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Foresight Key to Solving Intricate Labor Problems

Oscar de la Vega - De la Vega & Martínez Rojas
Managing Partner
Home > Talent > Insight

Foresight Key to Solving Intricate Labor Problems

Ricardo Martínez - De la Vega & Martínez Rojas
Managing Partner
Ricardo Martínez

STORY INLINE POST

Wed, 05/08/2019 - 12:47

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A political change, a complex social situation, the international environment and the negotiation of USMCA have ignited significant change in the country’s labor environment, say Oscar de la Vega and Ricardo Martínez, Managing Partners at De la Vega & Martínez Rojas. “Many of the country’s labor-related problems, particularly in the Matamoros area, are the result of a series of political and social elements related to instability and the social demands of workers that have gone unanswered,” says De la Vega.  
De la Vega & Martínez Rojas is a boutique Mexican law firm that has positioned itself in the heavily competed labor arena. “Our firm has 40 lawyers but we have the capabilities to manage any labor issue that arises,” says Martínez. In addition to its human capital differentiator, De la Vega & Martínez Rojas is a member of L&E Global Alliance, which de la Vega says is an important asset given that it puts the 3-year-old firm in close contact with labor leaders from around the world. “Labor problems are becoming increasingly complex and the exchange of talent is a regular occurrence. As part of this alliance, we can offer our clients global solutions.” 
The alliance, both lawyers say, is particularly relevant now, given the changes that Mexican labor law is experiencing. “Mexican law is emulating the US model,” says de la Vega, referring to the new labor legislation to be approved by the end of April. This, along with the pressure resulting from international treaties, such as USMCA, TPP11 and the ratification of Convention 98 of the International Labor Organization (ILO), requires international expertise, says Martínez. “What we are seeing is an effect of globalization. The labor reform we will experience is a response to international entities more than the will of internal players. Labor law has stopped being a local issue.”
The complex environment has created a breeding ground for labor conflicts in the northern part of the country, particularly in the Matamoros area, according to de la Vega. “In Matamoros’ maquila industry, we are seeing the combination of different realities: a mass of workers earning low wages and performing jobs with almost no added value, along with a corrupt union system that does not represent workers.” Although low wages have been a long-in-the-making problem, de la Vega says that it represents a failure not only of the private sector but also of authorities. “Since 1994, the country’s low labor cost has been presented as a selling point for investors but this is no longer sustainable. We need an integral work policy that provides added value to the workforce.” However, de la Vega adds that increasing wages through presidential decrees, as was done before, is never the answer. “Salaries must increase based on collective negotiations and this must respond to a productivity element.” He says the presidential decree to increase salaries by 16 percent nationwide and by 100 percent in the northern border represents a real problem for companies. “Given the conditions established in collective contracts, an increase in minimum wages represents an increase in the entire payroll of these companies, generating a significant cost issue.”
The lack of union representation also adds to social problems. De la Vega says that in the past, Mexico’s unions worked hand in hand with the ruling party, which provided the system with stability but also meant weak representation for workers. “There is no union transparency or accountability, so tension has built up and it easily explodes.” He adds that the landscape is primed to encroach on other industries. “The government, companies and unions need to work together. Otherwise, this situation will spread easily to other sectors,” says de la Vega. 
Although labor movements are alien to Mexico, Martínez says that previously, these movements were contained by the government to avoid generating fear among investors. But the current response from the government has been different. “The federal government has said that it will not meddle in the situation but will respect the freedom of each party. The problem is that, according to several labor-related international agreements Mexico has signed, the government is obligated to act as an intermediary whenever these conflicts arise, especially since any labor problem always impacts investment.”
 

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