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07/11/2012 | Reform in Mexico - Labour pains

The Economist Staff

The travails of a bill to modernise labour markets and unions highlight the difficulties facing Enrique Peña Nieto’s plans for reform.

 

WALK into a restaurant in Mexico mid-morning and you will find a surplus of idle waiters. Return at lunchtime and you will find the same number of staff rushed off their feet. Like many Mexican businesses, restaurants are alternately over- and understaffed because the ancient labour laws restrict part-time work.

The labour code was last overhauled in 1970, and it shows. Mexico is the only country in Latin America where it is legal to sack a woman for being pregnant. Probationary periods are not recognised. The rigid rules are intended to protect workers. But they are so cumbersome that many smaller businesses ignore them, leaving workers with no rights at all. Mexico has one of the largest informal economies in Latin America. The World Bank reckons that less than 30% of workers pay into a pension (one indicator of formal employment), compared with nearly 60% in Brazil and Chile.

Firing is as awkward as hiring: sacking an employee after a year costs three times as much as in Chile, and eight times more than in Brazil. The generous payouts bankrupt some small companies. Others shirk the rules. With no unemployment insurance, many workers settle for a tiny payout rather than pursue a lengthy tribunal case. Even when they win, in 60% of such cases the judgment is not enforced, according to David Kaplan of the Inter-American Development Bank.

A bill before Congress aims to modernise the labour code, introducing hourly pay, trial periods of up to six months and a tighter cap on severance pay, though it does nothing to encourage dispute-settlement without recourse to tribunals. It would also introduce clearer rules on outsourcing and bring women’s rights into the 21st century. The government says the reform would create an extra 400,000 jobs a year. By reducing informality, it could increase economic growth by 0.3 percentage points, according to BNP Paribas, a bank.

But the bill risks foundering over the ambition of the outgoing government of the conservative National Action Party (PAN) to clean up Mexico’s powerful trade unions. The bill requires unions to elect officials by secret ballot and to submit accounts for auditing. That threatens the hitherto unchallenged power of some union bosses. The head of the telecoms’ workers has been in his job for 36 years; after 23 years in office, the teachers’ leader, Elba Esther Gordillo, last month arranged another six-year term.

The proposals would affect only private-sector unions and the state-run oil industry. But the unions have long been a corporatist pillar of the Institutional Revolutionary Party (PRI) of Enrique Peña Nieto, who takes office as Mexico’s president on December 1st. The PRI duly voted to strike out the union measures from the bill in the Chamber of Deputies. But in the Senate, the PAN allied with left-wing parties, which have no love for the PRI union bosses, to reinstate the union-modernising clauses. On October 25th the bill was sent back to the lower house. The PRI is now mulling its next move.

This legislative ping-pong is the first glimpse of what awaits Mr Peña, who has promised some far-reaching reforms. The easy passage of the labour-market part of the bill suggests that he can count on the PAN to support his plans to open the energy sector and simplify the tax code. But the PAN’s insistence on the union-busting clauses, and his own party’s rejection of them, suggests trouble ahead. Ideologically the PRI and PAN are “closer than ever,” says Héctor Aguilar Camín, a historian. But the unions are “one of the great vulnerabilities” of the new government, and could curb the PRI’s appetite for reform, he says.

The affair has also made a mockery of the president’s new power to beat gridlock by fast-tracking two bills per congressional session. Each chamber has 30 days to vote on such measures. But unbelievably, there is no provision for what should happen if a bill is sent back for reconsideration, as has happened to the labour reform. Manlio Fabio Beltrones, the experienced leader of the PRI in the lower house, warned on October 29th that the labour reform would not pass before December 1st, contradicting a pre-election promise by Mr Peña’s team. Mexico has been frustrated before by wide-ranging legislative “whole enchiladas, which end up giving indigestion to the eater,” Mr Beltrones said.

It may be that Mr Peña has done a deal with the unions to secure their backing for other measures, such as an energy shake-up. The prospects of such reforms remain better than they have looked for years. Alternatively, he could defy the unions, and order his party’s legislators to pass the bill with both its economic and union-busting components intact. Either way, the first test of Mr Peña’s mettle has come even before he has taken office.

The Economist (Reino Unido)

 


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27/11/2009|
27/11/2009|
21/11/2009|
21/11/2009|
18/11/2009|
18/11/2009|
16/11/2009|
16/11/2009|
30/10/2009|
30/10/2009|
11/10/2009|
10/10/2009|
10/10/2009|
07/10/2009|
07/10/2009|
04/10/2009|
30/09/2009|
30/09/2009|
27/09/2009|
27/09/2009|
27/09/2009|
22/09/2009|
20/09/2009|
18/09/2009|
18/09/2009|
18/09/2009|
16/09/2009|
16/09/2009|
16/09/2009|
08/09/2009|
07/09/2009|
06/09/2009|
06/09/2009|
05/09/2009|
05/09/2009|
26/08/2009|
21/08/2009|
19/08/2009|
19/08/2009|
15/08/2009|
15/08/2009|
15/08/2009|
11/08/2009|
11/08/2009|
11/08/2009|
11/08/2009|
19/07/2009|
19/07/2009|
18/07/2009|
18/07/2009|
27/03/2009|
22/03/2009|
22/03/2009|
27/01/2009|
27/01/2009|
27/01/2009|
17/01/2009|
17/01/2009|
17/01/2009|
17/01/2009|
17/01/2009|
17/01/2009|
11/01/2009|
06/12/2008|
06/12/2008|
06/12/2008|
06/12/2008|
23/11/2008|
23/11/2008|
16/11/2008|
16/11/2008|
04/11/2008|
04/11/2008|
03/11/2008|
03/11/2008|
24/10/2008|
24/10/2008|
24/10/2008|
24/10/2008|
15/09/2008|
15/09/2008|
15/09/2008|
15/09/2008|
15/09/2008|
15/09/2008|
06/09/2008|
06/09/2008|
05/09/2008|
05/09/2008|
05/09/2008|
05/09/2008|
01/09/2008|
01/09/2008|
01/09/2008|
01/09/2008|
22/08/2008|
22/08/2008|
17/08/2008|
17/08/2008|
16/08/2008|
16/08/2008|
28/07/2008|
28/07/2008|
28/07/2008|
28/07/2008|
28/07/2008|
28/07/2008|
19/07/2008|
19/07/2008|
24/05/2008|
24/05/2008|
03/05/2008|
03/05/2008|
29/04/2008|
11/02/2008|
05/01/2008|
09/12/2007|
18/11/2007|
10/11/2007|
10/11/2007|
06/11/2007|
06/11/2007|
06/09/2007|
26/08/2007|
25/08/2007|
11/07/2007|
16/06/2007|
16/06/2007|
10/06/2007|
10/06/2007|
19/05/2007|
19/05/2007|
19/05/2007|
19/05/2007|
24/04/2007|
24/04/2007|
14/04/2007|
14/04/2007|
05/04/2007|
05/04/2007|
05/04/2007|
28/02/2007|
28/02/2007|
05/02/2007|
05/02/2007|
04/02/2007|
04/02/2007|
04/02/2007|
04/02/2007|
04/02/2007|
04/02/2007|
29/01/2007|
29/01/2007|
29/01/2007|
29/01/2007|
11/01/2007|
11/01/2007|
11/01/2007|
11/01/2007|
27/12/2006|
27/12/2006|
27/12/2006|
27/12/2006|
27/12/2006|
27/12/2006|
20/12/2006|
20/12/2006|
17/11/2006|
30/09/2006|
28/07/2006|
12/04/2006|
12/04/2006|
12/04/2006|
06/03/2006|
21/02/2006|
17/02/2006|
31/01/2006|
10/01/2006|
28/12/2005|
31/10/2005|
26/09/2005|
29/08/2005|
11/08/2005|
08/08/2005|
24/06/2005|
24/06/2005|
24/06/2005|
03/04/2005|
03/04/2005|
03/04/2005|
03/04/2005|

ver + notas
 
Center for the Study of the Presidency
Freedom House