Argentine President Javier Milei gained a crucial political victory on Friday as lawmakers approved a sweeping and divisive reform to the country's labor laws.

The Senate passed the government-backed initiative into law, with 42 out of 72 senators voting in favor.

"Historic! We have a labor modernization," Milei said after the bill was approved.

What's in the bill?

The reform is part of Milei's free market agenda and aims to boost hiring by loosening employers' liabilities and limiting workers' rights.

The law will:

• Limit the right to strike
• Reduce unions' bargaining power
• Make it easier for companies to fire workers
• Extend probation periods
• Curb workers' ability to sue employers upon dismissal
• Cut severance pay, which is traditionally high in Argentina
• Empower employers to mandate 12-hour workdays (instead of the current eight)
• Reduce salaries for employees on sick leave

About 40% of Argentina's workers do not have formal employment contracts. Unions warn the new bill would only exacerbate the situation. However, the government argues it will reduce under-the-table employment and create new jobs by lowering taxes on employers. 

The bill, long under the legislative process, created tension between the ruling government, the opposition, and labor unions. Recent polls showed Argentina was split on the reform, with 48.6% in favor and 45.2% against it.

Sergio Emiliozzi, a 60-year-old teacher, said that while the law was being promoted as a job creation tool, "it's quite the opposite."

The bill won initial support from the Senate earlier in February, but it had to go back for a final vote.

Labor reform passes despite protests

Thousands of Argentinians demonstrated on the streets over the last two weeks, protesting what they see as a rollback in workers' rights. The General Confederation of Labour (CGT) had called a general strike last week, which brought Argentina to a halt. 

Two protests outside the parliament ended in clashes between the police and demonstrators, but a third protest was largely peaceful, with only minor incidents.

Ahead of the Senate vote, the CGT announced it would take its fight to the courts.

Edited by: Dmytro Hubenko