Labor subcontracting will undergo its first reform, after being included in the Federal Labor Law seven years ago, with the intention of eliminating bad practices, without meaning that it will be eliminated. Nevertheless, the proposal presented in the Senate of the Republic by the president of the Commission on Labor and Social Welfare, Napoleón Gómez Urrutia, was not well received in the business and labor sector, even though union organizations at the international levels support it.
According to Gómez Urrutia, the proposal, which has already been turned over to the Commission on Labor and is in the process of being ruled on, was well received by labor representatives from countries such as Canada, the United States, Argentina and Brazil.
The leader of the most important worker’s center in the United States (AFL-CIO), Richard Trumka, stated that a proposal that regulates subcontracting strengthens the reform to the labor legislation and protects workers against corporate abuse.
Matías Cremonte, an Argentinian lawyer, pronounced himself in favor of a change in the working conditions in Latin America in order to avoid violating labor rights, having limited both the right to strike and labor justice, while employers decrease their relationship with the workers.
The initiative, presented on October 29 of this year, will be reviewed together with other proposals with the objective of obtaining a ruling during this regular term of sessions, informed Marcos Del Rosario Rodríguez, technical secretary of the Commission on Labor and Social Welfare of the Senate.
Some aspects included in the reform are: specifying and incorporating measures to ensure that subcontracting companies comply with legal parameters; creating the Registry of Subcontracting Companies; creating a management system in order to verify that requirements are met; seeking to curb insourcing – a figure within the company itself to hire its personnel -; in addition, it provides for a review of the payment of profit sharing to the workers and that the union rights of the workers are guaranteed.
However, Lorenzo Roel, president of the Labor Commission of the Employers’ Confederation of the Mexican Republic (Coparmex), said that the initiative overregulates the activity of subcontracting and he proposes that the scheme of Profit Sharing (PTU) for Workers be reviewed, in order to assess whether it is advisable for it to remain as a labor benefit or not.
In the opinion of the Center of Studies for Formal Employment (CEEF), in the event that this initiative prospers, “it would be threat to formal hiring which is now registered through subcontracting and, in consequence, around 2 million formal jobs would be lost, to the detriment of the workers hired under this scheme, as well as of the social security authorities, who would cease to receive the social security dues deriving from those jobs”.
Additionally, they believe that it is not likely that the employees that are currently employed under this scheme “will be hired directly by the beneficiaries of the services and, therefore, a similar number would become a part of informal employment”.
Ricardo Martínez Rojas, partner at the De la Vega y Martínez Rojas Firm, stated that the proposal seeks to eliminate intermediation, makes the contractor and the contracting party jointly liable, particularly on the topic of profit sharing, “in the event of not fully complying with the requirement that subcontracting must be specialized, sporadic and not within the main activity of the company, eliminating insourcing, which happens when a business group has the workers in one company and profits in another one”.
“In addition to this, if the National Commission for the definition of the PTU adheres to the 10% established in 1985, when inflation was of 85% and Cetes (Treasury Certificates) were at 89% approximately, when we now have an inflation of less than 4% and Cetes at 8%, a 10% PTU is completely uneconomic for the companies; the USA lowered its corporate tax from 30% to 20%, and it turns out that in Mexico entrepreneurs will pay 40% of their profits, which removes country from all competivity; the PTU must be reduced to a percentage that better fits the national economy, of approximately 3% in order not to further damage productive investment”, stated Martínez Rojas.