Cost overruns, lawsuits, and 1975 agreements: the assessment that demands labor modernization

Rigidity in negotiations

While the world adapts its regulations to modern work, Argentina is still governed by agreements signed almost fifty years ago. These regulations reflect a twentieth-century industrial economy and do not consider new forms of production, technology, or work modalities.

Ultractivity—the mechanism that allows expired agreements to remain in force indefinitely—blocks any update. This rigidity not only prevents productivity increases but also especially harms the poorest provinces. The report shows that national wage bargaining imposes uniform salaries in regions with very different productivity levels, destroying jobs in NOA, NEA, and Cuyo: According to official estimates, allowing regional negotiations could increase employment by 9 to 20 points.

A modern labor reform

The three structural failures described—overcosts, legal risk, and regulatory rigidity—produce the same result: a labor market that doesn't grow and that pushes millions of workers into informality. For this reason, the report is clear in stating that labor modernization is not an ideological goal, but a necessary condition for Argentina to generate employment again.

The consensus at Consejo de Mayo was broad. Only the CGT opposed any reform, defending a scheme that no longer protects workers, but rather the rents accumulated around the system. All other council members, including governors from the Pacto de Mayo, agreed that updating labor legislation is essential to give the country a structure that encourages registered employment, allows negotiations according to regional realities, and restores predictability to those who produce

Argentina needs to leave behind a model that has been stuck since 1975. Modernizing legislation doesn't mean making work more precarious: it means creating real opportunities, raising take-home pay, and letting the labor market function. After thirteen years of stagnation and informality that exceeds half the workforce, there is no room to keep postponing the obvious: without a deep labor reform, the country can't grow.

Consejo de Mayo points out that a single adverse ruling can bankrupt a company, especially small and medium-sized ones. In this context, it is logical for companies to choose not to hire: they outsource, automate, or simply halt their growth. This explains the paralysis of private employment for more than a decade. A reform must provide certainty and eliminate the gray areas that currently harm both employers and workers.

The situation of the Argentine labor market was starkly exposed in the report by the Consejo de Mayo: formal private employment hasn't grown in 13 years and informality affects more than half of all workers. The document identifies three structural failures that explain this deterioration: an overload of costs and "tolls" that make labor relations more expensive, high entry and exit costs that make any hiring risky, and regulatory rigidity based on outdated 1975 agreements that hinder productive adaptation.

These three distortions create a labor framework that discourages investment, pushes workers out of formal employment, and stalls economic development. The current structure benefits intermediaries and bureaucracies, while it sinks those who produce and work: The need to modernize labor legislation goes beyond ideological debate, and diagnoses converge on it as a necessary condition to recover employment, productivity, and growth.

Tax burden and various "tolls"

The report shows that Argentine labor costs are inflated by a combination of state taxes and private "tolls": the salary is enough for everyone except the one who earns it. Out of every 100 pesos an employer pays, the worker receives only 60; the rest is divided among the State, unions, health insurance providers, and other mechanisms that turn wages into a source of funding for multiple actors.

This overload explains much of the stagnation in formal employment: for an SME, hiring means taking on a total cost that far exceeds its real capacity. Any serious labor modernization requires reducing these costs so that hiring becomes viable again and so that the salary finally belongs to the worker, not a pool from which many take a share.

Significant entry and exit costs

Even when an employer is willing to bear the economic burden, the decision to hire is conditioned by legal uncertainty. High severance payments, cumulative fines, ambiguous interpretations of obsolete regulations, and a growing level of litigation turn any labor relationship into a risk.