent of employment compared with 19 per cent in manufacturing.
“If we can go from being an economy that exports and imports 10 per cent of GDP to one that exports and imports 30 per cent of GDP, the increase in living standards will be immeasurable,” Sturzenegger said. “If the government maintains this path, it can happen within one generation.”
The labour bill is likely to be debated in congress starting in February. LLA is now the largest party in the lower house, with 95 of 257 seats.
But the government will probably have to make concessions to win over moderate lawmakers, said Juan Cruz Díaz, managing director of Cefeidas political consultancy. “Whatever the final content, passing the bill would be a crucial signal for the government to show [investors] it can consolidate its reform agenda,” he said.
Sturzenegger has also led Milei’s efforts to slash Argentina’s labyrinthine regulations — and says he has cut or overhauled 13,500 articles using various executive powers.
Industries such as trucking have enjoyed a sharp drop in costs from these measures, Sturzenegger said. But the broader economic impact is hard to quantify, he added.
For example, “nothing happened this year” after they ended Argentina’s ban on exporting live cattle, he said, “because you have to develop the market”.
“But maybe in ten years, we’ll be the biggest provider for the Gulf countries,” he added. “We are totally convinced that the more freedom people have, the more they will do.”
