President Felipe Calderon has presented Congress’ lower house with a bill proposing significant changes to Mexico’s outdated labor law that he says will complete the country’s transformation to a more competitive and modern economy.
Labor law has not been significantly altered in four decades. Presently, it is both difficult and expensive to fire workers, a fact that discourages small businesses from taking on new staff. Moreover, union leaders are not directly elected or required to reveal the destiny of tens of millions of dollars that they receive each year.
“The aim is to enable millions of people who are unemployed to have access to work, particularly women and young people,” Calderon said of the bill, which will facilitate recruitment via outsourcing, introduce 180-day “learning contracts,” limit the right of workers to strike, speed arbitration, reduce severance payments for employers who dismiss employees and increase the accountability and democratization of labor unions.
Calderon hopes to fast-track the bill through the Camera de Diputados before he steps down on December 1. He introduced it as a “preferred initiative,” meaning legislators must discuss and vote on it within 30 days. A vote could be taken as early as September 27.Most attempts at labor law reform in the past two decades have been vigorously opposed by the left and union leaders, who fear for the erosion of workers’ rights, many of which derive from the 1910-1920 Mexican Revolution, a conflict that cost more than one million lives.
Although political parties across the board recognize the need for at least some reform to Mexico’s labor laws, there are concerns that the proposed changes will damage union leverage irrevocably and mainly benefit the nation’s economic elite. Last week, the Frente Legislativo Progresista, made up of three left-wing parties in the lower house, presented their own watered-down initiative that they said “had much in common” with Calderon’s bill. This proposal includes the setting up of a public registry of all unions, secret balloting in internal union leadership elections and measures to make an organization’s finances more transparent.
A contentious part of the initiative is permitting companies to subcontract work with no limit, effectively giving them, critics say, the ability to find low-cost workers with no union to replace unionized, higher-wage employees. It seems unlikely Mexican unions will acquiesce to these modifications to the law and many have organized protests against Calderon’s initiative this weekend. (Advocates of reform stress that the benefits of workers would not be touched, including the right to health care, pensions and housing.)
Foreign labor groups have been supportive of their Mexican counterparts. “The fundamental effects of the proposed changes to Mexico’s labor laws will be to lower the cost of labor, maintain widespread corporate control of labor relations, destroy job security and increase poverty and violate worker and human rights in Mexico,” the International Metalworkers’ Federation said of the labor reform bill presented by the Institutional Revolutionary Party (PRI) in March 2011 – an initiative not too dissimilar to the one Calderon sent to Congress earlier this month.
Discussion of Calderon’s proposal will be limited but perhaps not entirely necessary since legislators have been debating the intricacies of labor reform at length in recent sessions. But the question many wavering diputados may be asking themselves is whether the reforms would improve the lives of the 50 million people living below the poverty level in Mexico. According to some studies, the bill would add a mere 0.5 percent to annual GDP, although most agree that labor reform will stimulate formal job creation, albeit mainly on the lowest end of the wage scale.
Coparmex President Alberto Espinosa Desiguad said labor reform would shoot Mexico 10 to 15 places up the World Economic Forum Global Competitiveness Index. Mexico is currently 133rd out of 145 countries in “flexibility to hire and fire workers,” he noted this week.
Espinosa said the lack of job opportunities hurt the most “vulnerable” groups – the young, women and people with disabilities – most of all. (Mexico’s overall unemployment rate is 4.85 percent but 9.25 percent among the 18-25 age group. Around one million young people enter the workforce each year.)
An interesting feature of the initiative is that it forbids that women be required to present a non-pregnancy medical certification to get a job or to obtain a promotion.