Outcomes and Challenges After 100 Days of The Labor Reform

We are nearing the end of the fourth month since the subcontracting Labor Reform was implemented, on Sept. 1. After a little more than 100 days, it seems to me that we have enough elements to make a first analysis regarding what results have been obtained, as well as define the challenges for 2022 to strengthen the labor reality in our country, considering that the pandemic continues to weaken and with fewer high-risk cases compared to the second wave at the beginning of 2021.

Before evaluating these first four months, I would like to reflect on what the transition to this reform has represented for the Mexican economy. Like any reform process, at the beginning, it is normal for the markets to be cautious in expectation of what the new rules will cause, and that is what we experienced in the human resources industry during the first half of the year. Many customers began to feel nervous about what the new rules would be and how they were going to cope with this change.

On the other hand, human resources companies had to transform the business model, taking as a reference the experience in other markets in which we have a presence, which implied that small companies were left out of this new reality due to the lack of expertise and capacity to totally change their business model. An additional process was the need to comply with the requirement of the Ministry of Labor and Social Security (STPS) to be part of the list of specialized service providers validated by the STPS, through registration in the REPSE (Registry of Service Providers). This whole process, which began in April, the date the reform was approved, caused the dynamics of temporary hiring to stop and thus the generation of formal jobs was affected. Together with what was lost to the pandemic, it put the country in a difficult situation.

With the reform’s implementation, the market freeze was exacerbated, since at that time only specialized services were allowed and companies that had insourcing had to reorganize their structures to comply with the law and avoid sanctions. Until that moment, we can say that the reform that had been approved was generating more damage than benefits given the short time to the implementation of the law, which we considered worrying.

Since then, progress has been made at a semi-slow pace, as companies increasingly understand how specialized services work. This makes them feel more comfortable with the new rules. This can be seen in the latest report provided by IMSS, in October this year, when it reported 1,051,619 employer registrations, the highest in a decade. This means that the reform has begun to meet one of its objectives, which was to avoid tax and labor evasion, which indicates that more and more employers are committing to formality and guaranteeing workers' social security.

However, and facing 2022, we have an important challenge in this matter that has to do with a second objective of this reform: create more opportunities for formal and dignified work. From my perspective, this is the main challenge for next year in terms of employment, and that is why I consider that the creation and legislation of temporary staffing companies is essential to help generate more formal employment, even if it is for a determined period, because precisely these types of jobs are those that give young people and the elderly the opportunity to integrate into the world of work without violating their labor rights.

From my position, as the leader of the leading company in specialized services and human resources in the country, I am going to bet on promoting this tool, which I have witnessed in other countries. I believe that it will allow us to promote decent employment and formality in Mexico to achieve greater well-being and sustainable economic growth.