Priscilla Fialho
OECD
Emilia Soldani
OECD
OECD Economic Surveys: Argentina 2025
Abstract
A sizeable share of Argentina’s jobs and economic activity has traditionally been outside the formal economy. Informal workers have lower income stability, lower earnings, and limited access to social protection. For Argentinian firms, widespread informal activity can be unfair competition, limiting growth opportunities. Informality has also reduced tax bases undermining the Argentinian government’s capacity to deliver high-quality public services. Overcoming the challenges of informality requires a combination of policies to tackle both employment and business informality. This chapter discusses policies to increase incentives for formal employment, including by enhancing the flexibility of labour market regulations, lowering the labour tax wedge, strengthening ties between contributions and benefits in the social protection system, and improving the responsiveness of the education and training system.
Like other Latin American and emerging market economies, a sizeable share of Argentina’s jobs and economic activity has traditionally been outside the formal economy. While there is no universally agreed definition of informality, informal employment, in this report, is understood as work that is not formally registered, taxed, and compliant with employment regulations. This is in line with the definition used by the International Labour Organisation (ILO) and includes self-employment, when not taxed and registered. Based on this definition and internationally comparable data, in 2023, approximately 50% of employment in Argentina was in the informal sector. This is lower than in some regional and Asian peers, but significantly above the levels observed in most OECD economies (Figure 2.1). National data sources suggest that at the end of 2024, informal employment concerned about 42% of total employment. The household survey used to compute informality rates is not a fully nationally representative sample, as it is based on the population living in the 31 largest urban areas. The absence of comprehensive data makes it difficult to assess the true extent of informality, among other issues, and to formulate effective and efficient policy measures (World Bank, 2024[1]).
Rate of informal employment, latest year available
Note: 2023 for Argentina, Brazil, Chile, Costa Rica, Colombia, Mexico, Viet Nam, Peru, Indonesia and Türkiye; 2021 for Australia, Hungary and Switzerland; 2020 for Norway; 2019 for Denmark and Korea; 2018 for Iceland, Thailand and the United Kingdom; and 2022 for the rest of the countries.
Source: International Labour Organisation, based on SDG Labour Market Indicators.
Informal work in Argentina decreased sharply in the 2000s when it reached below 50%, but then bounced back again over the last decade (Figure 2.2). Women have traditionally been disproportionally affected by informality, but the gender gap in informality has been falling over time and by some data sources, informality is now higher among men than women. Women’s participation in the labour force has also steadily increased over time. Yet, the gender gap in informality is highly sensitive to the definition used for informality. Studies that include self-employed individuals not contributing to social security in the definition of informality find that women are still more likely to be employed informally than men (Susmel and Bour, 2022[2]). The incidence of informal employment also varies greatly across socio-economic groups, sectors of activity, and firm size.
Share of individuals in informal employment
Source: ILO SDG indicator 8.3.1 - Proportion of informal employment in total employment by sex (%). Based on microdata from the INDEC household survey “Encuesta Permanente de Hogares”.
Based on internationally comparable data from 2023, older workers and those with lower educational attainment are more likely to be employed informally. Informality is generally higher in the sectors of domestic services, manufacturing and construction, agriculture, crafts, hospitality services and retail trade (Figure 2.3). In contrast, informal employment is less common in the public sector and in the pharmaceutical industry. From a geographical perspective, informal employment is more widespread in the economically lagging northern regions where population density is lower (World Bank, 2024[1]).
Informal employment rate
Note: Lower education value computed as simple average of the informality rates for workers with basic and less than basic education and Higher education value computed as simple average of the informality rates for workers with advanced and intermediate education.
Source: ILO SDG indicator 8.3.1 and ILO Labour Force Statistics.
For workers, informal employment is generally associated with lower income stability and lower earnings (Kolev, La and Manfredi, 2023[3]; Groisman and Beccaría, 2015[4]; Susmel and Bour, 2022[2]). Based on the 2019 “Encuesta Permanente de Hogares”, informal workers earn, on average, nearly 60% less than formal workers. The informality wage penalty can be explained, on the one hand, by lower hourly wages, and on the other hand, by fewer hours worked (Susmel and Bour, 2022[2]). Informal workers tend to live in households where all working members work informally, exacerbating their economic vulnerability (Figure 2.4, Panel A). As a result, informal employment is generally more common in the bottom end of the income distribution (Figure 2.4, Panel B). Workers employed informally have limited access to social protection and lack protection against work accidents (Ohnsorge and Yu, 2022[5]).
Note: Economic classes are based on four per capita per day welfare thresholds, which differ by income level. LICs: poor: int’l dollar 2.15/day or less; near poor: int’l dollar 2.15-4/day; middle: int’l dollar 4-8/day; affluent: int’l dollar 8/day or more. LMICs: poor: int’l dollar 3.65/day or less; near poor: 3.65-7/day; middle: int’l dollar 7-20/day; affluent: int’l dollar 20/day or more. UMICs and HICs: poor: int’l dollar 6.85/day or less; near poor: int’l dollar 6.85-15/day; middle: int’l dollar 15-70/day; affluent: int’l dollar 70/day or more.
Source: (Kolev, La and Manfredi, 2023[3]). Extending social protection to informal economy workers: Lessons from the Key Indicators of Informality based on Individuals and their Household (KIIbIH).
Informal workers in Argentina are about half as likely as formal workers to benefit from access to social protection benefits (OECD, 2023; Figure 2.5). This social protection gap is largely explained by the lack of access of informal workers to benefits from contributory schemes, including contributory pensions, employment-based health insurance, unemployment insurance, and family subsidies for formal workers, known as “Asignaciones familiares”. Still, compared to other Latin American countries, a considerable share of informal workers has access to contributory pension benefits, either through family members, or owing to past pension moratoriums (Chapter 1).
Informality affects not only workers, but also enterprises, although there is no perfect overlap between the two and not all informal employment takes place in informal firms. Firm informality, defined as businesses that are not declared to tax and/or regulatory authorities, could be as high as 13%, according to some estimates (Amin, Ohnsorge and Okou, 2019[6]). Unregistered firms are generally small-scale, less capital and technology intensive, and concentrated in less productive activities. Informal firms are less likely to use modern technologies or train their workforce. Scaling up is often more difficult for informal firms who typically lack access to formal credit markets.
Source: Estimates based on (OECD, 2021), Key Indicators of Informality based on Individuals and their Household (KIIbIH) (database).
Informal firms can be unfair competition to formal enterprises, given the cost advantages associated with non-compliance with tax and labour laws. Widespread firm informality hence contributes to a misallocation of resources, limiting growth opportunities for formal productive firms, who bear the costs of complying with regulations, and potentially hindering productivity growth and the competitiveness of the economy. Informality also affects the public sector as it reduces tax bases and hence undermines the government’s capacity to deliver high-quality public services, such as social protection, education, health, and infrastructure (Leal Ordóñez, 2014[7]).
The drivers of informality are manifold. Weak legal enforcement is an obvious necessary condition for widespread informality (World Bank, 2019[8]). One major reason why firms exploit the possibility given by weak enforcement to operate and employ informally is that informal employment is often less costly than creating formal jobs (Levy and Cruces, 2021[9]; Arnold et al., 2024[10]). Several studies found a strong relationship between high labour tax wedges and informality, or between the complexity of the tax system, high tax compliance costs, and informality (Vuletin, 2008[11]; Leal Ordóñez, 2014[7]; Susmel and Bour, 2022[2]). The design of social protection benefits can also play an important role (Arnold et al., 2024). Regulatory burdens, both in product and labour markets, increase legal and administrative compliance costs, raising incentives for business and employment informality (Susmel and Bour, 2022[2]). Finally, low educational attainments can be another driver of informality (Loayza, 2016[12]). Low skills increase the likelihood that formal-sector wages exceed labour productivity, raising incentives for non-compliance with labour regulations.
Overcoming the challenges of informal activity requires a combination of policies to tackle both employment informality and business informality. This chapter will focus on policies to increase incentives for registered firms to employ workers formally, and for workers to prefer formal over informal jobs. Policies discussed in Chapters 1 and 4, to stabilise the macroeconomy, simplify the tax system and continue to improve the business environment, can go a long way in reducing the costs and increasing the benefits of firm formalisation.
2.2.1. Enhancing the flexibility of labour market regulations
Restrictive labour market regulations increase the cost of formal employment and may limit opportunities for less productive workers in the formal labour market. First-time jobseekers without relevant experience, older workers who struggle to keep up with new technologies, or less-educated workers, for example, may be particularly affected. Based on the OECD Employment Protection Legislation Indicator, which provides a comparable measure of the stringency of this kind of legislation across countries, and despite recent improvements, Argentina still has stricter employment protection legislation than other Latin American countries (Figure 2.6).
In fact, dismissals are strictly limited to the cases defined by law. The definition for collective dismissals is exceptionally restrictive and the administrative procedure particularly onerous. In addition, court cases can take a long time - on average, between two to four years - and can be filed up until two years after a dismissal, exposing firms to elevated uncertainty and contingent litigation risk. Severance payments are also high in international comparison, significantly exceeding those in regional peers. Severance payments for dismissals without just cause correspond to one month of salary for every year of service, without any cap. As an example, a worker with 24 years of tenure would be compensated with two years of salary. Circumventing these costs is one motivation for firms to hire workers informally.
A reform package dubbed “Bases Law”, approved in June 2024, ruled out the obligation for a worker to be reinstated after contesting the dismissal in court. Other changes concern the extension of probationary periods from three to six months, with the possibility of extending it to eight months for firms who employ between six and 100 employees, and to one year for firms with less than six employees. Ruling out reinstatement and extending probationary periods contributed to a slight decrease in the OECD Employment Protection Legislation indicator for permanent contracts in 2025, compared to 2019, but it remains more stringent than in other Latin American economies.
A set of newly created sectoral unemployment insurance schemes now provide a voluntary alternative to the standard severance payment rules for new labour contracts. One option for such schemes is to mimick an already existing scheme in the construction sector, in which funds accumulate monthly employer contributions on an individual worker account over time. Individual account balances can then be accessed for income support at the termination of employment, replacing severance payments, in line with a recommendation in the 2019 OECD Economic Survey of Argentina (OECD, 2019[13]). The amount of contributions and corresponding compensation are not defined by law but based on the mutual agreement principle. Both employer and employee must agree on a system they consider mutually beneficial and more advantageous than the current severance payment scheme. So far, take-up has been very limited, however.
For this change to produce meaningful effects, an increasing number of sectors would need to develop their own insurance system. The scheme could be particularly helpful to reduce separation costs in sectors where worker turnover is high. Communication and dissemination actions, promoting the results obtained in sectors who adopted the new scheme could help creating incentives for others to follow. The government could also consider provisions to ensure that remaining account balances can be carried over to new jobs. Such a system would be an effective way to protect individual workers rather than work relationships, facilitating the reallocation of workers towards more productive jobs.
For sectors with low worker turnover, where the incentives to adhere to the new voluntary unemployment insurance fund are low, the amount of severance payments mandated by law could be reduced. In Chile, for example, severance payments are limited to 330 days of service. The timing of such a reform would have to be carefully considered as evidence suggests that lowering firing costs tend to have positive effects on employment during good times but could have significant short-term costs if implemented during bad times (Duval et al., 2016[14]).
The “Bases Law” also introduced more flexible rules to hire temporary agency workers and independent contractors, reducing the risk that those are considered permanent employees in court. These changes significantly reduced the strictness of employment protection legislation for temporary contracts. Moreover, the new law extinguished the obligation for employers to pay compensation for damages to former informal workers upon declaring the work relationship and converting it into formal employment. Taken together, these are likely to reduce formal hiring costs and increase incentives for formal employment.
Note: The OECD indicators of employment protection are synthetic indicators of the strictness of regulation on dismissals and the use of temporary contracts, expressed on a scale from 0 (least restrictive) to 6 (most restrictive). For each year, indicators refer to regulation in force on the 1st of January. LAC6 includes Argentina, Brazil, Chile, Colombia, Mexico and Peru. 1. Reflects an average of severance pay requirements after 4 and 20 years of tenure. In panels A and B, data for 2019 except for Brazil (2012). In panel C, data for 2019 except for Brazil and Peru (2014). The indicators have been updated reflecting legislation in force on the 1st of January 2025 for Argentina only, for comparison purposes.
Source: OECD Employment Protection Legislation database, Version 3, http://oe.cd/epl
High minimum wages can also be a factor behind informality when informal jobs provide a means of circumventing them. This often particularly affects the prospects of younger and low-skilled workers if the minimum wage exceeds their productivity (Pabon and Del Carpio, 2017[15]; Nataraj et al., 2014[16]). In Argentina, the legal minimum wage floor is set by the Federal government, in cooperation with unions and employers’ organisations, and applies to all sectors of the economy and regions. Collective agreements concluded at the sector level can establish their own minimum wage, which can often reach twice the level of the Federal legal floor. Compared to OECD countries, Argentina’s statutory minimum wage is high relative to the earnings of an median worker (Figure 2.7, Panel A). The share of workers - formal and informal – who earn less than the minimum wage ranges between 20-30%, suggesting that the minimum wage is binding in many cases (Figure 2.7, Panel B).
Increasing the minimum wage too rapidly could be particularly damaging for low-productivity workers. As macroeconomic imbalances are progressively addressed (Chapter 1), the government could consider developing objective and predictable criteria for minimum wage adjustments, based mostly on productivity developments. Some OECD countries, such as France, Germany, and the United Kingdom, have created independent technical commissions to monitor labour market and productivity developments, whose role is to advise on minimum wage increases, improving objectivity and transparency in the minimum wage setting process.
Collective bargaining is organised at the sectoral level, where the organisations with the highest number of members have the monopoly to bargain on behalf of all firms and employees in the sector. Rules and agreements between the signatory parties are automatically extended to the entire sector. As a result, about 90% of employed workers are covered by some sectoral-level agreement. Firm-level agreements are strictly regulated by higher-level agreements and cannot apply less favourable terms for employees. Agreements remain valid until a new negotiation takes place, which often leads to outdated agreements lasting over long periods of time (Susmel and Bour, 2022[2]). This collective bargaining system adds to labour market rigidities, making it difficult to adapt labour relations to emerging technologies, processes, and organisational structures. It may also put smaller and younger firms at a disadvantage, limiting market competition and the reallocation of labour towards start-ups and innovative firms (Chapter 4).
Note: Panel A: Data from the 2nd quarter of 2024 for Argentina.
Source: OECD Minimum relative to average wages of full-time workers database, LSEG (Ministerio de Hacienda Argentina), INDEC.
Some OECD countries, like France, Spain, Portugal, and Greece, have introduced temporary opt-out clauses, also called hardship clauses or inability-to-pay clauses, allowing the suspension or firm-level renegotiation of the terms of agreements at the sectoral level in cases of economic difficulties. This includes the ability to agree on lower wage floors, longer working times, or changes in the work organisation at the firm-level. Such clauses can be useful mechanisms to avoid the “one-size-fits-all” sector-level agreements, to adapt to local or specific conditions, and respond swiftly to unexpected shocks, while keeping the high support of broad collective agreements. Such opt-out clauses need to be appropriately regulated, however, to prevent downward competition between firms, or even large firms using them as an anti-competitive tool, negotiating generous conditions at the sector-level and then opting-out to improve the terms in their favour, leaving smaller competitors to bear the brunt of the generous terms they negotiated (OECD, 2017[17]).
2.2.2. Lowering the labour tax wedge and reforming social benefits
1. High tax wedges may act as a disincentive to formal employment, especially for low-skilled workers, whose productivity is lower and who are most affected by informal work. High social contributions can discourage demand for formal low-skilled labour, while unskilled workers may also find that the taxes and contributions they need to pay exceed the benefits of formalisation. At about 44%, Argentina has the highest average labour tax wedge in Latin America, above most OECD countries (Figure 2.8, Panel A). Almost all of this can be attributed to social security contributions. In contrast, personal income taxes have a generous basic deduction, as a result of which the minimum taxable income is high and personal income tax is paid only by the most affluent workers, even after considering recent steps to increase the personal income tax base (Figure 2.8, Panel B; Chapter 1).
Note: Panel A: Information about single individual without children at the income level of the average worker. Data for Brazil is from 2019.
Source: OECD Labour taxation – average and marginal tax wedge decompositions database, Taxing Wages in Latin America and the Caribbean 2016, OECD Average annual wages, OECD Taxing Wages 2024 - Country details, national authorities, IBGE, Nubank, OECD Taxing Wages in Selected Partner Economies: Brazil, China, India, Indonesia and South Africa in 2019.
High social security contributions may be particularly discouraging for employees who are unlikely to contribute for long periods of time. To receive a contributory pension, above the universal minimum, workers need to contribute for at least 30 years. Workers in the informal sector may therefore perceive social security contributions as a “formalisation tax” that has no correlation with future pension benefits. Lowering social security contributions for workers, especially those with low incomes who are more likely to be employed informally, could help increase incentives for employment formalisation. From a very low entry rate, social security contributions could then rise gradually at the medium wage. The revenue losses from targeted reductions in social security contributions could be compensated by expanding the personal income tax base, whose basic deduction is so high that there is ample scope for lowering it without affecting vulnerable households. The personal income tax base could also be increased by limiting tax deductions such as mortgage interest payments and private healthcare expenses. Given the high basic deduction, these specific deductions benefit only those at the top of the income distribution and hence have regressive distribution effects (Chapter 1).
Reforming the pension system would help to strengthen incentives for formal job creation. A pension system with at least two complementary and well-integrated pillars would be able to achieve universal coverage while delivering adequate pension benefit levels and minimising disincentives for formal job creation. Preventing old-age poverty could become the role of the universal basic pension PUAM (Chapter 1), regardless of individual work histories in the formal and informal sectors. This basic benefit could be largely financed through general taxation, as is the case with PUAM, so that it would not raise the cost of formal job creation during working lives. As a result, contributions could be very low for low-income workers, given that the main focus in this income range is to avoid disincentives for formal work (Arnold et al., 2024). One way to lower fiscal costs of non-contributory pensions would be through better targeting. Current pension benefits granted without regular contributions benefit a larger share of middle-class and affluent informal workers rather than poor and near poor informal workers (Figure 2.9). This is largely the result of past pension moratoriums that allowed workers with incomplete contributory careers to become eligible for the contributory pension scheme (Chapter 1). Repeating these moratoriums should also be avoided to prevent blurring the distinction between contributory and non-contributory schemes.
Source: Estimates based on (OECD, 2021), Key Indicators of Informality based on Individuals and their Household (KIIbIH) (database).
A contributory scheme with more comprehensive benefit packages available for those with greater contributory capacity could complement basic benefits to improve benefit replacement rates for those with higher incomes. The base for this could be the current general pension regime SIPA (Chapter 1). Contributions could rise gradually with wages, avoiding discontinuities that could create incentives for reporting a lower than actual income. The benefits provided under this second pillar should be tightly linked to contributions to create incentives for formalisation and avoid excluding individuals with short labour histories. The contributory and non-contributory pillars should be seamlessly integrated within the pension system to ensure strong formalisation incentives for all income ranges and achieve the desired replacement rates for everyone in an effective way. A third pillar of voluntary individual savings could complement the basic and contributory pillars. This could increase incentives for higher domestic private savings and help boosting long-term domestic capital markets (Chapter 1).
Such a unified and universal multi-pillar system would allow streamlining the current array of available benefits. For example, survivor pensions granting access to old-age protection to partners of formal workers, with a fiscal cost of 1.2% of GDP in 2023, could be gradually phased out, replaced by the universal basic benefit. This would reduce the current bias of social spending on the elderly, whose incidence of poverty is significantly lower than among children and adolescents (Chapter 1). Current spending on non-contributory pensions is about three times that of non-contributory social assistance programmes aimed at children, adolescents, and vulnerable adults (World Bank, 2024[1]).
Other elements of the social protection system do not create disincentives for formalisation and could be maintained. Child allowances provided through the conditional cash transfer schemes “Asignación Universal por Hijo para Protección Social (AUH)”, “Prestación alimentar”, and “Plan 1000 días”, are examples of well-targeted programmes, concentrated on the poorest 20% of the population (Figure 2.10). In a welcome move, such allowances have been significantly scaled up recently. AUH benefits almost doubled in real terms since the end of 2023, complemented with a 500% increase in the early childhood programme “Plan 1000 días”. Evidence shows that, by being conditional on health controls and school attendance, the AUH benefit has successfully improved primary school completion rates (Poy et al., 2021[18]; Gasparini, Albina and Laguingue, 2024[19]).
Note: Data for 2020 except for Peru (2021) and Argentina (2014). 1. Adequacy of conditional cash-transfer benefits refers to the income support received as % of the household income.
Source: World Bank, Atlas of social protection: Indicators of resilience and equity (ASPIRE).
Efforts are also underway to make the delivery of social support programmes more effective. The role of intermediary social organisations, which add to costs and inefficiencies, is being scaled back. The government is also developing an integrated household-level income database, “Registro Social de Hogares”, and a comprehensive mapping of national and provincial social support programmes, known as “Sistema Integrado de Información Social”, to improve information-sharing across ministries and levels of government, identify potential overlaps and complementarities, facilitate programme evaluation, and allow more effective social protection at lower costs.
Recent changes to the tax regime for autonomous workers, known as “monotributo”, are likely to increase incentives for the formalisation of self-employed workers, and are a step in the right direction (Chapter 1) (Mas-Montserrat, Colin and Brys, 2024[20]). This presumptive tax regime simplifies compliance, merging the payments of VAT, corporate taxes, and social security contributions, into a fixed monthly fee. The fixed monthly fees vary across brackets based on turnover. The scope of this targeted regime has been expanded by updating the brackets thresholds so that a higher number of small enterprises may qualify for the simplified regime. To minimise losses in fiscal revenues, the monthly lump-sum fees were also increased by on average 21%. Brackets and fees will be updated every semester according to the Consumer Price Index. Evaluating these changes after some time to quantify their distributional impact, effects on formalisation and tax revenues, would help inform future reforms to improve the efficiency and fairness of the tax system.
2.2.3. Improving the quality of the education and training system
Education and skill training are the most effective policies to strengthen households’ capacity to generate market income, to access formal and high-quality jobs, and to lower social assistance dependency. However, the quality of education in Argentina is low in international comparison. According to the latest OECD PISA results, average student performance remains below OECD countries (Figure 2.11). Proficiency in mathematics ranks particularly low, having barely improved since 2018. The national standardised tests APRENDER that assesses primary education outcomes, show similar results. The share of students reaching an advanced level in mathematics fell from 19.6% in 2016 to 11.1% in 2023, while the share of those below basic level increased from 18.1% to 24.1% during the same period (Ministerio de Capital Humano, 2024[21]).
PISA scores, 2022
Source: OECD PISA, 2023.
Moreover, socio-economic backgrounds continue to play a critical role in determining educational attainments and future opportunities in the labour market. In 2023, in urban households, half of the children under the age of four in the wealthiest quintile were attending school, compared to only a quarter of those in the poorest quintile. School drop-out at the secondary level is higher among disadvantaged students (World Bank, 2024[1]). School outcomes are also closely linked to parental educational levels. For example, 29% of students whose mothers only completed primary school were classified as over-aged in their respective grade. This proportion drops to 12% among students whose mothers attained higher education. A similar trend follows when considering fathers’ education (World Bank, 2024[1]). School attendance is also strongly influenced by parents’ labour status, whether formal or informal (Figure 2.13).
Early school drop-out prevents many students from developing their potential. About 25% of 25-34 years old leave school without an upper-secondary qualification (Figure 2.12). Such high drop-out rates often reflect students’ failure to acquire essential skills in early childhood, exacerbated by frequent grade repetition. The share of grade repeaters at the upper secondary level in Argentina is higher than most OECD countries, only surpassed by Mexico and Czechia (OECD, 2024). On a positive note, the share of 15-year-olds who repeated a grade fell by six percentage points between 2015 and 2022 (OECD, 2023[22]; OECD, 2024[23]). Enrolment in vocational education programmes declined considerably since 2018 (OECD, 2023[24]). Only 5% or less of 15–24-year-olds participate in technical or vocational education (OECD, 2024[23]).
Percentage of 25–34-year-olds with a level of education below upper secondary as the highest level attained
Source: OECD Education at a Glance 2024.
To ensure that education and training programmes provide relevant skills, systematic skill assessment and anticipation tools could be developed. Close cooperation with the private sector to detect changing skill requirements as well as systematic feedback from employed graduates could inform regular updates of education and training content and quality control, potentially building on recently created coordination mechanisms. In addition, participating in the OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) could help to maintain up-to-date information about the skills available in the adult population and where there are important skill gaps.
Gap in the school attendance rate between children living in formal and informal households
Note: Data refer to youth aged 6-24. (In)formal households are those where all working members are employed in the (in)formal labour market.
Source: OECD, 2021, Key Indicators of Informality based on Individuals and their Household (KIIbIH) (database).
Expanding the offer of technical and vocational education and training at the secondary level could increase opportunities for less academically inclined students, helping to reduce drop-out rates at the secondary and tertiary levels. Vocational education and training contribute to personal development, confidence, and self-esteem, providing a range of skills relevant for every industry, therefore reducing the risk of unemployment and underemployment. This is especially true for vocational education programmes that provide hands-on experience through work placements. Vocational programmes also serve those who are no longer in initial education, providing young adults with a second chance for upskilling and reskilling (OECD, 2023[24]). Technical and vocational education are meant to have closer links to labour market demand and could prove critical for the workforce to adapt to the changing world of work, as Argentina becomes a more open economy and develops new sectors of activity (Chapters 3 and 4).
Active labour market policies targeted at the working-age population that are harder-to-place may have a meaningful impact on their employability and capacity to obtain a formal job, although evidence on the success of such programmes is somewhat mixed and depends on effective targeting. On-going efforts to revamp the programme “Volver al trabajo”, formerly known as “Potenciar Trabajo”, are going in the right direction. “Potenciar Trabajo” was administered through social intermediaries that had discretionary powers to select programme beneficiaries and programme requirements. Often, programme beneficiaries were required to perform community services that would not necessarily help them strengthening ties with potential formal employers, nor acquire skills that are relevant for the labour market. According to the government, out of 1 400 000 participants in “Potenciar Trabajo”, only 1.3% found a formal job at the end of the programme (Ministerio de Capital Humano, 2024[25]).
Instead, the revamped programme “Volver al trabajo” will be directly administered by the Ministry of Human Capital. The programme will be targeted at adults between 18 and 49 years-old who benefit from conditional cash transfers, registered self-employed, registered domestic workers, and rural workers. Beneficiaries will receive a cash allowance for two years, while attending demand-driven and soft skills training programmes and being placed in a working environment for at least six months. Employers who host beneficiaries from “Volver al trabajo” will also receive an employment subsidy. If a beneficiary of the programme is hired on a formal job during those two years, the cash allowance will be maintained for the remaining period to increase employment incentives. An impact evaluation of the revamped programme after some time would be useful.
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