Argentina’s president, Mauricio Macri, opened the year on the heels of a bruising fight over pension reform, which has galvanized the opposition and sent his approval ratings tumbling. But the promise of greater economic growth and persistent divisions among the opposition make it far from certain that this short-term turmoil will derail his government’s agenda and turn into a major barrier to his re-election next year.
Macri’s team first began floating the idea last summer of reforming a retirement system that is plagued by an insufficient funding base—the result of demographic factors and widespread labor informality. His determination to secure a legislative fix to these problems grew following his party’s surprisingly decisive victory in October’s mid-term elections, when it substantially increased its representation in Congress. Weeks of political horse-trading culminated in the reform’s passage on Dec. 19, though legal challenges continue in the courts.
Pension reform has proved no less controversial in Argentina than in bigger, wealthier countries, whether France or the United States. One of the law’s most contentious features is a new formula to determine changes in benefits for Argentine pensioners, which in most cases will slow down the rate at which pensions increase. The reform also raised the retirement age from 65 to 70 years for men, and from 60 to 63 years for women.