Milei administration launches voluntary buyouts for federal employees

CEPA reported a 21.6% federal workforce reduction through August

Argentina’s federal government launched a voluntary buyout program for public employees, offering financial compensation to workers who agree to leave their federal jobs. The program comes after the Argentine Center for Political Economy, known as CEPA, reported 74,332 federal positions eliminated between December 2023 and August, a 21.6% reduction in public employment under President Javier Milei’s administration.

Federico Sturzenegger, Argentina’s minister of deregulation and state transformation, said about 20,000 public employees could qualify. The Milei administration described the initiative as part of a broader restructuring intended to streamline government agencies and improve how public resources are used.

“The national executive branch is pursuing a policy of transformation and reorganization of the national government aimed at optimizing its structures and staffing levels, seeking an appropriate and efficient allocation of public resources,” the decree states.

The program establishes eligibility requirements, compensation amounts and restrictions for workers who leave their positions. Compensation will depend on employees’ ages, years of service and pension contributions. Applications will be accepted from Sunday through Nov. 30, although the government may extend the deadline by another 30 days.

Eligible workers could receive compensation equivalent to 25 monthly salaries or 60% of their gross monthly salary for three years. Employees who accept the buyout will be barred from returning to federal government employment for eight years, according to the decree.

The initiative is part of Milei’s so-called “chainsaw” austerity plan, a reference to his campaign pledge to slash public spending, reduce government intervention in the economy and eliminate agencies he considers unnecessary.

CEPA’s report, titled National Public Sector Staffing, says the cuts averaged about 72 positions per day. They included layoffs, contracts that were not renewed and jobs eliminated for other reasons.

Semiautonomous public agencies accounted for the largest number of positions eliminated, followed by state-owned companies and departments directly administered by the federal government. The directly administered departments experienced the steepest proportional reductions in relation to their original staffing levels.

Hernán Letcher, director of CEPA, said the program has two objectives: reduce government spending in the short term and limit the state’s ability to intervene in the economy over the medium term. He said the immediate goal is to reduce the fiscal deficit, while the underlying objective is to reduce the state’s presence in the economy and society.

Letcher said the savings generated by the buyout could be relatively small compared with total government spending. He also warned that eliminating positions could weaken public agencies.

“When the government eliminates jobs, it does not just reduce salary expenses. It also reduces the number of employees available to carry out public duties, develop policies and participate in decision-making across different areas,” he said.