César Maillard Canudas, Managing Partner, Maillard, Cerbón, Canudas, Argumedo: Viewpoint

César Maillard Canudas, Managing Partner, Maillard, Cerbón, Canudas, Argumedo, Palma y Asociados

Viewpoint: César Maillard Canudas

The macroeconomic uncertainty facing Mexico in 2018 creates challenges for the country’s labour market. With both external and internal challenges, it is more important than ever for the country to pass legislation to help its labour market grow and mature so that it can provide a wider variety of jobs with respectable salaries. Since the publication of the presidential decree in February 2017 that reformed Article 123 of the Constitution on labour justice, there have been a number of delays to the implementation of both the procedural and collective changes initially planned. Even though there has been progress, it is highly probable that its implementation will be delayed until the legislative session beginning in December 2018 given the current political and macroeconomic uncertainty caused by the change in government and global economic volatility.

The labour court system reform can be considered a controversial issue because it disrupts the tradition of the administration of justice in this area, reducing the need for labour tribunals through the creation of an autonomous entity that manages trade union registration and reconciles employee-worker conflicts. The implementation of a decentralised jurisdictional body is necessary to resolve disputes that cannot be resolved by conventional means. Here, mediation processes between employers and employees will be developed, as will the registration process for unions at the state and national levels. This new centralised body means that the control of the registration of trade unions will not rest with the executive branch.

The reform also prioritises the outcome of conciliation over further review or dispute, as well as making judgement timings shorter and improving procedural efficiency. Although its implementation will be challenging, it has the good intention of resolving collective and individual problems in work relationships. The judicial authorities affirm that the whole dispute process will be smoother, but we will have to wait to evaluate the effectiveness of this scheme as the labour courts will require significant investment from both federal and state governments, and much will depend on how well civil servants are trained in the new procedures.

Despite the positive impacts of the reform for the labour court system, employers still want mechanisms to simplify employee-employer contracts. Legislators often forget that 98% of the companies that create jobs are micro-, small and medium-sized enterprises. If they do not have peace of mind about their legal flexibility in this matter, they may be less willing to invest their money in human capital, which would slow the creation of high-value jobs and provide fewer incentives for workers to improve their productivity.

The labour reform has also focused on the field of procedural law, but it seems the substantive aspect has been forgotten, which is an important part of labour laws in many developed nations. Clarification of this aspect of the law would result in better competition in the market, as workers would be more attentive to their employment and more productive.

Another highly relevant topic in today’s globalised economy is outsourcing. Some call for it to be regulated and restricted in the Federal Labour Law in order to create additional and higher-value jobs. Although the perception is that outsourcing can create precarious work conditions and uncertainty in the labour market, in addition to not complying with international labour standards, this is not necessarily the case. Worldwide outsourcing and subcontracting are the prevailing labour trends, and they allow entrepreneurs to dedicate themselves to their strengths and specialties using a flexible pool of labour. Therefore, outsourcing must be seen as a strategic ally for boosting innovation in the economy and enhancing the performance of companies. Since the employer generates more jobs than the state, the government should create public policies to reflect this. If employers do not benefit from legal security in this regard, businesses will be restricted, as will workers’ opportunities in the labour market.

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César Maillard Canudas

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The Report: Mexico 2018

Legal Framework chapter from The Report: Mexico 2018

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