August 30, 2018 ILN

The Challenge of Corruption in Global Supply Chains: Compliance Risks Posed by Labor Protection Contracts in Mexico

By Tequila J. Brooks

The negotiation of “labor protection contracts” is a common but contested practice in Mexico. This practice involves foreign and Mexican companies entering into labor agreements with “official” trade unions at the establishment of an enterprise, without the participation of workers and frequently before any workers have been hired. When workers in an enterprise later endeavor to organize a trade union and register it with the local or national labor board, they discover there is already a collective agreement in place with a union with which they do not have a relationship. The labor protection contract system has been widely criticized as a practice that violates fundamental labor rights and as being inconsistent with the principles of corporate social responsibility (CSR) and ethical behavior.

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