Note published in Factor Capital Humano, Leyes y Gobierno [Laws and Government] section by Blanca Juárez.
Read the note in its original source
The timeframe in which the changes would come into effect, profit sharing and the registration of subcontracting companies are some of the points that still continue to generate disagreement between the authorities and businessmen.
The bill with the reform on subcontracting “is in the House of Representatives, it is not in the Executive Power or in the business sector”, the president of the Lower House Finance Commission, Patricia Terrazas, emphatically points out. But negotiations between the cabinet and the private sector have been prolonged, and the legislator reports that this reform could be issued as late as January.
“There is no certainty” that the commission that she presides, together with the commission on Labor and Social Welfare, could reach a decision in this ordinary period of sessions that ends on December 15, she said in an interview. “We will surely go into an extraordinary period, but not this year. We are pressed for time and the covid-19 pandemic is not helping much”, she informs.
This reform bill, sent by President Andrés Manuel López Obrador “still has many pending issues.” After conducting a third open parliament on the topic, she believes that “all voices and comments” expressed in this citizen forum must be taken into account.
Both commissions are still working jointly on the pre-ruling and they still haven’t defined when they will approve the document. “We are waiting for all parliamentary groups to present their opinion.” Both legislative bodies will hold a session this Tuesday “and we will see whether we issue a ruling or we leave it to be resolved upon at a later date.”
The rush in having this bill approved comes from “the President of the Republic”, states Cesar Maillard, president of the Commission on Employment and Productivity of the Confederation of Industrial Chambers of the United Mexican States (Concamin).
The business representative said in an interview “that it has been possible to postpone it.” The agreements reached in the meetings with the federal Executive Power are to continue the talks this week. “If an agreement is not reached, we will continue in early January and until February, at the most.”
Nevertheless, “there is nothing set in stone” in this regard. This Monday, in the morning press conference, President López Obrador claimed: “this disagreement will be resolved this week.”
The registration of companies, “an excess”
According to Maillard, a first agreement achieved is to limit the delivery of profits based on what is worked in one month in the case of companies known as Purchasing Centers (CC) as well as for non-profit associations (AC) but is still pending to be defined for other companies.
Another point that has to be changed is the entry into force of these new regulations, says Oscar de la Vega, Director of the De la Vega & Martínez Rojas Abogados Law Firm. “Companies need time to restructure, a minimum of six months.”
Subcontracting that generates simulation and the violation of labor rights must be eliminated, he agrees. “But exactly as it is proposed, the bill limits the flexibility of companies by expecting that all service works have to pass a filter by the Department of Labor and Social Welfare (STPS).
For the business lawyer, the reform to Article 14 of the Federal Labor Law, through which a registry of subcontracting companies would be created “would inhibit competitiveness in the country.” It would be difficult to get registered and then to obtain approval by the agency, he maintains.
“It is an excess of bureaucracy and inefficiency which, in Mexico, translates into corruption”, he states. There are hundreds of thousands of companies that would have to go through this procedure, which makes it unviable, he says.
In his opinion, the federal Executive Power is not taking the operative flexibility required by companies into account. “We hope that this is attenuated in the bill, that they are not subjected to a bureaucracy.”
According to the world Bank (WB), says the lawyer who specializes on labor topics, “the greater the rigidity in labor relationships, the greater the informality.” We have to promote investment in the country”, and the registration of companies could be an obstacle for this, he concludes.