Economics: What to expect from Labor Reform
The Senate passed the administration’s labor reform proposal this past week, and the changes to the country’s labor laws and the conciliation and arbitration system are significant, but doubts abound as to whether efforts aimed at eliminating past forms of abuse of workers’ rights might open the door to new forms of government control in a country whose modern history has been marked by corporatism, especially over the labor movement.
Steps were taken to streamline arbitration and conciliation procedures and ease labor court caseloads, but this arrangement significantly centralizes oversight capacity as well as the ability of the Executive Branch to intervene in the internal life of labor unions.
While the reform grants autonomy to the new Federal Conciliation Center and Labor Registry, the President of the Republic will appoint the person who will preside over the new body, which will also have authority over reviewing collective bargaining agreements and the official registration of unions, possibly opening the door to officials' replacing union leaders with individuals more inclined to do the current government’s bidding.
Measures were introduced to curb the ubiquitous practice of "sweetheart contracts" entered into without even the knowledge, much less the consent of the affected workers, and to favor workers exercising a right to elect their officials and vote on contracts.
Given the sense of urgency about the need to remove obstacles to winning ratification of USMCA/T-MEC, especially in the US Congress, it was not possible to consider some concerns raised, especially those put forward by business representatives (such as whether workers can opt out of paying union dues, rules on outsourcing arrangements, and companies being free to bring replacement workers across picket lines), which may be taken up later by a special session of Congress.
Longer term concerns include whether measures to level competitive conditions across T-MEC countries will ultimately detract from the competitiveness of the region as a whole, thus facilitating the migration of investment and production across the Pacific, and raise the cost of consumer products locally.
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