Milei takes on Argentina's unions, drawing protests as senators debate his labor overhaul

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BUENOS AIRES, Argentina (AP) — Thousands of workers mobilized by powerful trade unions converged outside Argentina’s Congress on Wednesday, blocking traffic and clashing with police as senators debated a sweeping overhaul of the nation's rigid labor laws considered crucial to libertarian President Javier Milei’s shock therapy program.

Security forces struggled to control the crowds in a central square of downtown Buenos Aires, firing water cannons and rubber bullets at protesters who lobbed petrol bombs, stones and water bottles. Security Minister Alejandra Monteoliva said two people were arrested for attacking police officers.

The fiery standoff underscored the sensitivity of labor rights in this nation dominated since the 1940s by Peronism, a populist movement that has swung right and left ideologically over the decades but always claimed to champion workers' rights.

Supporters of Milei's labor overhaul blame nearly two decades of stagnant private sector job creation on Argentina's sky-high payroll taxes, a byzantine system of severance payments and national wage agreements that limit negotiations at the company level.

The bill under discussion would offer businesses more flexibility by curbing the right to strike, extending trial periods during which companies can fire unproductive new employees, reducing the power of national trade federations in collective bargaining and cutting severance payouts.

Businesses say the changes would encourage badly needed foreign investment and incentivize formal hiring in a country where almost half of all workers are employed off the books.

But they face bitter opposition from the labor unions that helped found modern-day Peronism and their political allies. They argue that the bill would roll back strong protection measures, including against unfair termination, necessary to safeguard vulnerable workers from the nation's notoriously frequent economic shocks.

“It’s not modernization, it’s austerity for the workers,” said the General Confederation of Labour, the largest trade-union grouping that organized Wednesday's protest.

The heated debate in the Senate was expected to stretch through the night. If approved, the legislation will go to the lower house of Congress for debate next month.