More than 115 Argentine unions grouped under the ‘Front of Struggle for Sovereignty, Decent Work and Fair Wages’ march in June toward the Ministry of Deregulation and State Transformation. File Photo by Adan Gonzalez/EPA
Argentina’s government is pushing a labor reform aimed at reducing off-the-books work and expanding formal employment to shore up a pension system under the strain of historically low birth rates and a rapidly aging population.
The proposal, which seeks approval during special sessions of Congress, would increase the number of active workers who contribute to the public pension fund.
Currently, only 12.8 million people make formal contributions, while employment without legal or social protections stands at 43.2% according to the national statistics office for the second quarter of 2025.
Falling birth rates are compounding the problem. The rate dropped to a low of 11 births per 1,000 inhabitants over the past four years, the lowest level in 15 years, according to the United Nations.
Argentinian Health Ministry data show that only 460,902 babies were born in 2023, a 48% decline from 2000. The trend reduces the number of young people entering the labor market, while the number of retirees continues to grow.
Gala Diaz Langou, executive director of the Center for the Implementation of Public Policies for Equity and Growth, told UPI that Argentina’s pension system operates under a pay-as-you-go model, meaning current pensions are funded by contributions from today’s workers.
“When fewer children are born, that means there will be fewer people of working age in the future supporting a larger elderly population,” Diaz Langou said.
Decades ago, many workers supported each retiree. Today, that ratio is shrinking rapidly. “If a family used to have four children who later contributed to the system and now has only one or none, that single worker must sustain a far more strained system through taxes and contributions,” she said.
Without changes, Diaz Langou warned of three risks: lower pensions, heavier tax pressure on workers or a larger deficit financed through debt or money issuance.
“Demographics do not determine everything, but they set the ground on which pension sustainability is decided,” she said.
She said the decline in births reflects a mix of factors.
“On one hand, there are positive structural changes such as greater access to education, especially for women, wider use of contraceptives and a sharp drop in teenage pregnancy. That explains part of the decline and it is good news,” she said.
Since 2014, Diaz Langou said, more troubling factors have emerged, including economic stagnation, job insecurity, difficulties accessing housing and rising uncertainty.
“Having children stopped being just an intimate decision and began to feel like a risky bet in a context where it is hard to imagine medium-term stability,” she said.
Motherhood and fatherhood are postponed or abandoned because material and symbolic conditions are lacking, Diaz Langou said. She added that at the individual level, a teenager who does not have children early gains opportunities, including more years of education, better access to jobs, greater economic autonomy and more freedom to shape a life project.
“From that perspective, the decline in teenage pregnancy is a major social advance and must be defended,” she said.
However, she warned that if postponement is not followed by conditions that allow people to have children later, such as quality jobs, shared caregiving responsibilities and accessible services, the country loses future population, labor force, economic dynamism and intergenerational cohesion.
In that context, having children becomes a more fragile decision.
“Raising children was never an individual task, but today many families feel they are on their own, without a caring state, without community support and without job or pension stability that provides predictability,” she said.
“When those family, community and institutional support networks fail, having children stops being seen as a collective project and becomes a personal risk,” she said. “Reversing the birth-rate decline does not mean forcing anyone to have children, but rebuilding the social conditions that make wanting and raising them possible again,” Diaz Langou said.
Manuel Mera, director of social protection at the same policy center, told UPI that having fewer children can undermine pensions because fewer adults will be working and contributing to the system.
He said the issue becomes serious only if the country fails to adapt to the new demographic reality.
Mera said 75% of Argentine adults do not reach the 30 years of contributions required to retire. He proposed a reordering of the pension system rather than a full overhaul by removing the rigid 30-year threshold, which penalizes those with fewer years of contributions, guaranteeing a minimum pension for all older adults while proportionally rewarding each year contributed.
“This change would benefit 80% of people with equal or higher pensions,” he said.
On the labor reform sent to Congress by President Javier Milei’s government, Mera said it will not quickly solve Argentina’s pension crisis. “As long as pension spending does not change, the government will have to cover the funding gap with higher taxes or Treasury resources,” he said.
The government’s premise is that more formal jobs will generate new contributions to balance the system. Mera questioned whether that will happen soon given high labor informality.
“We should not wait for the labor market to react. We need to work on spending,” he said. “It is possible to spend less by being more efficient and more progressive. The solution is less about changing the labor market and more about reforming the pension system itself,” Mera said.
