Milei’s Shock Therapy

While tear gas filled the streets, the Senate passed a historic overhaul designed to dismantle Argentina’s "industry of the judgment."

[Speaker 1]: If you looked at the front pages in Buenos Aires this morning, you saw two very different realities occupying the same space. [Speaker 2]: Right. Outside the Congress building yesterday, you had the tear gas, the rubber bullets, and thousands of protestors claiming that Argentine labor rights were being shredded. [Speaker 1]: But inside the chamber, the mood was almost clinical. The Senate voted 42 to 28 to pass the "Labor Modernization Act." And for the government, this wasn’t a demolition-it was a rescue mission. [Speaker 2]: We’re looking at the mechanics of this law today because it represents a fundamental shift in the psychology of the Argentine economy. It attempts to swap the employer’s fear of bankruptcy for the worker’s fear of dismissal. [Speaker 1]: To understand why this passed, and why it’s so explosive, you have to hold one number in your head: three hundred and fifty. [Speaker 2]: Keep that number in mind. Three hundred and fifty. Because that is the statistic that justified this entire overhaul. [Speaker 1]: It’s Saturday, February 28, 2026, and you’re listening to The Angle. [Speaker 2]: So, let’s start with how we got to that vote yesterday. Javier Milei has been trying to pass this since the week he took office back in December 2023. [Speaker 1]: Yeah, he originally tried to do this by emergency decree, the courts struck it down, and he’s spent the last two years fighting the legislative battle. His argument has always been that the 1974 Employment Contract Law is the reason the economy has been stagnant for a decade. [Speaker 2]: And the data does back up the stagnation part. For nearly fifteen years, formal private employment in Argentina flatlined. Meanwhile, the informal sector-people working off the books for cash-ballooned to over 43 percent of the workforce. [Speaker 1]: Which is the government’s main talking point. They argue that the old laws weren’t actually protecting workers; they were just keeping half the country working in the shadows. But the urgency to pass this *now* came from that number we mentioned: 350. [Speaker 2]: Right. According to small business associations, in 2025, there was an average of 350 labor lawsuits filed every single business day. [Speaker 1]: That is a staggering amount of litigation. [Speaker 2]: It is. And for a small business owner-someone running a kiosk or a small textile shop-one of those lawsuits is an extinction event. Under the old system, if you fired someone and miscalculated the severance, or if they claimed they were registered improperly, the fines multiplies. [Speaker 1]: Exactly. I’ve spoken to owners who call it the "industry of the judgment." You have a dispute over a few thousand dollars, legal fees pile up, the fines compound, and suddenly a small shop owes a sum that forces them to liquidate. [Speaker 2]: So that’s the "Risk Removal" thesis. Minister Sturzenegger’s logic is that companies are terrified of hiring because they are terrified of firing. If you remove the lethal risk of a lawsuit, they’ll start hiring again. [Speaker 1]: But to remove that risk, they have fundamentally changed what it means to be an employee in Argentina. And this is where we need to look at the mechanism, because they’ve essentially financialized the act of firing someone. [Speaker 2]: They call it the "Severance Fund," or the "Fondo de Cese." [Speaker 1]: How does it work in practice? [Speaker 2]: Under the old law, if I fire you without cause, I have to pay you one month of salary for every year you worked. It’s a big, sudden…