Minister of Economy Luis Caputoensured that, in conjunction with labor reforms, it is working to reduce employer contributions to direct resources to retirement benefits.
“We in the economy sector are looking to give more power (to labor reform) and are analyzing the costs of adding other variables on top of what we have heard so far. Essentially, it reduces employer contributions by 3 points and replaces them with retirement benefits. This is mandated to make it easier for companies to deal with redundancies from a cost and litigation perspective. “It will help a lot in terms of formality,” the minister explained.
In Argentina, employers pay contributions or contributions for salaries.
The first is withholding tax that is collected from wages used for social security programs and social services. Contributions to the retirement plan are 11% of the gross salary, contributions to PAMI are 3% and contributions to the social work scheme are a further 3%.
Social insurance contributions are the employer’s obligation. This adds up to 27% of your gross salary. 12.7% of this goes to the Integrated Pension Plan (SIPA), to which ANSES belongs. According to the Argentine Institute for Fiscal Analysis (IARAF), 1.6% will go to PAMI, 5.5% to the family allowance subsystem, 1.1% to the National Employment Fund and 6% to the social services system and the Solidarity Redistribution Fund.
To these components is added labor insurance or ART of approximately 4%. Therefore, the total tax liability for employee and employer contributions is 44% of gross salary.
Based on this data, we found that Argentina has the 7th highest tax burden compared to OECD countries, while the 10th highest tax burden among 39 countries in terms of employer contributions.
Need to be clear. In 2025, 19% of collections will be accounted for by contributions and contributions to social security According to IARAF.
“it is good initiative The government is starting to address this issue, but I think the following three points are important. Promoting registration alone is not enough of employees. “It’s not very reassuring because the burden is really, really high,” he explained. Pablo Mastromarino, partner of Tanoira Cassagne Specializes in labor law.
Juan Manuel Ottaviano, Fundar Researcher, Added general reduction in contributions “While there is potential for cost relief for small businesses, there will be no lasting savings in this economic climate.”
“77% of informal acts are concentrated in small businesses. “If the cuts are general and not concentrated, it will simply be a deepening of fiscal inequality, with informality subsidizing large companies with less concentration,” he added.
Argentina has more than 2 million economic units, of which 79% are micro-enterprises, employing more than 500,000 people, 15.5% are small-scale enterprises, employing more than 1 million people, and 3.9% are medium-sized enterprises, employing more than 1 million people, who are always employed as registered employees. Collectively, they account for 1% of economic units and generate more registered employment than large businesses with over 2.2 million registered employees, according to the 2020 Census.
Ottaviano said another difficulty posed by the proposal is the “weakening of social security funds.”
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