Issue: June 2018

MEXICO - Mexican Congressional Session Closes without Passing Legislation Implementing Labor Justice Reform

By: Tequila Brooks

Mexico’s congressional session closed on April 30, 2018 without passing legislation implementing constitutional labor justice reforms enacted in 2017.

Stakes for passage of labor justice reform legislation in Mexico are high because of upcoming presidential elections on July 1.  In addition, Mexico has been engaged in negotiation of more than one free trade agreement during the last several months.  These include ongoing proceedings for the re-negotiation of NAFTA, finalization of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on March 8, 2018 in the wake of the US 2017 withdrawal from TPP, and finalization of a re-negotiated free trade agreement between Mexico and the European Union on April 21, 2018.

2017 labor justice reforms to the Constitution of Mexico

In Mexico, private sector labor law is governed primarily by the 1917 Constitution and the Federal Labor Law (Ley Federal de Trabajo, LFT).  In 2017, the Government of Mexico amended Articles 107 and 123 of its Constitution to address labor justice shortcomings that have been highlighted by national and international critics for decades.  Primary among these shortcomings are the existence of labor protection contracts, ineffective tripartite labor boards, lack of transparency and availability of collective bargaining agreements to workers, and lack of secret ballots in trade union elections. 

The labor justice reforms to the Constitution were enacted when they were announced in Mexico’s Federal Register (Diario Oficial) on February 24, 2017.  Under the reforms, Mexico is constitutionally obligated to replace existing tripartite labor boards with independent labor courts, make collective bargaining agreements available to workers, and institute secret balloting in trade union elections.  The new constitutional reforms will not be truly in effect until they are implemented through the LFT.

Protection unionism, labor protection contracts, and tripartite labor boards in Mexico

The constitutional labor justice reforms are designed to eliminate protection unionism and labor protection contracts from the Mexican labor ecosystem.  Under protection unionism, private sector employers (both international and national) enter into agreements with so-called “official” unions prior to hiring any workers.  These agreements are referred to as “protection contracts” because they protect employers from employee organization drives and collective bargaining with genuinely representative trade unions.  The titular heads of “official unions” sit as trade union representatives on tripartite labor boards at the local and federal level.  This results in conflicts of interest in cases where independent trade unions attempt to dislodge the entities holding title to the protection contracts.  The practice has been criticized as leading to suppression of wage growth in Mexico.

When employers provide monetary payment to the heads of these “official” unions in exchange for signing and registering a collective bargaining agreement, it may present a corporate compliance issue.  In their capacity as trade union representatives on tripartite labor boards, “official” union leaders are, in effect, government officials.  It is a violation of the US Foreign Corrupt Practices Act (FCPA) and other national and international laws to provide payment to a government official in exchange for some sort of benefit – for example, lower wages resulting from not being required to engage in collective bargaining with a genuinely representative trade union.

Legislative proposals for implementing constitutional labor justice reforms

Like the US, Mexico has a federal bicameral legislative body with a Senate and a Chamber of Deputies.  The original constitutional reform bill submitted to the Mexican Congress by President Enrique Peña Nieto included proposed legislative amendments to the Federal Labor Law to implement the reforms.  These amendments died in committee without debate, however, and were not passed at the same time as the constitutional reforms.

In December 2017, legislators from a range of political parties submitted various legislative proposals to implement constitutional labor justice reforms.  None of these proposals made it out of committee, either.  One of these proposals – that of the Institutional Revolutionary Party (Partido de la Revolución Institucional, PRI), considered to be most affiliated with the “official” trade unions which would lose power, income, and privileges once labor justice reform is implemented – was the subject of a complaint under NAFTA’s labor side agreement.

Petition under NAFTA labor side agreement

Protection unionism and labor protection contracts have been the subject of multiple complaints to the US and Canadian governments under the NAFTA labor side agreement (North American Agreement on Labor Cooperation, NAALC) since it first went into effect in 1994.  They have also been the subject of a number of comments from the ILO’s Committee on the Freedom of Association (CFA) and Committee of Experts on the Application of Conventions and Recommendations (CEACR).

On January 25, 2018, the AFL-CIO and Mexican National Workers’ Union (Unión Nacional de Trabajadores, UNT) filed a NAALC complaint with the US Department of Labor (USDOL) arguing that implementing legislation proposed by the PRI (the party of the current President of Mexico, Enrique Peña Nieto) would undermine 2017 constitutional labor justice reforms in various ways, including undermining independent labor courts by making them subject to a tripartite technical council that would include leaders of the so-called “official” unions.  On March 19, 2018, USDOL announced that it would extend the time to determine whether to accept the NAALC petition submitted by the AFL-CIO and UNT in light of forthcoming discussions with Mexico in March and the outcome of legislative debates in the Mexican Congress.


REFERENCES

Fair Labor Association, Protection Contracts in Mexico, March 2015, available at http://www.fairlabor.org/report/protection-contracts-mexico.

Fares, Lawrenz, “Unions file NAFTA labor complaint against Mexico government,” Jurist, January 26, 2018, available at http://www.jurist.org/paperchase/2018/01/unions-file-nafta-labor-complaint-against-mexico-government.php.

Government of Mexico, Reforma en materia de Justicia Laboral (Labor Justice Reform), available at https://www.gob.mx/stps/documentos/reforma-en-materia-de-justicia-laboral.

Maquila Solidarity Network, Briefing Paper:  Labour Justice Reform in Mexico, July 2017, available at http://www.maquilasolidarity.org/en/labour-justice-reform-Mexico.

Maquila Solidarity Network, Debate on Mexican Labour Justice Reform Continues as Counter-Reform Bill Suspended, May 2018, available at http://www.maquilasolidarity.org/en/will-mexico-make-good-on-promise-of-labour-justice-reform

Martinez, María Del Pilar, “Preocupa destino de reforma en justicia laboral: expertos” (Concerns about destiny of labor justice reforms: experts), El Economista, January 12, 2018, available at https://www.eleconomista.com.mx/empresas/Preocupa-destino-de-reforma-en-justicia-laboral-expertos-20180112-0005.html

Olvera, Dulce, “Décadas de sindicalismo charro dejan su marca: malos salarios, malas prestaciones, corrupción” (Decades of yellow unionism leave their mark: poor salaries, inadequate benefits, corruption), SinEmbargo, March 1, 2017, available at http://www.sinembargo.mx/01-05-2017/3205400.

Straulino-Rodriguez, Pietro and Stefano Sandoval Malori, Mexico Finalizes Significant Changes to Its Labor Justice System, The National Law Review, February 24, 2017, available at https://www.natlawreview.com/article/mexico-finalizes-significant-changes-to-its-labor-justice-system

US Department of Labor Bureau of International Labor Affairs, Notice of Extension of the Period for Acceptance for Submission #2018–01 (Mexico), 83 FR 12411, March 21, 2018, available at https://www.federalregister.gov/documents/2018/03/21/2018-05866/bureau-of-international-labor-affairs-office-of-trade-and-labor-affairs-north-american-agreement-on

US Department of Labor Bureau of International Labor Affairs, Submissions under the North American Agreement on Labor Cooperation (NAALC), available at https://www.dol.gov/ilab/trade/agreements/naalc.htm.

Welch, David and Nacha Cattan, “How Mexico’s Unions Sell Out Autoworkers,” Bloomberg, May 5, 2017, available at https://www.bloomberg.com/news/articles/2017-05-05/how-mexico-s-unions-sell-out-autoworkers

Tequila Brooks

Attorney and International Employment Policy Specialist