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Milei’s Shock Therapy and the Workers’ Response

Milei’s right-wing government has launched an all-out attack on workers’ rights and an economic program tailored to business’ interests. A tumultuous period of class struggle lies ahead, for which the outcome is still open.

Juan Cruz Ferre

December 26, 2023
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Less than two weeks after President Javier Milei took office in Argentina, his term is turning out to be as convulsive as promised. His economic policy is a textbook example of shock therapy, and includes massive cuts to social spending, a drastic currency devaluation — with the consequent depreciation of wages —, the reduction of subsidies on energy and transport, and price liberalization. This program was accompanied last week by the implementation of a new “security protocol” aimed at suppressing social protest and penalizing those who mobilize to reject government policies. In this context, a mass mobilization to Plaza de Mayo last Wednesday, followed by spontaneous pots and pans protests in front of Congress, was the first show of strength by those who vow to resist the onslaught.

An Unprecedented Attack on Workers’ Rights

The attack on workers began with the economic plan unveiled by Minister of Finance, Luis Caputo just a few days after Milei was sworn in. In line with the recommendations by the IMF, Caputo laid out a plan of zero fiscal deficit (Argentina has a current account deficit equivalent to 5 percent of the GDP) through a harsh reduction in public spending, the total suspension of public works projects, a reduction in subsidies to energy and transportation, and the freezing of all other items in the federal budget — or rather, a real reduction, since inflation will dilute its real value. At the same time, the government has devalued the national currency by 50 percent — one of the largest devaluations in the history of the country. Aided by the liberalization of prices, this sharp depreciation is poised to translate into price increases across the board. With workers’ bargaining power undermined due to high unemployment and poverty rates, and thanks to the relaxation of employment protections, wages will inevitably lag behind inflation, resulting in a reduction of income for the majority of the population.

A week after this economic plan was presented, the government announced an all-encompassing decree affecting issues as diverse as labor law, health care, foreign trade, land, and mining. It is difficult to grasp the breadth of these measures, but the general content is clear: it includes an attack on workers’ rights, the liberalization of the economy, the erosion of protections for tenants, the environment, and small businesses, and the strengthening of big firms through market deregulation and numerous incentives. Let us review some of the most relevant provisions (take a deep breath).

One of the key components of the decree is a labor reform that relaxes a number of regulations aimed at limiting informal employment. For instance, among other things, It abolishes fines and penalties for non-registered employment, it extends the probationary period for new employees from 3 to 8 months, and it restricts union meetings during work hours. The decree, perhaps most importantly, also severely restricts the right to strike, demanding the maintenance of 75 percent of operations in those sectors deemed “essential,” including health care, education, distribution of water, gas and electricity, air traffic, and communications. In addition, it demands that operations be maintained at 50 percent in a vast array of other sectors deemed “critical” (trascendentales), including transportation, food processing, logistics, mining, postal service, gastronomy, and more.

The right to strike would be further undermined by a provision that gives employers the ability to fire anyone who occupies the workplace, or blocks the entrance (as is common during a picket line), or even causes any material losses to the company. Lastly, two important funding sources for unions are targeted by the decree. One is agency fees. Under current labor laws, all employees in a unionized shop have their union dues automatically deducted from their paycheck. The decree will require employees to give their consent for such deductions. This alone will likely undercut unions’ funding by an important percentage. The other one is the union-managed health insurance (the so-called “obra social”). This is a form of social health insurance that benefits all formal workers and their families. Since the 1960s, the payroll contributions for this insurance have been managed by the union representing workers in the sector where the worker develops their activity. The executive order allows private health insurance companies to compete with unions for these funds.

Another measure that will immediately affect working-class peoples’ lives is the elimination of the rent law, a legislation enacted initially in 2020 and recently reformed, which regulates (although tepidly) rental leases. It imposed a minimum duration of three years for any property rental, and set caps to rent increases. The proposal eliminates both duration and rental increase limits, and it even allows landlords to require payments in U. S. dollars.

All price controls and regulations are also being eliminated. A major player that was demanding price controls to be lifted is health insurance companies, which, just one day after the decree was published, announced premium hikes of 40 percent. The presidential decree also changes the legal status of all state companies allowing for their privatization down the road. It lifts all restrictions to the purchase of land by foreigners, and it opens the market for satellite internet “to allow companies like Starlink to provide their services” said Milei, in an explicit wink to Elon Musk during his announcement.

From Anti-Establishment Candidate to Sharing Power With the Establishment

The package of measures is “a war plan against working-class people,” as the Left Front’s presidential candidate and national congresswoman, Myriam Bregman put it. Anticipating widespread discontent, the government put in place a new “security protocol” to repress street protest. At the head of the Ministry of Security is Patricia Bullrich, former presidential candidate for Juntos por el Cambio. The new protocol targets, in particular, roadblocks and other kinds of protests that affect the “free circulation” of individuals, methods of resistance that have become a key pressure mechanism for social organizations and the unemployed in Argentina since the late 1990s. In addition, the government vowed to strip those who participate in this kind of protests from any social assistance benefits they may receive.

During the presidential campaign, Milei railed against the “political caste,” a term that he borrowed from left movements (it became popular during the 2011 indignados movement) to refer to career politicians of establishment parties. He employed this anti-establishment rhetoric as a demagogic device to capitalize on the widespread rejection of the two parties that have dominated Argentinian politics for the past ten years: the Kirchnerist/Peronist coalition (which changed its name as it added or dropped players along the way), and the center-right, Juntos por el Cambio. Although this was arguably the biggest strength of his bid for president, his public discourse also included radical free-market proposals, and an ultra-conservative agenda that, among other things, derided human rights, opposed the right to abortion, and promised to drastically roll back welfare policies. 

However, when Milei came in second against Peronist Sergio Massa in the general elections and found his candidacy in peril in the lead-up to the runoff, he met with former president Mauricio Macri and struck a deal that would redefine his program. For once, he no longer talked about the “political caste” — understandably, since he was partnering with one of its main representatives. In fact, Macri simply took over his campaign after the general elections. Over the weeks that followed, and after he won the runoff, Milei moderated his discourse, ditched the most extreme ideas (such as shutting down the country’s central bank), and even toned down his public appearances. Apart from Macri’s influence, the unsolicited advice of foreign business ideologues, such as columnists from Foreign Affairs, or The Economist, contributed to push him in the same direction: forget the culture wars, ditch the fringe rhetoric, and focus on the radical free-market program. The shift was welcome by the market. As the WSJ reported, “Signs of Milei’s postelection moderation are welcomed by Wall Street investors concerned about his ability to govern. The president-elect is expected to appoint to his cabinet several former ministers of Mauricio Macri.” The transformation from anti-establishment candidate to free-market president allied with Macri, and at the service of the capitalist class, was complete. It is no wonder that, immediately after the decree was published, all major business organizations (Union Industrial Argentina, Asociación Empresaria Argentina, and more) came out in support of the package.

The First Response

While labor federations and the Peronist opposition took a “wait and see” attitude after the neoliberal economic plan was announced the first week, the political parties organized in the Workers Left Front (FIT), along with unemployed workers’ organizations and combative unions, swiftly called for a march to Plaza de Mayo, the square that lies at the doors of the presidential palace. Many thousands defied the strict protocol mandating protesters to “march on the sidewalk,” resisted provocations by security forces, and, at several points, broke the police line to flood into the streets and penetrate into the square.

Later the same day, Javier Milei announced the national decree on public television. That evening, many thousands of protesters flooded the square and streets outside Congress banging pots and pans. The scene was reproduced in several neighborhoods in the city of Buenos Aires and in other major cities of the country. Overwhelmed by the number of protesters, the police did not even try to push them off the streets and onto the sidewalk. The next day, similar protests sprang up in Buenos Aires and other big cities in the interior of the country.

Slowly, labor unions started to react. The CGT, the largest labor federation, announced a march to the Supreme Court for Wednesday, December 27, where they plan to file legal appeals to some of the measures in the decree. No strike was announced yet. The slightly more combative CTA declared that it would join the march on Wednesday and that, the day after the march, it would set a date for a national strike.

 Will the Decree Stand? 

Even though a national decree is set to go into effect eight days after it is published in the official bulletin, the path ahead for this decree is not completely cleared. On the one hand, it may raise objections from the judiciary system. Decrees are meant to address matters of urgent necessity (its full name is, in fact, Decreto de Necesidad y Urgencia). In fact, many constitutional experts agree that the content of the decree does not meet the requirements for such an instrument. Javier Milei and his staff presented the executive order as a necessary measure to avoid an economic catastrophe, and to bring the country’s economy back on its feet. Yet, government officials can hardly explain why many of the provisions, such as the erosion of workers’ rights, or the lifting of restrictions on foreigners to buy land, are “urgently needed,” and therefore cannot be channeled through the usual legislative process.

In addition, the decree needs the support of at least one of the houses in Congress. The incumbent party, La Libertad Avanza, does not have a majority in either of the houses, so it will need the votes of other parties and coalitions. However, it is safe to assume that most lawmakers from the center-right Juntos por el Cambio will vote in favor. After all, many of the high-profile Ministries in Milei’s cabinet, such as Security (Bullrich), Finance (Caputo), and Defense (Petri), are occupied not by members of his own party, but by Juntos por el Cambio career politicians. And the bar for the decree to pass Congress is low: with only one house approving it or even failing to reject it, the decree stands. In sum, the decree is unprecedented in its scope and it represents a violent attack on people’s rights, but the record does not allow for much optimism regarding the state institutions. No decree has ever been struck down by Congress since this presidential instrument was regulated by law in 2006.

The Outcome Will Be Defined by Class Struggle 

While many actors place their hopes in legal or parliamentary challenges, more combative voices are sounding the alarm, and calling on unions and social organizations to demonstrate now. Members of congress for the Workers Left Front are demanding labor federations to call for a general strike to kick off a fighting strategy to “defeat the decree on the streets.”

The coming period will undoubtedly be marked by intense class struggle. The attempt to implement a textbook “shock therapy” by the current government poses great threat to the livelihood and working conditions of millions of people. The move represents an assault on democratic rights and it seeks to undermine the power of workers and their organizations. At the same time, this all-out attack opens up an opportunity for the Left and workers organizations to coalesce around the defense of historic gains and rights, a defensive platform that can unite the struggles and find expression in massive mobilizations, challenges to the security protocol, and large protests, and that places overwhelming pressure on the leadership of unions and labor federations to call for a general strike.

This is not the first time Argentina has faced a situation like this one. Although Milei’s program is more akin to Carlos Menem’s in the 1990s, the economic and political situation today resembles that of the turn of the century, with record rates of poverty and unemployment, in the context of a protracted stagnation of the economy. In 2001, two years after president De la Rúa took power, an orthodox economic plan was met with mass mobilizations, factory occupations, and roadblocks across the country. The situation quickly spiraled into widespread looting and turmoil, which a late and desperate declaration of “state of siege” could not bring under control, forcing De la Rúa to resign. The mass movement behind the 2001 uprising reset the political system, but absent a revolutionary Left with enough influence over this movement, it was in part co-opted, and in part dismantled by a progressive government that was ready to give significant concessions.

The situation today is different. On the one hand, Kirchnerism can hardly play the same role it played in the early aughts. On the other hand, there is today a recognized revolutionary Left that has jumped onto the national scene with a radical program, militant actions, and numerous high-profile battles over the past few decades. The Workers Left Front’s presidential candidate Myriam Bregman was the most resolute detractor of Milei’s neoliberal program during the presidential debates. And Nicolás del Caño, the VP candidate is widely recognized as a combative anti-capitalist congressman. Both of them are members of the Partido de Trabajadores Socialistas (PTS, Left Voice’s sister organization in Argentina), the leading party within the Workers Left Front. Their relentless critique of the economic elite and of governments serving their interests will inevitably resonate with millions of people, and increasingly so as the effects of Milei’s program become evident, and much of the popular support he garnered for the elections evaporates.

The visibility Bregman, del Caño, Vilca, Castillo, and other PTS members have conquered in the terrain of parliamentary politics and media presence has a parallel on PTS’s influence in the labor movement. With presence in sixty national unions, PTS militants have permeated workers’ organizations and are recognized fighters in some key sectors of the labor movement, such as the subway system in Buenos Aires, the food industry, public education, and among health care workers. The PTS-affiliated women’s organization Pan y Rosas (Bread and Roses) has played a significant role in the struggle for abortion rights and against different forms of women’s oppression, and it is poised to play a prominent role in organizing against the conservative backlash that the current government is capitalizing on and fueling.

The PTS has also built, over many years, a powerful machine for agitation and socialist propaganda. La Izquierda Diario, (a member of Left Voice’s international news network), reaches millions of readers monthly in Argentina, and it has branched out to radio broadcasts, podcasts, weekly streaming shows, magazines of culture and ideology, a publishing house (IPS) that puts out several new books every year, and more.

The current government has declared war on workers, women, human right activists, the environment, and more. The goal is clear: to make tabula rasa of all past gains and concessions to the working class, and redraw the boundaries of industrial relations in the country. In other words, the aim is to eliminate any restriction on the exploitation of labor. The response by union leaders and the Peronist opposition has been, at best, tepid. A resolute, organized, and massive resistance will be necessary to preserve all the rights that are today under attack. The revolutionary Left is called to do what it does best: engage in class struggle and agitate for a revolutionary working-class program.

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