BUENOS AIRES, Feb 12 (Reuters) - Argentina's Senate approved President Javier Milei's flagship labor reform bill early on Thursday, marking a key advance for the libertarian leader's sweeping economic agenda.
After debating the measure for more than 13 hours, lawmakers voted 42 to 30 to pass the reform and send it to the lower house for debate, a victory for Milei's administration, which argues the overhaul will spur investment and formal job creation.
The Senate's approval of the reform is expected to encourage investors who are watching to see whether Milei has the power to continue implementing his free-market agenda.
"This law represents a turning point in Argentine labor history," Milei said in a statement after the vote, calling it a "profound transformation" that would reduce bureaucracy and update regulations he described as outdated in the face of economic and technological change.
Opposition Peronist senators had fought against the reform, arguing that the package threatens long-standing worker protections.
The reform eases hiring rules, changes the vacation time system, allows for extending the standard workday from eight to 12 hours and for salaries to be paid in foreign currency.
It also introduces new limits on the right to strike by setting minimum requirements for services to continue during work stoppages. The reform streamlines the calculation of severance pay, lowering costs for employers by excluding bonuses that were not part of a worker’s regular salary from the compensation formula.
Lawmakers made adjustments to the bill before its passage, including the removal of a provision that would have cut income tax rates to 31% from 35%, a change sought by provincial governors.
The reform kept a requirement in place for employers to be responsible for the automatic collection of union dues, a concession to labor groups to avoid weakening their finances.
The government also removed a clause that would have allowed workers to be paid through virtual wallets following pushback from traditional banks.
Protesters hurled Molotov cocktails and clashed with police outside Congress during the debate on Wednesday, though city services were largely interrupted in Buenos Aires.
The bill will be next be debated and voted on by the lower house.
(Reporting by Lucila Sigal; additional reporting by Leila Miller; writing by Cassandra Garrison; Editing by Aidan Lewis and Nia Williams)
