Mexico Senate Passes Landmark Labor Reform James Young - MNI
go to original November 14, 2012

MEXICO CITY - Mexico's Senate voted 92 to 28 to give final approval to a landmark labor reform bill, after weeks of back and forth with the lower house, sending it to President Felipe Calderon for his signature.

The labor reform initiative stands as Calderon's final major achievment before leaving office Dec. 1, and offers a hint at how the newly formed Congress will interact under the upcoming presidency of Enrique Pena Nieto.

The package marks the first major labor reform in 42 years, and eases restrictions that private sector economists - and the outgoing PAN government - has for many years said were inhibiting the nation's economic potential.

The reform will allow outsourcing to third parties for contracting workers; pay by the hour (limited to eight hours per day); raises and promotions based on productivity rather seniority; and temporary and probationary hiring, with paid one-month trial period (or up to six months for management positions).

It also includes provisions giving expanded leave and reduced hours for new parents; and imposes harsh penalties for child labor and for discrimination and sexual harassment in the workplace.

The outsourcing provision was one of the more hotly contended issues, drawing thousands of protesters outside legislative buildings for weeks.

The reform also provides new rules to make hiring and firing less costly for employers and streamlines the arbitration system for workers seeking settlements after layoffs, placing a one-year cap to process the suit.

Mexico's private sector has been decrying such rules for years as making it difficult to hire and fire employees, a problem that has had the effect of pushing three out of every 10 able-bodied workers into the informal sector, where they work with no benefits whatsoever.

Pena Nieto is expected to send an additional labor reform package once in office, likely the first in a series of major initiatives, including fiscal, energy and political reform, all reforms the PAN had tried and failed to garner support for over a decade of rule.

The Senate approved the package that included amended rules on union democracy and transparency that divided lawmakers over the last two months of debate, although in the end excluded two articles on collective bargaining.

Going into the vote, National Action Party (PAN) Sen. Javier Lozano Alarcon made a statement confirming the PAN's desire to work with the Democratic Revolutionary Party (PRD) and the Labor Party (PT) once again to reinstate two articles which focus on unionized workers' right to approve collective contracts democratically.

In the end, the PRD-PT-PAN bloc managed to strip the articles from the main body of the reform, and they will be sent back to the Chamber of Deputies for another round of debate. The timeline for that debate was not established, leaving it simply for "future sessions".

Calderon sent the initiative to Congress Sept. 1 under new "preferential" status that forced a fast-track review process, giving 30 days to each house to produce a vote on the bill.

After the lower house passed the majority of the reform Sept. 29, the initiative hit a snag in the Senate Oct. 25 when a coalition formed largely by the conservative PAN and the leftist PRD forced the reintroduction of several key measures removed by the lower house dealing with union transparency and democracy.

The move bounced the package back to the lower house special commission on labor reform, where leadership of the Pena Nieto's Institutional Revolutionary Party (PRI), threatened to stall the initiative until February 2013.

Calls from Pena Nieto, who many speculate did not want to see his party appear obstructionist - or who did not want to have to fight for the reform in his administration - and pressure from the PAN leadership to pass the bill before Calderon leaves office, led to a Nov. 8 compromise and paved the way for final approval.

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