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Argentina:
Labour reform
Ongoing discussions on a labour law reform bill are heating up. The main issues under debate are a salary cap on termination indemnities, elimination of automatic extension of employment contracts, and ongoing employment promotion via reductions in payroll taxes for apprenticeships and other qualified employment. The government is concerned about employment stability, high unemployment, and evasion of payroll contributions. In particular, it believes the elimination of incentives for promotional employment will result in an increase in permanent employment contracts and reduce abuse of this facility.
Debate on these issues has occurred at various times since 1993, without general consensus for reform ever being reached. The current initiative dates back to 1997 and it is still proving difficult for all parties to reach agreement. In May, the employers' organisation took the unprecedented step of submitting its own bill to the Legislature. Their agenda revolves around maintaining promotional employment, substituting company collective bargaining for industry-wide negotiations, and establishing a cap on termination indemnities.
The International Monetary Fund is also pressing for modifications to the government bill as it is concerned that elements of the proposed reform conflict with Argentina's IMF commitments. The precise shape and timing of there form cannot be predicted, but it is clear there is potential for change that could significantly affect employers in Argentina.
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