BUENOS AIRES, May 12, 2025 (AP) — Argentina's Supreme Court ruled 5-2 on Thursday that President Javier Milei's February labor market decree is constitutional, rejecting challenges from labor unions and opposition parties and handing the government its most significant judicial victory since taking office — a decision that could embolden Milei to issue further economic decrees without congressional approval.
The ruling, authored by Chief Justice Horacio Rosatti, found that the decree's provisions — which extended probationary periods for new hires from three months to one year, capped labor lawsuit awards at 12 months of salary, and made union dues opt-in rather than mandatory — fall within the president's authority under Article 99 of the constitution to issue emergency measures during "extraordinary circumstances" that threaten public order or economic stability.
"The evidence before this court demonstrates that Argentina faced, and continues to face, an economic emergency of sufficient magnitude to justify extraordinary executive action," Rosatti wrote in the 47-page majority opinion. "The decree's labor provisions are rationally connected to the emergency it identifies and do not permanently eliminate constitutional rights."
Justices Ricardo Lorenzetti and Juan Carlos Maqueda dissented, arguing in a 31-page opinion that the decree exceeded constitutional bounds by permanently altering labor rights rather than providing temporary emergency relief. "The Constitution does not grant the president the power to rewrite the Labor Contract Law by decree," Lorenzetti wrote. "If Congress wanted these changes, it would have passed them. It didn't. That is the constitutional system working as designed."
The decision was immediately hailed by business groups and investor circles. The Merval stock index, which had been trading down 0.4% in morning sessions, reversed course within minutes of the ruling to close up 1.8%. YPF led the rally with a 2.9% gain, while banking stocks rose an average of 1.6%.
Research firm BTG Pactual said the ruling removes a major cloud of uncertainty that has hung over the labor market for four months. For six months, companies didn't know if the labor reforms would survive judicial review. Now they do. Hiring is expected to accelerate in the second half of the year.
The CGT labor federation, which brought the challenge along with the CTA teachers' union and three individual workers, condemned the ruling as "a judicial coup against workers' rights" and announced a 24-hour general strike for May 20 — the second nationwide strike against Milei this year.
The ruling does not resolve all judicial challenges to Milei's decrees. A separate challenge to his January decree, which eliminated 23 federal agencies and modified state procurement rules, remains pending before the court and is expected to be decided in July. Constitutional scholars said the 5-2 split reflects the court's increasingly ideological divide along political lines.
