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Labor reforms could impact Mexican unions, companies

A new bill meant as an update to 1970s-era labor laws will likely be passed in Mexico. However, unions and business leaders are both skeptical about possible ramifications.
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Workers make speakers in a maquila (free trade zone manufacturing center) in Ciudad Juarez, Mexico. A new bill passed by Congress may make it easier for companies that employ union workers to have more flexibility over hours, wages, and hiring. (Joe Raedle/Getty Images)

BOGOTA, Colombia — The Mexican Congress is expected to pass a labor reform bill later this month, but labor rights advocates claim there’s nothing in the legislation that will help average workers.

In their view, the good stuff — such as provisions to make corrupt, undemocratic labor unions more transparent and representative — has been stripped from the bill. On the other hand, the legislation would make subcontracting easier, legalize part-time hourly work, and make it easier for businesses to hire and fire workers.

Business leaders say these modifications to Mexico's 1970s-era labor regulations would help make Latin America's second-largest economy more competitive and create new jobs. President-elect Enrique Pena Nieto, who will be sworn in Dec. 1, strongly supports the bill.

“I am very optimistic,” Pena Nieto told a news conference in Sao Paulo last month. “I support it and hope all political forces work towards constructing rather than obstructing."

But critics say the proposed legislation would simply make life even more difficult for low-wage workers and increase the gap between rich and poor. “It’s basically a labor flexibility law that will have a deep impact on workers’ economic rights,” said Lorraine Clewer, who represents for the AFL-CIO’s Solidarity Center in Mexico City.

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About 10 percent of Mexico’s labor force carries union cards, but nine out of every 10 members belong to pro-business unions that work in cahoots with companies to suppress wages and maintain docile labor forces. These so-called “protection unions” are so secretive that many workers don’t even know they are members while those who try to join independent unions are often blocked.  

However, articles in the original reform bill designed to allow for secret ballots for union elections and outside audits of union finances were removed at the insistence of lawmakers for Pena Nieto’s Institutional Revolutionary Party, or PRI, which has extremely close ties to the protection unions.

For most of the 20th century, Mexico was controlled by the PRI, which worked closely with union bosses to control workers, prevent strikes and insure labor peace. In return for payoffs and political posts, union leaders delivered huge sums of votes for PRI candidates, which helped the party maintain its grip over Mexico.

The PRI finally lost power in the 2000 election but subsequent administrations maintained the labor status quo in the name of maintaining low wages and global competitiveness. Now, with the PRI on its way back to power, the labor reform bill was seen as a test of the party’s willingness to take on its old allies. But PRI legislators refused.

“They are leaving out the points they claimed were the most beneficial in terms of democracy and transparency,” Manuel Oropeza, leader of the opposition Democratic Revolution Party in Mexico City, told the Associated Press. “What they are really interested in is flexibilized work rules.”  

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Those rules will make it easier for companies to subcontract workers. But there would be no regulatory mechanism to ensure that subcontractors are held responsible for working conditions in their production chains, according to Richard Trumka, president of the AFL-CIO.

Legalizing hourly wages may also prove problematic because Mexico’s minimum wage is only about $5 a day. If workers in what had been full-time jobs are told to go home after just five or six hours, they would end up earning even less, Clewer said.

Another measure would make it easier for companies to hire and fire workers by extending the probationary period to six months. Labor rights activists fear these provisions favor temporary over full-time work because, unless closely regulated, employers could end up hiring a series of employees for six months at a time.

For years, business leaders across Latin America have pushed for flexible work rules, claiming that they would boost employment. But institutions, ranging from the World Bank to the Organization for Economic Cooperation and Development, have produced reports questioning their long-term impact.

For example, a recent OECD report called “Divided We Stand: Why Inequality Keeps Rising” stated that three decades of regulatory reforms designed to make labor forces more flexible had in many cases significantly increased wage inequality.

Even so, Angel Gurria, OECD secretary-general, recently urged Mexico to pass the reforms which he said would create millions of jobs and help end Mexico’s “mediocrity.”

For more of GlobalPost's coverage of labor laws around the world, check out our Special Report "Worked Over: The Global Decline in Labor Rights." 

http://www.globalpost.com/dispatches/globalpost-blogs/rights/labor-reforms-could-impact-mexican-unions-companies