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Mexico labor bill would loosen hiring, union grip

Mexico labor bill would loosen hiring, union grip

September 26th, 2012 by MARK STEVENSON, Associated Press in News

MEXICO CITY (AP) - A proposal to reform Mexico's dysfunctional, 1970s-era labor laws, loosen work rules and increase union democracy split Mexican political parties Tuesday, threatening to create the first big political battle for President-elect Enrique Pena Nieto.

Advocates say the reform, which will allow part-time work, hourly wages and outsourcing, will help Mexico create the million new jobs per year it needs for young people and migrants returning from the United States. The bill weakens seniority provisions, and leaves unchanged Mexico's 5 ½-day work week.

But critics say that Pena Nieto's Institutional Revolutionary Party, the PRI, has stripped out specific requirements for external audits of union finances and secret ballots for union elections contained in the original bill submitted by President Felipe Calderon earlier this month.

Pena Nieto, who takes office on Dec. 1, supports labor reform, but his PRI party - the largest voting block in Congress - counts some of the country's most antiquated, autocratic unions among its strongest supporters, leading to speculation that the old guard had pressured his party to leave out what critics say is the only progressive part of the bill. That would weaken Pena Nieto's claims that his party has left behind the reputation of repression and corruption it built up over 71 years in power, from 1929 to 2000.

"They are leaving out the points they claimed were the most beneficial in terms of democracy and transparency, because it's clear there was an agreement between the PRI and (Calderon's) National Action party to move forward on what they're really interested in, which is flexibilized work rules," said Manuel Oropeza, leader of the leftist Democratic Revolution Party, the PRD, in Mexico City.

PRD officials have said they will use any means necessary, including marches, to head off passage of the bill. Even Calderon's normally conservative, pro-business party wasn't happy with the watered-down language on union democracy.

Mexican unions are, at present, so undemocratic that, when opening new plants, employers will sometimes select a docile union for the new facility, and the first workers will enter with a labor contract already signed behind their backs. Many workers don't even know the name of the union that supposedly represents them, and takes their dues.

PRI Congressman Hector Gutierrez said the democracy language had to be changed, because the provisions in Calderon's original bill allegedly violated constitutional articles that protect unions against outside interference.

"It wasn't just a question of a whim," said Gutierrez.

Opponents say Mexico's low wages in several industries already make its labor force more attractive than increasingly affluent countries like China and the last thing its workers need is a reform that would pare the meager benefits and job security they currently enjoy.

"Yes, we need a reform that allows labor productivity to increase, but not at the cost of workers' rights," said PRD national leader Jesus Zambrano.

Congresswoman Luisa Maria Alcalde Lujan of the small leftist Citizen's Movement party said new rules wouldn't create stable new Jobs, but rather "short-term Jobs for a few months with low wages and no benefits."

The problem is pressing: The country's 5.4 percent unemployment rate is probably a huge understatement, given the lack of unemployment insurance and the fact that jobless workers quickly slip into Mexico's vast, unregistered army of street vendors and day laborers. Officials say the lack of jobs is one reason why so many youths are drawn to Mexico's violent drug cartels.

Under Mexico's 1970's-era labor laws, workers earn as little as 60 pesos ($5) per day but still pay dues to pro-company "paper" unions they never see. About one-fifth of salaried workers in Mexico are unionized.

Bosses, meanwhile, complain that expensive severance and benefits packages, along with strict work and seniority rules, make it hard to create new jobs.

Added to that is a lengthy and arcane dispute resolution process that can hold up back-pay or severance cases for a decade.

Experts say loosening work and seniority rules to let employees perform different tasks and gain promotion based on ability would increase productivity.

In August, OECD Secretary General Angel Gurria said that labor reform, together with tax and other changes, could boost Mexico's GDP growth by 1 percentage point per year.

Jaime Moreno, 42, a secretary at a Mexico City high school and part of the National University Workers Union, took part in a protest against the proposed reform last week, saying it would result in a "total transformation of labor relations," with temp labor agencies contracting workers for a few months, without the health, pension and housing benefits most workers currently get.

But business groups say the reform is necessary.

"A flexible labor market, that gives legal certainty to employers and employees, is indispensable if we want our economy to grow," said Alberto Espinosa, leader of the Mexican Employers Federation.

Calderon said the new law, by providing training, probationary and part-time work, could especially help create jobs for those who currently have the hardest time entering the labor market: women and young people.

But critics say Mexico's ongoing wave of drug violence, extortion and robbery of freight shipments play a greater role than labor rules in limiting investment here.

"Businessmen don't avoid hiring people in Mexico because it's expensive," labor lawyer Arturo Alcalde notes, "because they earn so much less."