Mónica Flores
General Director
ManpowerGroup Mexico and Central America

Labor Market Optimization Beyond the 2012 Reform

Tue, 01/22/2013 - 13:16

Until November 2012, Mexican employees had worked under the same Federal Labor Law since 1970. Successive governments had made small changes to the regulation, but had largely left its structure untouched. As a result, the operating framework became increasingly misaligned with modern employment practices. This was particularly true in the oil and gas industry, where particular skills, knowledge and experience requirements limit the size of the potential workforce. In November 2012, a new law was passed to improve market conditions, but how much of an improvement was it?

Mónica Flores Barragán, General Director of Manpower Mexico, believes that the main priority of the labor reform was to achieve better job placement that meets the needs of a technologically advancing and increasingly competitive workplace. “Technology has changed the labor market as a whole, since now people can work from home or from another country, or even just punch-in for a couple of hours,” Flores Barragán explains. “The concepts of employment, vacations, meetings, and teams, have all evolved with technology, and it is Mexico’s turn to finally adapt to it.”

In the amendments made to the labor law since the 1970s, flexibility was mentioned frequently, but the labor law failed to address the challenges of modern Mexico. New hiring modalities for entry-level employees became available under the 2012 Labor Reform: companies could now consider trial periods for new hires, as well as initial training contracts and temporary jobs. Also, by regulating hourly rates, employers were given the opportunity to hire people by the hour.

Flores Barragán is convinced that if employers are subjected to tight regulations, labor will flow freely under market conditions. “Regulations should be stricter when paying contributions and taxes. The past labor reform had a loophole in fiscal compliance, which companies used to create a strong informal labor market,” she explains. “The government needs to establish clear guidelines and stronger penalties to encourage companies to meet their tax obligations, pay their social security contributions, and create formal jobs.”

Flores Barragán explained that encouraging the creation of more jobs in technical industries is crucial. “The government needs to develop incentive programs to encourage students to look at more specialized career programs: a solution could be reducing fees for the programs with the most unfulfilled supply in the labor market. According to a 2011 survey conducted by Manpower Group, 42% of the companies in Mexico find obstacles in filling vacancies,” she says, pointing out that the percentage is further increased for technical jobs, such as petroleum engineers. By making information available about the high demand that companies have for technical graduates and the opportunities these careers o†er, the number of potential applicants for positions in markets such as oil and gas could eventually begin to grow.

The education sector also has a role to play by improving the match between education programs and current job market needs. “Universities and technical training institutions should be more dynamic in the way they structure career syllabi, since the technology and knowledge needed in the market changes almost every year,” says Flores Barragán. Students have to bridge the gap between knowledge gained in the classroom and knowledge needed on the field, since most students graduate from their programs in Mexico without any practical experience. “Training positions are a first step, but internships need to be formalized as part of the learning experience in degree programs.” Getting to know the market and developing the skills needed to participate are priorities for recruitment, and should therefore also be priorities for the education system.

Once a better pairing between companies and candidates is achieved, the market should be ready to seize the advantages that technology brings. “With more adept candidates on the market, companies will start to hire teams or crews instead of people,” Flores Barragán says. “Each crew will have its own leader and projects will be tendered, o†ering the job to the most capable team; people will still be needed out there, performing oil-specific jobs, but the soft-skills and the interaction will be di†erent.”