The beautiful South American country appears to be taking the necessary steps to once again become a beacon in a troubled world.

Since President Javier Milei took office just over a year ago, public policies have been implemented that have eliminated the fiscal deficit, brought inflation under control, and deregulated part of the country’s burdensome bureaucratic framework—creating a more favorable business climate.

Last week, the administration reached an agreement with the International Monetary Fund (IMF), and in parallel, began lifting restrictions related to the foreign exchange market.

All of these measures are taking place in a labor context heavily marked by informality, as highlighted in a recent IMF report. According to official data, Argentina’s labor market shows a worrying 42% informality rate. Among the self-employed, the rate rises to 62.4%, and among salaried workers, it stands at 36.1%. Looking at the demographic of workers aged 29 and under, 58.7% lack access to social security.

The rate of informal employment is higher among women than men (43.4% vs. 40.9%). It is estimated that approximately 9 million workers are not formally registered.

The IMF report acknowledges the achievements of the Milei administration and clearly states that these reforms “must be complemented by a reform of the tax system, as well as by active labor market policies to support the mobility of workers into sectors with greater potential and comparative advantage.”

What are active labor market policies? What initiatives have had a positive impact in modernizing and energizing the formal labor market?

Active labor market policies are actions and measures designed to improve access to employment by enhancing employability and facilitating faster and more effective matching between labor supply and demand. These policies contrast with passive policies, which are limited to providing social assistance. The goal of active policies is to improve workers’ skills and connect them to the labor market efficiently, rather than simply offering financial support.

So far, nothing has been said about formalization. In Argentina, public employment services have had little impact on employability (the skill mismatch requires urgent action), have not effectively energized supply and demand, and the statistics clearly show they have not improved formalization.

What should Argentina do in this context?

Argentina must ratify ILO Convention 181 on private employment agencies and promote coordination between public and private employment services.

Private employment agencies guarantee access to the formal labor market. The entire process that ends with an invoice to a user company is only possible if a formal employment contract is signed. For this to happen, the private employment agency must have access to the right talent—talent aligned with the user company’s skill demands. No other actor in society is better positioned to train workers based on market demand than private employment agencies.

There are several successful cases from the world’s most modern, dynamic, and formal labor markets that can serve as a source of inspiration to generate immediate impact through the implementation of an active employment policy based on the collaboration between public and private employment services. Those of us who have had the opportunity to see these systems operate and understand their inner workings know that their impact is both swift and significant.

Development stems from the creation of a favorable business climate and the development of relevant talent. So do investments that drive progress.

Opportunities do not wait.

The time has come to modernize Argentina’s labor market.

Photo of Sasha • Make Stories Studio in Unsplash