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Weekly Roundups

Outsourcing Reform: Stimulus for Job Certainty

By MBN Staff | Thu, 11/19/2020 - 12:47

At the end of last week, President Andrés Manuel López Obrador presented an initiative to reform the outsourcing system in Mexico, referring to the fact that the current scheme is used by companies to avoid their obligations to workers, as well as taxes. López Obrador said that this initiative aims to "bring order" to labor subcontracting, which is estimated to affect at least 4 million workers. The law seeks to regulate three areas: the subcontracting of personnel, specialized services and works and employment agencies.

According to analysts consulted by Expansión, the reform initiative will improve working conditions in Mexico, as well as legal certainty for workers. “Workers will be fully aware of their benefits and wages and will contribute to their social security based on their actual salary. Many times, outsourcing companies were used to simulate acts and to mask social security contributions, both with IMSS and INFONAVIT," said Juan Cristóbal Ibáñez, an academic from the Law School at Universidad Panamericana (UP). Another benefit, he pointed out, is that workers will be able to access better-paid, higher-benefit jobs and will have greater legal certainty. 

However, the prohibition to contract personnel under this modality will affect job creation, as companies will be forced to hire employees with full salaries and benefits. 

More news below:

  • Of the 2.6 million people who decided to start a business in the country in 2019, just over 500,000 were women. What’s behind this figure? “We observed the behavior of income in 2019, a year in which growth was reflected for both men and women, with women benefiting the most with almost 44 percent growth over the previous year. However, comparing 2019 against 2020, one can see how the pandemic brought a significant decrease in income for both genders, with women being the most affected, seeing a fall of more than 15 percent,” wrote this week David Arana, CEO of Konfío in Mexico Business News.

  • Global trends are changing the business environment, customers and value chains. Monica Vera, Managing Director of TMF Group, explains this week how to deal with these changes. “Expanding around the globe poses a major challenge to business owners because each jurisdiction has its own rules and, more importantly, its own way of doing things. From rules and regulations to tax and labor compliance, there are trends that are followed globally to a certain extent but e in very particular ways depending on the specific jurisdiction,” she pointed out. Read the full story here.

  • In 3Q20, 58 percent of the jobs lost due the pandemic were recovered, according to INEGI figures. The National Survey of Employment and Occupation (ENOEN) published this week revealed that the employed population increased by 5.9 million in the 3Q20, compared to 2Q20, to reach 51 million.

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