The Labor Reform and the Future of Syndicalism in Mexico How is your company affected? What to do?

In May 1, 2019, a decree amending the Federal Labor Law was published in the Federal Official Gazette, which constitutes a before and after in labor relations in Mexico.

Published by:     Marihel Armendariz Magallanes    Date: 2019-05-23


The reform focuses, mainly, on two aspects: the modernization of labor courts and procedures, as a result of the constitutional reform approved in 2017; and the homologation of Mexican syndical life to international standards.

Regarding syndicalism, the reform derives from the commitments acquired by Mexico under the new free trade agreement entered with the United States and Canada (USMCA) and the ratification by Mexico of ILO Convention 98. It punctually responds to the specifications that the US and Canada imposed on Mexico, due to pressures from the unions in those countries, which demand equal working conditions in order to compete with Mexican workers.

The reform seeks to ensure that the election of union leaders be carried out through personal, free, direct and secret voting, avoiding employer interference, and establishes mechanisms to guarantee the representativeness of workers in collective bargaining procedures. It also obliges union leaders to be accountable to union members.

Historically, unions in Mexico have been dominated by the political and economic powers. The so-called "labor peace" has actually been the result of the control that these powers have exercised over the workers through the unions.

Specifically, the employer sector has developed practices, such as the creation of so-called "white unions", to weaken the development of genuine collective relationships and prevent the emergence of leaderships that actively promote the improvement of working conditions. So much so, that currently about 90% of collective agreements in Mexico are "protection agreements"; that is, they are entered with white unions.

The current unionism, undemocratic and controlled by the government or by the employer sector, has been the determining factor for maintaining low wages compared to US and Canada, two of Mexico's main trading partners.

Therefore, it is expected that the reform will lead to a strengthening of syndical life and that, as a result, pressures will arise to improve prevailing working conditions, including, in a very important way, salaries.

This should not be interpreted as a negative change, but as the implementation in Mexico of international labor standards that are the norm in many other countries. To face this new reality, the following actions are recommended:

• In the first place, it is advisable that companies do a self-assessment exercise of their labor relations. Are labor and social security obligations being complied with? What is the status of your labor relations, both individual and collective? What is the current work environment in the company? Do the salaries that are paid respond to the demands and trends of the market?

• Secondly, we recommend designing and implementing strategies to correct failures and mitigate the risks that may generate labor conflicts in the future.

• Thirdly, you must be aware of legal, political and economic changes that occur in the labor environment, in order to prevent risks and successfully face the challenges ahead.

We are at your service in case of questions or comments in connection with this or any other matter

Author:  Villalobos & Moore, S.C.
Of Counsel