AMLO will send a bill to eliminate outsourcing

Note published in El Economista, Empresas [Companies] Section by Maritza Pérez and María del Pilar Martínez.
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The President pointed out that it is another topic that will create controversy, like the elimination of the trusts did.

President Andrés Manuel López Obrador announced that he will send a bill to the Federal Congress to eliminate outsourcing or subcontracting, like he did for the elimination of the trusts, with the objective of cleaning up corruption in the country, since the rights of the workers and the income of the Public Treasury have been negatively affected.

“I will send a bill to make this mechanism disappear. This will be another controversial topic, I am telling you in advance, like that of the trusts, but we have to clean house, we cannot be accomplices to corruption”, he warned in the morning press conference.

According to the President, the proposal started being prepared since October, because he believes that this practice affects the Public Treasury and the development of the country.

“These reforms that were made (to allow outsourcing) were based on the fact that, in this manner, the company benefited from not having to engage in administrative procedures, so that it could enter into a contract with a company that managed the payments to be made to the workers, social security and Infonavit [National Worker’s Housing Fund Institute] dues. What happened? That they abused this modality.”, he emphasized from Palacio Nacional [Seat of the Federal Executive Power]

All of the above was made known after the President said that a company that issues false tax receipts and invoices and at the same time owned a subcontracting company is already under investigation.

He explained that the scheme of this service, through which the company’s responsibility of paying workers what is fair was avoided, allowed them not to pay benefits to the workers, “removing them from the payroll in November, December and not giving them a year-end bonus, and putting them back in the payroll in January, February. Well, that is going to end.”

Additionally, the Mexican President stated that companies now know that there is a true Rule of Law in Mexico and that is why more investments are arriving.

“They know that it is no longer a crooked Rule a Rule of bribery, that corruption and impunity are not permitted, no matter who the person involved is. That is why I told the neoliberal technocratic experts that we would take a fall in the economy due to the effects of the pandemic, but that we would recover soon”, he stated.

It should be noted that the modality of subcontracting was first introduced in the Federal Labor Law in 2012; while the bill presented by Napoleón Gómez Urrutia, which was approved by a majority in the Labor Commission, is pending approval by the plenary session in the Senate of the Republic.

Data from the Inegi [National Institute of Statistics and Geography], shows that there are 4.6 million workers in the country hired under the modality of subcontracting; this represents 13% of the share in the total of employed persons in the country, with a growth of 31% between 2014 and 2019, when the data was presented.

Oscar de la Vega, labor specialist in the D&M Abogados Firm, said that, while the modality of subcontracting cannot be legally canceled, particularly in instances in which whole industries depend on it, such as the automotive industry, the federal government must focus on bad practices conducted in this modality “which are in no way defensible.”