VZCZCXRO1946
PP RUEHCD RUEHGD RUEHHM RUEHHO RUEHJO RUEHMC RUEHNG RUEHNL RUEHRD
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DE RUEHME #6314/01 3111325
ZNR UUUUU ZZH
P 071325Z NOV 06
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 4078
RUEATRS/DEPT OF TREASURY WASHDC
RUEHC/DEPT OF LABOR WASHDC
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHXI/LABOR COLLECTIVE

UNCLAS SECTION 01 OF 02 MEXICO 006314 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILSCR, WHA/MEX AND PPC, USDOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON PGOV PINR MX
SUBJECT: BONUS, BONUS, EVERYONE GETS A BONUS 
 
 
¶1.  Summary: Recently, a joint statement by the head of 
Mexico,s federal civil service union (FSTSE) and a senior 
GOM Treasury Secretariat official announced that all federal 
employees would receive an end of term bonus.  The union 
leader described the bonus as an established employee benefit 
traditionally paid to civil servants in recognition of 
faithful service by an outgoing presidential administration. 
The exact cost to the federal government of this bonus is 
unclear since different sources cite varying figures for the 
exact number of federal employees. One estimate calculated 
the cost of this bonus as roughly 4 billion pesos (USD 367 
million).  Once it became clear that federal employees would 
receive an end of term bonus Mexico City,s municipal 
employees petitioned for a bonus as well and hinted at a 
strike if their request was denied.  In order to avoid a 
strike during the December 1 change of administrations, 
federal authorities agreed to cover the cost of a bonus for 
Mexico City,s municipal workers.  This bonus will be paid 
near the end of November and is over and above the Christmas 
bonus (&aguinaldo8) of 45 days of salary that nearly all 
Mexican workers, both public and private, are legally 
entitled to.  The combination of these two payments will make 
the end of 2006 a very expensive time for Mexico,s federal 
government.   End Summary. 
 
-------------------------- 
Bonus Officially Announced 
-------------------------- 
 
¶2.  It has long been common practice in Mexico for outgoing 
presidential administrations to pay all federal employees an 
end of term bonus.  With the end of the Fox government fast 
approaching (the next administration takes office December 1) 
there was considerable media speculation as to whether the 
bonus established by the former ruling party would be 
continued.  That speculation ended on October 26, when Joel 
Ayala Almeida, the head of Mexico,s federal employees, 
union, FSTSE (Federation of Unions of State Workers), and 
Guillermo Bernal, a senior GOM Treasury official publicly 
signed an agreement announcing the payment of the bonus. The 
signing took place in the offices of the GOM,s Treasury 
Secretariat. 
 
SIPDIS 
 
¶3.  The agreement between the GOM and the FSTSE committed the 
outgoing Fox administration to pay the equivalent of some USD 
250.00 to all federal employees.  The FSTSE leader Joel Ayala 
described the bonus as a well-established employee benefit 
traditionally paid to civil servants in recognition of 
faithful service by an outgoing presidential administration. 
Speaking for the Secretariat, Guillermo Bernal, the Director 
of the Treasury,s Budget Policies and Control Unit, said the 
bonus was an &economic stimulus8 consistent with the 
federal government,s labor policies.  The Treasury 
Secretariat expects to pay the bonus sometime around November 
 
SIPDIS 
¶22. 
 
------------------------------- 
How Much Is This Going to Cost? 
------------------------------- 
 
¶4.  The total cost to the GOM of this end of term bonus is 
difficult to determine because of several complicating 
factors.  One of the main factors complicating the 
calculation of the bonus, total cost is the fact that there 
are no consistent figures on the total number of federal 
employees.  The figure most commonly cited in the media for 
the total number of federal workers is 1.6 million employees. 
 Were each of these employees to receive a bonus equivalent 
to USD 250.00 the cost to the GOM would be around 400 million 
dollars.  FSTSE claims that there are really are 1.6 million 
federal employees but there is no hard evidence to support 
this claim. 
 
 
¶5.  Another complicating factor was a request by the 115,000 
municipal employees of Mexico City,s government that they 
also be paid an end of term bonus.  According to a senior 
staffer in the Mexican senate, the municipal workers hinted 
at a massive strike during the December 1 inauguration of 
Mexico,s new president if their request was denied.  In 
response to this request the City government immediately 
stated that its budget could not cover cost of the bonus. 
Moreover, the Mexico City government pointed out that there 
was no legal basis for the municipal employees, request 
since the end of term bonus is a benefit paid by the GOM to 
&federal8 employees.  That said, the Mexico City government 
quickly added that it had no objection to the federal 
government paying some type of bonus to the municipal workers. 
 
MEXICO 00006314  002 OF 002 
 
 
 
¶6.  This statement of no objection by the Mexico City 
government was taken up by the head of FSTSE as an invitation 
to petition the Treasury Secretariat on the municipal 
workers, behalf even though they are not federal employees 
and despite the fact that they have their own separate union. 
 Ultimately, FSTSE leader Joel Ayala (and apparently the 
threat of a strike) prevailed on the GOM and the Treasury 
agreed to cover the cost of the bonus for the municipal 
worker.  Thus, at the cost of paying a bonus to an additional 
115,000 employees the cost of the end of term benefit went up 
another 28.75 million USD.  One reason the GOM quickly agreed 
to pay a bonus to federal employees was, according to the 
senate staffer, because it had already budgeted and obligated 
roughly seventy-five percent of the cost of paying the end of 
term benefit to federal employees.  Consequently, adding a 
bonus for another 115,000 employees was not that much of a 
stretch. 
 
 
 
--------------------------- 
And Then There is Christmas 
--------------------------- 
 
¶7.  In his remarks at the signing of the agreement between 
the GOM and FSTSE, Guillermo Bernal, the Treasury Secretariat 
representative took pains to point out that the end of term 
bonus was independent of whatever other benefit employees 
were entitled to.  Thus, the GOM essentially affirmed that 
the bonus was over and above the Christmas &aguinaldo8. The 
aguinaldo is a payment of 45 days of salary all Mexican 
workers, both public and private, are legally entitled to. 
The cost of this benefit to the GOM cannot be as easily 
estimated as the end of service bonus since the payment the 
employees receive will be determined by their actually salary 
and not by a fixed amount per employee. 
 
On the bright side, from a budget perspective, the aguinaldo 
is an annual benefit that governments (and businesses) have 
to plan for so the cost of this payment should already be 
budgeted for.  Also, since the aguinaldo is something all 
employers are legally required to pay the GOM will not be 
expect to provide this benefit to anyone other that federal 
employees. 
 
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Comment 
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Between the end of service bonus in November and the 
&aguinaldo8 the GOM will pay federal employees in December, 
the end of 2006 could be an expensive time for the Mexican 
government.  Added to all this is the extra money the GOM 
agreed to pay to Mexico City,s municipal employees (in order 
to avoid even the possibility of a strike during inauguration 
of the new administration).  The estimated 28.75 million USD 
that this bonus will cost will certainly not bust Mexico,s 
budget but it was also an expense that was not planned for. 
 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
GARZA