Argentina Court Suspends Labor Reforms, Dealing Setback to Milei

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(Bloomberg) — Argentine President Javier Milei suffered his first judicial setback after the country’s national labor appeals court suspended a key portion of his emergency decree aimed at overhauling South America’s second-biggest economy.

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The court announced an injunction Wednesday that suspends labor reforms included in Milei’s wide-ranging emergency decree from Dec. 20 that touched on several aspects of economic policy. The court’s decision marks at least at temporary victory for one of Argentina’s most powerful labor unions, CGT, that requested the labor measures be suspended and stands to be one of Milei’s rivals during his presidency. The CGT has called for a nationwide general strike on Jan. 24.

Milei’s press office announced later Wednesday that the government will appeal the court’s decision to suspend his labor reforms, arguing the judge’s ruling contradicts other courts at the municipal and provincial level.

Read More: Milei Unveils Broad Reforms to Liberalize Argentina Economy (2)

For now, the court’s injunction still avoids a worst case scenario for Milei where the entire decree is thwarted by either congress or the courts. Lawmakers still have time to vote for or against the whole decree though congress hasn’t blocked a presidential decree in recent governments.

Milei’s labor measures centered around simplifying employer’s severance pay obligations and “trial periods” before a company must hire a worker to a full-time contract, among other reforms. Argentina has higher labor costs relative to worker productivity.

(Updates with government’s response to appeal court decision in third paragraph)

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