MEXICO SOLIDARITY NETWORK - WEEKLY NEWS SUMMARY
MAY 22-31, 2001

World Bank Urges End To Collective Contracts, Labor Benefits in Mexiko

A new World Bank report on Mexico, entitled "An Integral Agenda of Development for the New Era," was formally presented in Mexico on May 21. The report includes specific recommendations on labor policy for the government of President Vicente Fox, most notably proposals for increasing the "flexibility" of Mexican labor.

Concretely, the report recommends that current regulations mandating severance pay, collective bargaining, exclusion contracts, obligatory benefits, restrictions on contracts for temporary employment and apprenticeships, antiquity-based promotion schemes, company-sponsored training programs, and company payments to social security and housing plans, should all be eliminated.

The report suggested that North American investors attracted to Mexico under NAFTA are put off by domestic labor regulations, and that without making salaries more flexible, reducing company obligations toward workers and essentially repealing the federal labor law, investors will continue to have doubts about Mexico's economic future, while the poor will continue to be "impeded" by pro-labor laws from "obtaining the greatest benefit from their human capital."

While the World Bank recommendations created a good deal of controversy in the press and among labor groups, they were solidly backed by the PAN party and the Fox administration.

President Fox said that all the suggestions and recommendations made by the World Bank "are very much in line with what we have contemplated," and that indeed they are essential for Mexico to "really enter into a process of sustainable development."

Managerial Coordinating Council (CCE) president Claudio X. González, however, took a different view. The leader of Mexico's most influential business organization affirmed that the World Bank recommendations went "over the top," and that business leaders in Mexico have no intention of eliminating elements such as severance pay, collective bargaining contracts, or payment of benefits to workers.

"We are in the process of modernizing our [labor] law," said González, "but some of these proposals of the World Bank are not made even to the most developed nations. Why are they then being recommended for the emerging countries?"

This report is a product of the Mexico Solidarity Network. Redistribution is authorized and encouraged provided that the source is cited.
Comments: msn@mexicosolidarity.org
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