Mexico Must Tackle Tomorrow’s Legal Labor Challenges

Mexico faces complex legal labor challenges. The country is known for its manufacturing capacities and cheap labor, making it an attractive business destination. Despite this reputation, experts agree that it is necessary to migrate and adapt to the global new trends in order to attract and retain labor talent and remain reputable. Lorenzo Roel, President of the Labor Commission, the Business Coordination Council (ECC) saw three areas of opportunity: higher salaries, personalized incentives and legal benefits.

Individual Challenges
Businesses in Mexico are facing high turnover rates. As younger generations start to demand more from companies, it seems that the days when one person worked his whole life in the same office are far away. Roel identified three concepts that need to be addressed in order to tackle these challenges, as improved wages, more individually-focused incentives and legal benefits can provide security and confidence to workers.

Mexico’s labor law must shift and adapt towards today’s necessities since many of the world’s strongest economies already provide a clear path on how to achieve better working conditions. Many changes have already been made in the past few years in Mexico: For example, the Federal Labor Law largely prohibited the subcontracting of personnel.

The COVID-19 pandemic accelerated the shift to remote work. Many companies and employees saw that their work could be done outside of the office and even though this shift brought on many positive changes. Nevertheless, the speed at which this change occurred proved that adequate regulations were not in place. For many years, Mexico’s Labor Law has aimed to provide for appropriate working conditions, including through visits to medical professionals. However, how can companies ensure this with employees working from home?

This is what the Mexican Official Standard NOM-037 aims to answer, as it has been created to safeguard occupational health and safety conditions for remote work. However, this brings about two complications, the first of which is the obligation for employers to provide an ergonomic chair to the home office employees, which represents a significant cost for many SMEs around the country. Meanwhile, companies must also contribute to the cost of electricity and internet service, said Roel. 

Furthermore, Roel highlighted that younger generations do not always work from home, so it is difficult to ensure quality working conditions when the companies cannot control the place where workers perform their activities, such as in parks, coffee shops and other easily accessible places with an internet connection. Adjustments need to be made: As new employees seek flexibility at their job, companies must adapt to these demands, or they will be left behind.

In 2019, the Labor Reform generated the Prejudicial Conciliation Procedure, which establishes the obligation between employers and workers to request a conciliation procedure before moving a lawsuit to labor courts. Roel said that companies must ensure that they follow procedures correctly since potential lawsuits can become serious threats to companies. 

This conciliation must be done at the Federal Center for Labor Conciliation and Registration or  Local Conciliation Centers, depending on the circumstances, and may not take longer than 45 days.

Roel also pointed toward the government's target to increase the minimum wage by 2024, with the aim to ensure that two people working and earning a minimum wage would be able to provide for four members of a family. 

The Northern Border Free Zone (BFZN) has already seen an increase in the minimum wage. However, for the rest of the country, this increase may have to wait until 2025 or 2026 because of the high inflation SMEs are battling.

Challenges Regarding Collective Issues

The USMCA brought important changes to the business models in the country. One of the most important shifts is the established four-year time limit to legitimize collective bargaining agreements. If no agreement is reached, the possibility of forming a new independent union is left on the table. What is more, contractual reviews must be carried out every two years to approve changes.

It is no longer possible to sign collective bargaining agreements negotiated directly with union leaders. Now, it is necessary to talk to the workers, who are empowered by a free, direct and secret personal vote. The measure sets out to create stronger and more legitimate unions that benefit both companies and workers. “As of yesterday, there are 7,548 legitimate collective contracts, which represents only 9 percent of the active collective contracts,” said Lorenzo Roel. 

Reform Initiatives

Mexico needs to update its Labor Laws. Roel highlighted the importance of doubling the legally mandated vacation days after the first year of work from six to 12 days. However, he insisted that this must be a gradual change because SMEs are not ready for this drastic alteration. The vacation bonus is also an issue to address since the country is lagging internationally. However, he also argued for a progressive shift to avoid informal work gaining strength. 

Overall, these factors will help companies address the many challenges ahead. The government will also do its part to tackle various issues. “In the coming years, vacations, labor violence, inclusion, gender pay equity and digital platforms will be the biggest talent initiatives in Congress,” concluded Roel.