The government finally sent the Work Modernization Bill to Congress. The project proposes changes to the Labor Contract Law, an incentive system for medium-sized investments, an employment regulation plan and the reduction of employers’ contributions with an additional discount for new jobs.
The project also proposes changes in tax issues, including profits for companies and individuals, internal taxes and VAT. However, the majority of modifications focus on work modifications. He The government is aiming for greater formalization of work, which would be accompanied by increased collection despite the reduction in rates.
Among the points that can contribute to the creation of registered jobs, experts cite the laundering of unregistered workers, incentives for job creation and the hour bank, but essentially the reduction of Contributions amounting to 5% of wages, Depending on the size of the company, up to 17.4% or 15% of the social insurance and integrated pension insurance rates.
Before the reform, there is another fundamental factor. “Assuming there is sustained economic growth with employment expansion In sectors that are not growing today, a new money laundering and a permanent system to reduce hiring costs, as in the reform, could temporarily accompany job creation,” explained labor lawyer and researcher at Fundar, Juan Manuel Ottaviano.
The government expects economic activity to grow by 5% by 2026, while analysts forecast growth of 4%. According to the Minister of Economy, Luis Caputo, revenues increase by one point for every four points of growth in activity.
There are other factors that could increase private sector employment. Pablo Mastromarino, a work expert at Studio Tanoira Cassagne, explained that this is an expectation focuses on money laundering and the new employment system, but its performance will be heavily linked to activity.
He also emphasized that simplifying registration and digitizing certificates can be particularly helpful for small and medium-sized companies, as the bureaucratic effort involved in contract processing involves costs and time.
“The fundamental fight, which is to reduce contributions in the general system, is not taking place,” explained Mastromarino, referring to the three percentage point reduction in employer contributions. Although contributions to ANSES and SIPA will also be reduced in parallel, the 3-point reduction in contributions will be offset by the contribution to the Employment Assistance Fund, which makes the failed Employment Termination Fund mandatory with monthly contributions from employers. “I don’t see any benefit for the company, it neutralizes the reduction in contributions,” Mastromarino added.
In order to increase registration, contributions would have to be reduced, the expert explained.
Finally, he added that it could be helpful to abolish the caps for part-time work, which provides for a salary reduced to two-thirds of the daily wage, above which the usual salary is paid. According to Mastromarino, lifting this restriction will allow more flexibility and registration in sectors where demand is not constant throughout the year.
Matías Ghidini, partner at Ghidini y Rodil, explained that reducing costs will favor hiring: “Cuts in employer contributions to pension funds or social work will make sense in the short term, especially for small companies. The employer’s priority and demand is that hiring is cheaper.”
“The other changes are not of central importance. They have to do with a government negotiation strategy to admit problems,” he concluded, emphasizing that the business priority is to reduce hiring costs.
The truth is that, according to private estimates, the revenue losses resulting from the contribution reduction in 2026 will amount to almost $3 billion per year, equivalent to almost 0.5% of GDP.
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