Note published in Arbeted, in the Global [Global] Section, by Asa Welander.
Read the note in its original source
It is a little after eight in the morning and the sun’s rays reach the street where cleaning workers sweep leaves.
The city’s coat of arms and the legend ‘State Government of Mexico City’ can be seen in their green-and-yellow overalls. But Mary Díaz cannot recall the name of the company that provides the clothes. By the way, there is yet someone new that will take over after the start of the new year.
– A company disappears and a new one arrives. They said they would pay the same salary as the previous one, but we will see to it that they do not cheat us.
During her 14 years in the profession, she has worked for at least five different companies, although her responsibilities have never changed.
The fact that employees are subcontracted for jobs is common and it often means that employees lose important payments of pensions, legal bonuses and points in social security systems. In the end, there is no one to turn to for complaints, either.
The paycheck often shows the name of a PO Box company or other temporary subcontractor; companies that often come and go under different names. Many others have also implemented systems for reporting lower-than-actual wages.
In some cases, leasing companies themselves are behind the affiliates or subcontractors that commit offenses. In this way, head companies avoid both legal bonuses for employees and responsibility for incorrect reports.
Using an intermediary reduces costs, explains Héctor de la Cruz, an expert in labor law.
– Partly because no benefits are paid and partly because if personnel is earning 1,000 pesos, the subcontractor only reports 100 pesos to the authorities and the rest is paid on the side to decrease tax expenses and social fees.
In November, President Andrés Manuel López Obrador presented a bill to severely restrict the use of subcontracting or the so-called outsourcing.
The union movement hopes for a reform of the current practice.
“Subcontracting entails huge losses for the workers, besides the fact that many times there is not even a true employer, but an office that can disappear at any time when problems arise”, says José Luis Carazo of the Mexican Workers’ Confederation (CTM), the largest union in the country.
The bill that is currently on the table would prohibit all contracting of personnel for the main business of a company. Therefore, an automobile factory could hire, for example, cleaning services and telephone assistance, but not workers for the factory itself.
But the bill has been criticized. Over 4.5 million Mexicans work under contracts that could be affected by the change to the law, Business organizations warn that the government’s proposal would put their job positions at risk and would seriously damage the job market.
At a time when both employees and businesses have been hit hard by the coronavirus pandemic, a stricter regulation of the labor market is also highly controversial.
During the second quarter of last year, when much of Mexico was closed, the country’s economy contracted by 17 percent and, in April alone, more than 12 million Mexicans lost their income.
Some unions are also concerned that stricter regulation could be the end of Mexican jobs, but Labor Minister Luisa María Alcalde, who initiated the reform, has dismissed these concerns.
– On the contrary, unemployment will create a more equitable and fair labor market, but also more productive, she has said to El País newspaper.
The USMCA Free Trade Agreement was signed on November 30, 2018. The President of the United States, Donald Trump, was flanked by former Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau.
Something that has contributed to drive the issue forward at a governmental level is the new free trade agreement for North America.
Mexico today has longer minimum wages than, say China, and one of the lowest labor wages in Latin America, which has made the country popular within the manufacturing industry.
With the new agreement, the President of the United States at the time, Donald Trump, hoped to recover factory jobs from their neighboring country on the south, increasing labor costs in Mexico. Thus, when the USMCA replaced the previous free trade agreement, TLCAN, last summer, it did so with a focus on more equitable working conditions.
“There is pressure on Mexico to raise the employment standard to the same level as in the rest of the free trade area, but I don’t believe that is what the other countries had in mind”, said Fiona Coombe, legal analyst at Staffing Industry Analysts, resorts to companies that hire personnel.
She says that the bill, even from a global perspective, goes unusually far in wanting to limit the use of subcontractors.
– Most countries have laws for the provision of staff or subcontracting, but it is generally poorly regulated, so I would say that it is quite controversial.
As far as she knows, similar attempts had previously only been made in the Philippines, where the law never passed, and Brazil, where, since its introduction, the regulation was pulled again.
As a result of pressure from several business organizations, debate on the bill in Congress was postponed until February.
Nevertheless, labor expert Héctor de la Cruz is convinced that the reform will pass with a few minor adjustments and says that this will mean a change of paradigm.
– All medium and large companies, up to the transnational level, use this system and they will have greater problems when they have to pay higher salaries, more taxes, higher social security fees and corporate benefits. But it is positive for employees and for social security, who will receive more money.
Sweeper María Díaz hopes that the law will be approved but is tempered after all the years with short contracts.
She earns the equivalent to 640 SEK per week, but it is not clear how much goes toward a pension and social security.
– They have been saying that they will eliminate private intermediaries for years. That would be good, because I know several people that work directly for the state and their salaries and conditions are much better.
Today, Mexico has longer minimum wages than, say China, and one of the lowest labor wages in Latin America. Only Cuba and Venezuela are estimated to have lower wages, which has made Mexico attractive to the manufacturing industry.
A bill that forbids companies from subcontracting their main activity has been drafted, but it still has not been reviewed by the legislature. The objective is to stop salary and conditions dumping and prevent companies from cheating in the payment of taxes. The bill is welcomed by large unions, while business organizations want restrictions to be softened.
The most important thing for the central CTM organization is that employees have access to their rights in the form of social security, pensions and legal bonuses.
By law, a certain percentage of companies’ profits for each year must be distributed among employees. But when people are not employed directly by the companies that make the profits but rather through an intermediary, they lose the dividend that they would have received as direct employees. Additionally, many subcontractors report lower salaries, which means that employees can also lose social benefits and part of their pension.