Bloomberg News

Mexico Senate Reinstates Union Transparency in Labor Bill

October 24, 2012

Mexico’s Senate altered a bill that eases the process of hiring and firing workers, approving greater union transparency, and sent it back to the lower house for a final vote.

Parties reinstated some union oversight measures, such as secret voting and periodic expense reports from leaders, while the nation’s two largest parties argued about other provisions that had been stripped by the lower house last month. President Felipe Calderon presented the original proposal Sept. 1 under a fast-track mechanism that gives both the lower house and the Senate 30 days each to approve or reject the bill.

Supporters of the bill say it will foster job creation and lure businesses out of the informal sector, where about a third of workers currently labor.

Differences between Calderon’s National Action Party, or PAN, and President-elect Enrique Pena Nieto’s Institutional Revolutionary Party, or PRI, show there will be tensions negotiating future economic overhauls, according to Eurasia Group.

“It’s likely to create a much more fractious environment,” Carlos Ramirez, an analyst with the Washington- based research group, said in a telephone interview. While economic bills may still pass in diluted form, the dispute over the labor bill “adds an additional factor of uncertainty of what’s coming in future reforms.”

The PRI could freeze the bill in the lower house if it disapproves of the changes made by the senate. The party probably won’t do so and risk a “failure” at the start of Pena Nieto’s term, Ramirez said.

Parties Disagree

“Union members that can’t vote freely or demand information from their leaders and directors don’t know the content of their contracts and therefore can’t oppose them,” PAN Senator Javier Corral said during the legislative session.

PRI Senator Humberto Mayans said the union measures violate international treaties and requiring a secret vote goes against laws that give unions “the right to create their own statutes and regulations.”

In addition to revamping labor laws, Pena Nieto has pledged to boost tax collection and increase private investment in the energy sector. If all three overhauls pass, Mexico could lift growth by as much as 1.5 percentage points, Nomura Latin America strategist Benito Berber said in a Sept. 25 report.

The labor bill would allow temporary and trial-basis contracts and hourly wages, while regulating outsourcing and limiting the amount of back-salaries employers must pay if they lose legal disputes with workers. Thousands protested in Mexico City against the initiative in weeks leading up to the vote, saying it erodes workers’ rights.

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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