Argentina's Macri downgrades labor reforms after union pressure

BUENOS AIRES (Reuters) - Argentina’s government is scaling back and delaying a planned labor reform after pressure from union leaders and a violent protest over changes to pension laws late last year.

Argentina's President Mauricio Macri speaks during a ceremony at the Casa Rosada Presidential Palace in Buenos Aires, Argentina January 29, 2018. Argentine Presidency/Handout via REUTERS

Measures will be split into two or three bills to be sent to Congress from March, once the government has negotiated with opposition Peronists and with powerful union leaders, two government officials said.

President Mauricio Macri had promised more immediate and drastic changes to the country’s labor laws, widely seen as among the most costly to companies in Latin America, after his business-friendly coalition performed unexpectedly well in October’s mid-term elections.

But he still does not have a congressional majority and has responded carefully to recent hostility from unions. The government now seeks a piecemeal approach to labor reform, one of the main factors that has held back investment in Latin America’s No. 3 economy.

“There are some unions that are working and that have understood we have to gain productivity and competitiveness,” Macri told Reuters in an interview last week in Davos, Swtizerland, citing workers in a key shale producing province as an example.

“And there are others that don’t understand that there’s been a change and that the citizens demand from them cooperation.”

Unions had broadly backed some of Macri’s measures since he took office in late 2015, but the relationship has deteriorated in recent months.

Macri’s government has threatened to cut funding for some unions and audited some of their finances. The judiciary has charged and even jailed some important union leaders on corruption accusations.

Unions on the other hand have accused Macri, a scion of one of Argentina’s wealthiest families, of persecuting workers in a country where support for labor rights is historically strong.

In a public letter to Macri this week, Hugo Moyano, head of Argentina’s largest umbrella union the CGT, issued a searing critique of the government and a new pension reform, which spurred violent protests before it passed Congress in December.

The government has “gravely injured millions of retirees... who have worked with dignity their whole lives and do not have the possibility of enjoying a comfortable retirement like your father,” Moyano wrote.

Macri’s father Franco ran a large conglomerate that once oversaw the country’s postal service.


The violence around the passage of a law changing how retirement benefits are calculated in December has given the government pause.

“Now the idea is to not be so confrontational. We need to look for consensus,” said a government official who was not authorized to be named. He said the CGT and moderate Peronists, like Senator Miguel Angel Pichetto, would need to be on board with future reforms.

The government will progress with measures that have broad support, like bringing informal workers into the legal labor force, the official said. On the other hand, a proposal to lower corporate penalties for firing workers faces steep opposition.

“There is a strong consensus on themes like labor amnesty, a medical technology agency, a vocational training institute,” said a second government official. He said such measures would be passed by Congress and not by decree.

Still, the unions have shown no sign of lessening their opposition. Some have already called protests for February and March.

“We reject the labor reform. It is only about accumulating more profits for concentrated economic groups without contemplating anything for the workers,” the leader of the CTA union Pablo Micheli said.

Additional reporting by Alessandra Galloni in Davos; Writing by Caroline Stauffer; Editing by Alistair Bell