Argentina’s new president Javier Milei suffered a judicial blow when a court suspended labour rule changes which form part of sweeping deregulation and austerity measures aimed at reviving the struggling economy.

Wednesday’s ruling by a three-judge court followed a legal challenge the General Labor Confederation, the main union group, which argued the changes affected workers rights.

Mr Milei’s decree, announced in December, included increasing job probation from three to eight months, reducing severance compensation and allowing the possibility of dismissal for workers taking part of blockades during some protests.

Alejandro Sudera, one of the three judges, said the administration went beyond its authority to decree labour changes, which needed to discussed and approved by Congress.

The government said it would appeal the court’s ruling.

The union confederation said the decision “puts a stop to the regressive and anti-worker labour reform”.

Labour activists have questioned whether Mr Milei, a self-described anarcho-capitalist who has long railed against the country’s “political caste,” can impose the measures using emergency decree to bypass the legislature.

On December 20 he announced sweeping initiatives to transform Argentina’s economy, including easing government regulation and allowing privatisation of state-run industries. The libertarian economist made about 300 changes.

The measures have stirred protests in the capital city Buenos Aires.

Since his inauguration on December 10, the president has devalued the country’s currency by 50%, cut transport and energy subsidies and said his government will not renew contracts for more than 5,000 state employees hired before he took office.

He says he wants to transform Argentina’s economy and reduce the size of the state to address rising poverty and annual inflation, which is expected to reach 200% by the end of the year.