The labor reform, which already has an opinion from the nation’s Senate and will be debated in February 2026, aims to reshape the way salaries are negotiated in Argentina. Specifically, the project proposes to replace traditional salary systems with a “dynamic salary model” based on the performance of each individual employee.
The measure, presented as a way to increase productivity and reduce labor costs, has drawn strong criticism from unions, which they interpret as a new form of hidden flexibility.
Labor reform 2026: new dynamic salary system
The labor reform project includes the creation of a system of so-called “dynamic wages”, a system that aims to link workers’ pay to their individual productivity.
Specifically, it is about modernizing collective agreements, adapting them to the reality of each company and each region and setting salaries that reward performance.
The aim of the initiative is to set a minimum requirement in the agreements that is based on “the most disadvantaged company in the most disadvantaged area of the country”. In practice, this could mean lowering traditional salary floors, allowing each company to adjust salaries based on its results.
The government assures that the new dynamic salary system will help reduce labor costs and promote formal employment, on the premise that salary “should not necessarily be linked to inflation, but to the employee’s performance”.
The “dynamic salary” proposal is based on models from other countries in which productivity compensation took on different forms and dimensions. International experience allows us to observe a varying degree of connection between salary, performance and collective bargaining, depending on the institutional framework of each country.
Dynamic salaries: warning from unions due to work flexibility
Trade unions, trade union organizations and labor law experts are watching the “dynamic wages” proposal with concern as they believe it could lead to hidden flexibility in working conditions.
According to labor experts, the system “diminishes the rights and wages of millions of workers” because it would convert conventional minimum wage limits into caps for individual bargaining, thereby weakening the strength of collective bargaining agreements.
The system is reminiscent of performance-related compensation models, which in the past were used to discipline or overwhelm employees instead of promoting their productivity. In addition, by decoupling wages from inflation, there is a risk that purchasing power will further deteriorate as prices rise.
“In this model, the economic risk is shifted from the employer to the employee,” the unions claim.
Dynamic salaries: How this could impact joint ventures and formal employment
If the project is approved in the National Congress, the situation could change significantly. Instead of negotiating across-the-board increases by industry or sector, salary adjustments would be determined based on individual performance or productivity.
According to unions, this would weaken collective bargaining and increase inequality between workers within the same company by making it dependent on subjective evaluations or business criteria.
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