Labor & Workforce

Mexican president determined to outlaw outsourcing

Mexico City, Oct 28 (efe-epa).- Mexican President Andres Manuel Lopez Obrador said Wednesday that he remains committed to passing legislation that would bar outsourcing, which he said facilitates more than 21 billion pesos ($900 million) annually in tax evasion.

“We have been trying, but there are some who don’t help,” he said during his daily morning press conference. “There are many responsible business-owners, but there are others – and, in the strictest – they are not even business-owners, they are coyotes (a slang term for smugglers), influence-traffickers.”

In January, the leftist president, popularly known as AMLO, created an interagency task force to address subcontracting irregularities blamed for some 380,000 job losses in 2019.

The Labor and Social Provisioning Secretariat reported the existence of 6,000 firms in Mexico that engage in “abusive subcontracting” involving 5 million workers.

“When the (Covid-19) pandemic began, we came to know of many workers who were being fired without any recognition of their rights,” AMLO told reporters Wednesday at the National Palace.

The government’s stated intention of eliminating outsourcing prompted a warning from Coparmex, Mexico’s most powerful business federation.

“Subcontracting is a modality of labor relation that should be preserved. Many companies carry out that activity legally. The president’s threat to promote an initiative to prohibit ‘outsourcing’ would imply the loss of millions of jobs,” Coparmex chief Gustavo de Hoyos said in a statement.

Pledging to take those concerns into account, AMLO said that he wants to enact regulations that unscrupulous operators “cannot circumvent again,” insisting that every person in formal employment should receive a “just salary” and be registered with the social security administration (IMSS).

Only 59 percent of Mexico’s roughly 20 million formal jobs are permanent positions, while the remainder are temporary, the president said, citing IMSS data.

Some firms, he said, make it a practice to lay off employees at the end of the year to avoid paying benefits and rehire the same people in January without any seniority.

Outsourcing became established in Mexico following the overhaul of labor law enacted in 2012 by rightist President Felipe Calderon.

“It was abused,” AMLO said Wednesday of the law. “They are the so-called structural reforms, which were not done thinking about the benefit of workers, not done thinking about the benefit of the people. They were done thinking about the benefit of one group, a minority.” EFE

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