PEMEX and its Union Sign Deal for Significant Compensation Boost

PEMEX and its labor union agreed on a 7.82% increase in combined compensation and benefits for employees, as announced in a government statement released on Thursday.

As per this arrangement, PEMEX workers will see their salaries rise by 4.16%, along with a 2.28% increase in benefits, over the period spanning from August 2023 to July 2025. An additional 1.38% salary increase is scheduled to take effect from January 2024. The Mexican Oil Workers Union (STPRM) reported that a revised collective contract with the company was approved by unionized workers, with over 92% of the votes in favor and a participation rate of 78.51%. This decision was made following a consultation held on Oct. 17, involving nearly 92,000 union members, as mentioned in the union's statement.

Mexican law mandates the periodic review of collective contracts, encompassing both salary and benefit adjustments. Concurrently, salary increases are implemented on an annual basis. Notably, both parties had previously agreed to a 4% salary increase and a 2.25% rise in benefits for the period spanning from 2022 to 2023.

On Tuesday, President Andrés Manuel López Obrador said that the agreement was favorable for oil workers. 

However, PEMEX faces mounting debt challenges primarily due to increasing salary and pension obligations. As of the end of June 2023, PEMEX had allocated US$78.3 billion to cover employee benefits. 

With an implicit government guarantee, PEMEX stands as one of the largest employers in Mexico and holds the unenviable position of being the most heavily indebted energy company globally.

Many of the NOC's pension arrangements were originally negotiated with the influential oil workers' union several years ago, when oil prices were substantially higher and life expectancy was lower. However, over the past fifteen years, crude oil production has dwindled and the company's liabilities have continued to accumulate.

Negotiations with STPRM began in July last year in the presence of the Ministry of Labor and Social Welfare (STPS). "Both parties expressed their willingness to construct a fair agreement for the benefit of the petroleum community, given that it is a shared concern to ensure the well-being of workers," said PEMEX.