Mexico passes radical labour reforms

Mexico's senate approves controversial labour laws in biggest shakeup of job market in more than four decades

Mexico's senate has approved a wide-reaching labour reform bill in the biggest shakeup of the country's job market in more than four decades.

Approval of the watered down bill came after a protracted tussle between outgoing president Felipe Calderón's National Action party (PAN) and pro-union hardliners within the Institutional Revolutionary party (PRI) of the president-elect, Enrique Peña Nieto. The PRI has traditionally relied on union support.

"We shouldn't underestimate what we have," said PAN senator Javier Lozano. "It is a very good labour reform economically speaking which will really stimulate competitiveness and productivity, and will modernise labour relations."

Nonetheless, the bill, approved by 99 votes to 28, has been criticised by leftwing politicians who accused the government of trampling on the rights of Mexico's workers. Protesters gathered outside the senate and television reports showed small scuffles breaking out.

"What we're doing here is annulling worker's rights," said Alejandra Barrales, a senator from the leftist party of the Democratic Revolution (PRD).

The bill, which the government said will create up to 400,000 jobs a year, contains a raft of measures, including changes that would make it easier for firms to hire and fire workers and shorten labour disputes. However, parts of the bill that sought to make unions more transparent were cut back.

Peña Nieto sent a tweet congratulating congress on the passage of the bill, which he said would "improve the productivity and competitiveness" of Mexico.

Under the new measures, work contracts will be more flexible, enshrining trial periods and initial training contracts in labour laws. Regulations will be tightened on outsourcing of personnel, while the minimum wage will rise from an hourly to a daily rate.

The reform strengthens the rights of working women, including outlawing gender-based discrimination and helping mothers plan their work schedules.

Unions will have to publish their regulatory statutes on the ministry of labour's website, but many of the tougher measures – including rules to force them to show how they manage members' fees – were dropped.

Peña Nieto faces an uphill battle to create jobs once he takes office. Last week, Calderón said 2.1m new jobs were created during his six-year term but that figure is well short of his promise of 1m a year.

Between 2006 and 2011 the number of Mexicans old enough to work grew by some 6.5m, according to data from the national statistics office.

If the bill succeeds in creating new jobs it will help stem the flow of workers heading into the informal economy, which some estimate employs more than 10% of the population and costs Mexico up to $15bn in lost taxes each year.

"There is a possibility that more people will be hired, but not under the right labor conditions," said Javier Oliva, a political scientist at Mexico's UNAM university.

Labour reform, along with an effort to widen the tax base and allow more private investment in state oil giant Pemex, have been the three main items on Peña Nieto's economic agenda.

His capture of the presidency returns the PRI to power after a 12-year hiatus. The centrist party governed Mexico from 1929 to 2000, a rule frequently dogged by allegations of vote-rigging, authoritarianism and corruption. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds