Argentina postpones implementation of Milei's labor fund reform

President Javier Milei's government announced that the new Labor Assistance Fund (Fondo de Asistencia Laboral, FAL), a cornerstone of its labor reform, will not become operative in June as originally scheduled. No new activation date has been set, and the rollout has been delayed to allow completion of the necessary regulatory framework.

The postponement reflects a dispute within the economic team: Treasury minister Luis Caputo warns of fiscal and financial risks, while economist Federico Sturzenegger pushes for rapid deregulation. The fund is intended to let employers contribute to a collective pool that would partially replace traditional severance indemnities, reducing labor costs and litigation. Companies and unions are awaiting clearer rules on fund administration, liquidity guarantees, and the transition from the existing system.

While other parts of the labor reform – such as changes to hiring contracts and registration of informal workers – have already been implemented, the FAL remains the most significant pending element, with expectations that it may be introduced in the second half of the year.