At the end of last year, I celebrated two years of libertarian progress in Argentina.

Now, thanks to strong results for President Milei’s libertarian party in the October mid-term elections, I’ll hopefully have a column at the end of this year to celebrate three years of progress.

I’m specifically hoping there will be good news to share regarding labor law deregulation.

One of the (many) unfortunate legacies of Peronism is that Argentina is saddled with laws – such as so-called employment protection legislation – that tilt the playing field in favor of unions.

The net effect of these laws is that it is needlessly expensive to employ workers. So the inevitable impact is that fewer jobs are created, or that jobs are in the shadow economy.

This is why I explained last summer (as part of a series on the next steps for Argentina’s economic renaissance) that Milei needs to convince the legislature (where his party now has more power, but not a majority) to liberalize.

The good news is that liberalization is happening.

Here are some excerpts from an Associated Press report by Isabel Debre.

Argentina’s Senate early Thursday gave its overall approval to a labor overhaul that is considered crucial to President Javier Milei’s shock therapy program after hours of debate… Thousands of workers mobilized by powerful trade unions converged on a central square of downtown Buenos Aires earlier Wednesday, blocking traffic and clashing with police as the marathon session got underway. The fiery standoff underscored the sensitivity of labor rights in this nation dominated since the 1940s by Peronism… At around 1:30 a.m., senators backed the labor bill in principle by a vote of 42-30 after 13 hours of debate, handing Milei an initial victory that underscored the radical libertarian’s newfound leverage in Congress… The bill still faces a test next month in the lower house, where some Senate amendments could be changed or reversed. …Supporters of Milei’s revamped labor law say high severance payouts and taxes make it almost impossible to fire employees, constraining productivity and discouraging business from formal employment. Almost half of Argentines work off the books. Private sector job growth has remained stagnant for 14 years.

Here are some additional details.

The bill has drawn fierce opposition from labor unions and their Peronist allies… Successive governments…have promised to overhaul Argentina’s labor legislation and have failed. “This is the most important reform in the last 50 years,” said Sen. Patricia Bullrich, leader of the La Libertad Avanza bloc in Congress. “No government has achieved it, and I believe we will.” …after clinching a big midterm victory last year…, Milei has a fresh mandate to enact reforms… The bill under discussion would curb the right to strike, extend trial periods during which companies can fire unproductive new employees, defang national trade unions by allowing collective bargaining at company level and unwind a byzantine system of severance payments by narrowing grounds for wrongful dismissal. Experts said that even if the government is forced to make concessions in Congress, the passage of anything called “labor reform” would be a huge achievement in Argentina.

The bottom line is that Argentina needs free and competitive markets for labor.

This is an area where the United States gets reasonably high rankings.

I’ll close with some political analysis.

The good news is that my Argentine friends tell me that the legislation should make it through the Chamber of Deputies and that Milei will get a victory.

The bad news is that there have been some unfortunate compromises to get support from the non-libertarian parties (remember, last October’s elections went very well, but Milei’s party does not control the legislature).

So the assessments that I’m getting are that this legislation only solves about 50 percent of the problem.

But the problem is enormous, so fixing half of the problem is en enormous achievement.

Ronald Reagan and Margaret Thatcher also had to make compromises as they rescued their economies. So long as the movement is toward greater economic liberty, even a curmudgeon like me will be happy.

But it does show that Milei still has a long way to go if he wants to achieve his goal.