Milei approves Basic Law with labor loss, privatization and privilege to capital

After more than 20 hours of intense debate, the Argentine Chamber of Deputies approved this Tuesday the new project of the “Basic Law and Starting Point for the Freedom of Argentines”, popularly known as the “Basic Law”, the controversial omnibus bill proposed by Javier Milei’s government. The project, which covers a wide range of economic and social issues, received a general sanction with 142 votes in favor, 106 against and 5 abstentions, reflecting the deep divisions within the Argentine legislature.

The “Basic Law and Starting Point for the Freedom of Argentines” represents a comprehensive attempt by the government to promote deregulation of the economy, spending cuts, privatization of 11 state-owned companies and labor reforms, among other measures.

The president of the União por la Pátria bloc, Germán Martínez, said that “it is absolutely false that this project is better than the previous one”. “Just because it has fewer items doesn’t mean it’s better; On the contrary, it incorporates aspects such as the entire labor reform package and all pension issues that were not previously up for debate,” he added.

Privileges to capitals

One of the most controversial points of the project is the creation of the Large Investment Incentive Regime (RIGI), which aims to attract foreign investment through substantial tax benefits. However, critics argue that the regime represents a serious setback for the country’s public finances, allowing the import of used equipment without paying taxes. As if that weren’t enough, it forces national companies to present balance sheets in dollars.

The Law on Fiscal, Palliative and Relevant Measures includes a series of measures that openly favor holders of large capital by eliminating taxes and regulation on capital. Among other key points is the reversal of Income Tax, the reduction of Personal Assets, the tax, customs and Social Security moratorium, money laundering, the change to the simplified regime (includes the elimination of the social monotax), the elimination of the Tax on the Transfer of Real Estate for Individuals and Individuals (ITI) and the creation of the Consumer Tax Transparency Regime.

Regarding the Fiscal, Relevant and Palliative Measures initiative that is being dealt with together with the omnibus law, he said that “far from improving the original idea that the Government had around this issue, what it does is worsen it”.

Martinez summarized by saying that workers who did not pay Profit will pay again, the highest level of taxpayers who pay for Personal Property will have a lower tax rate, money laundering “is rolling out the red carpet for products produced by criminal economies in Argentine Republic”.

However, measures such as money laundering and the delivery of hydrocarbons faced strong resistance from the opposition, who denounced the potential negative impacts of these policies. The delivery of hydrocarbons. The hydrocarbons that the company YPF produces will no longer be declared of national interest and will no longer be a priority for internal supply. The modification allows there to be no limits on exports and allows for deregulation in price controls.

Losses to workers

In the barrage of articles of the general law that conflict with labor rights, the ruling party and its allies approved the replacement of compensation with a compensation fund that will make each worker pay for their own dismissal. The new law does not protect workers, proposes regressive reforms and even threatens compensation. The section, which integrates the so-called “labor modernization”, was approved with 136 affirmative votes, 113 negative and 4 abstentions.

It also gave half sanction to the chapter that allows workers registered as independent workers to hire up to five people without having to declare them as employees in a dependent relationship. A universe of people excluded from labor protection is created by the legalization of labor fraud.

The law that compensates workers for damages caused by clandestine or poorly registered labor relations is also repealed. In relation to revocations, article 9 of Law No. 25,013 is removed, which allows the “recklessness and malice” of employers who do not pay severance pay or who do not comply with approved labor agreements.

The deputy of the Left and Workers Front, Nicolás del Caño, pointed out against the labor reform contained in the Basic Law. “What a little gift on the eve of Labor Day! Many will vote here for a reform to put their hand in the workers’ pockets”, complained the legislator.

Del Caño recalled that President Javier Milei won the elections by promising the people that he would end the privileges of the “caste” and highlighted that in the end it was revealed that the caste was nothing more than the working class. “In the end, the caste is celebrating and those who pay for this brutal adjustment are the working classes,” he said.

Another controversial aspect of the project are the extraordinary powers delegated to President Javier Milei, which allow him to make unilateral decisions on administrative, economic, financial and energy issues. This move raised concerns about the concentration of power and lack of accountability within the government.

Likewise, the green light was given to the dissolution of some organizations dependent on the State, such as the National Genetic Data Bank. The Executive Branch was also authorized to merge or transfer organizations, although it did not close, some others such as Conicet, ANMAT, INCAA, ENACOM, National Commission for Space Activities (CONAE) and Incucai.

The law also promotes a system of mass dismissals in the national State through the availability regime, violating the constitutional right to stability of public servants. In what emulates a set of dictatorship decrees recently repealed in the province of Buenos Aires, the omnibus law prohibits the exercise of political rights, freedom of conscience and expression by national public servants, during the performance of their tasks.

Despite criticism and opposition from civil society and some political sectors, the governing party managed to obtain half-sanction for the project in the Chamber of Deputies, guaranteeing the approval of a series of controversial measures. The bill now heads to the Senate, where it will face new challenges and heated debates before becoming law.

Retirements

One of the most controversial changes proposed by the new legislation is the revocation of the social security moratorium, established at the beginning of 2023 by Law 27,705, which allowed the retirement of hundreds of thousands of Argentines who did not meet the minimum social security contribution requirements. If approved by the Senate, this measure will mainly affect elderly women, who will lose their right to retirement under current rules.

Currently, women over 60 can start the retirement process and pay the remaining years of contributions to receive their monthly benefits. However, the new legislation will require women to contribute for an additional five years, raising the retirement age to 65, in line with men.

To compensate for this change, the government proposes the creation of the “Proportional Retirement Benefit (PRP)”, which would guarantee a monthly salary equivalent to 80% of the minimum wage for those who meet specific requirements, including being 65 years old or over and proving a minimum of 10 years of social security contributions.

Privatizations

Four public companies were categorized for “full privatization,” including Companhias Aéreas Argentinas, Enarsa, Rádio e Televisão Argentina and Intercarregue. This decision has significant implications for key sectors of the Argentine economy, from air transport to the hydrocarbon industry and communications.

Argentine Airlines are facing an aggressive adjustment plan, with the announcement of the closure of cabotage routes in the off-season as part of efforts to reduce the operating deficit by half. In turn, the privatization of Enarsa, an energy company, represents the transfer of key activities to the private sector, including studies, prospecting and exploitation of hydrocarbon deposits.

The sale of Radio and Television Argentina, in turn, raises concerns about the future of the media landscape and federal communication, already shaken by the recent closure of the Télam agency. In addition, five other public companies are on the list to be privatized or concessioned, including Água e Saneamento Argentino (Aysa), Correio Argentino, Cargas Belgrano, Corredores Rodoviários and Empresa Operadora Feviária (Sofse).