VZCZCXRO1415
RR RUEHCD RUEHGD RUEHHM RUEHHO RUEHJO RUEHMC RUEHNG RUEHNL RUEHPOD
RUEHRD RUEHRS RUEHTM
DE RUEHME #6285/01 3621917
ZNR UUUUU ZZH
R 281917Z DEC 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 0026
RUEHC/DEPT OF LABOR WASHDC
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHXI/LABOR COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEAHLA/DEPT OF HOMELAND SECURITY
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RHMFIUU/CDR USSOUTHCOM MIAMI FL

UNCLAS SECTION 01 OF 04 MEXICO 006285 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILCSR, WHA/MEX, WHA/EPSC, EB/IDF/OMA, 
EB/ESC, USDOL FOR ILAB, DOE FOR INTERNATIONAL AFFAIRS, 
 
E.O. 12958: N/A 
TAGS: ELAB ECON ENRG EPET PGOV PINR MX
SUBJECT: PEMEX TECHNICAL STAFF OBJECTS TO INDIVIDUAL WORK 
CONTRACTS 
 
REF: MEXICO 3993 
 
¶1.  SUMMARY: This past July, Petroleos Mexicanos, Mexico,s 
national petroleum company (Pemex), and the Petroleum Workers 
Union (STPRM) announced an agreement on a new collective 
bargaining contract for 2007-2009 (REFTEL). One of the most 
significant elements of this contract was an agreement 
between the company and the union to grant Pemex greater 
latitude in making personnel decisions.  As a part of this 
newly granted leeway Pemex is requiring that some 32,000 
members of its technical staff sign Individual Employment 
Contracts.  According to Pemex these contracts will, for the 
first time ever, establish unambiguous work requirements for 
the company,s technical staff and clearly define the roles 
of the technical staff and their supervisors. PEMEX says the 
contracts are needed to help reduce the nearly USD 750 
million it pays out annually in labor dispute related law 
suits.  The president of a newly forming union representing 
the technical staff and separate from the STPRM, says the 
Individual Employment Contracts will allow the company to 
fire tenured workers, renege on previously agreed to wages 
and benefits, outsource a large number of what are now 
permanent positions and ultimately lead to the privatization 
of Pemex.  In examining the respective claims of Pemex and 
the technical staff it seems apparent that both sides have 
legitimate concerns.  What is not yet apparent is a genuine 
willingness on either side to find a way to reach a 
negotiated settlement of their differences.  END SUMMARY. 
 
 
NEW CONTRACT ALLOWS NEW RULES 
----------------------------- 
 
¶2.  In July 2007, Petroleos Mexicanos, Mexico,s national 
petroleum company (Pemex), and the Petroleum Workers Union 
(STPRM) announced an agreement on a new collective bargaining 
contract for 2007-2009.  At the time the contract was both 
condemned and hailed by many labor and petroleum industry 
observers.  The 2007-2009 Contract was condemned for the 
extremely generous wage and benefits package it granted the 
workers and their union and hailed because the company 
obtained significant new latitude in making personnel 
decisions.  For example one of the concessions grants the 
company considerable leeway in transferring employees.  As of 
July 2007, Pemex had some 16,000 workers who were only 
marginally employed that it wanted to transfer for business 
or production reasons.  This has now changed.  Previously 
these employees could not be obliged to transfer for any 
reason but they can now be compelled to go wherever the work 
is. 
 
¶3.  In a further exercise of its newly granted latitude on 
personnel matters Pemex management, has decided to institute 
Individual Employment Contracts (IEC) for the roughly 32,000 
members of its technical staff. According to an attorney for 
PEMEX, the IEC,s will, for the first time ever, establish 
specific job responsibilities and work requirements for the 
company,s technical staff; and clearly define the authority 
of and the relationships between members of the technical 
staff and their supervisors.  The Pemex lawyer also indicated 
that the company expects that the IECs will allow it to 
reduce the 8 billion Pesos (approximately USD 750 million) it 
pays out annually in law suits and legal fees arising from 
labor disputes. Beginning roughly in mid-2005, Pemex began to 
define its technical staff as &trusted employees8 which, in 
the company,s view, allows them to be characterized as 
management level employees.  Management level employees do 
not enjoy the same collective bargaining benefits and 
protections as working level staff. 
 
 
THE TECHNICAL STAFF SEES THINGS DIFFERENTLY 
------------------------------------------- 
 
¶4.  Although from Pemex,s perspective its reasons for 
implementing the use of IECs are straightforward and logical 
the members of the company,s technical staff see things 
differently.  According to Moises Flores Salmeron, President 
of the fledging National Union of Trusted Workers of the 
 
MEXICO 00006285  002 OF 004 
 
 
Petroleum Industry (UNTCIP), signing an Individual Employment 
Contracts would be tantamount to surrendering employee 
benefits and legally established labor rights.  Flores and 
the UNTCIP have denounced the IECs as a violation of worker 
rights. 
 
¶5.  One of the main issues for UNTCIP is its disagreement 
with Pemex,s unilateral decision to define &trusted8 
employees as being fully equivalent to management level 
staff.  Mexican labor law implicitly recognizes a class of 
workers who are neither labor nor management and who are 
often referred to as &trusted employees8.  Such persons are 
usually hired because they possess some type of technical 
skills and they are normally paid at a salary grade 
equivalent to a mid-level manager.  From a legal viewpoint a 
&trusted employee8 is not covered by collective bargaining 
agreements and as such an employee in this category would not 
be entitled to the same protections as a unionized worker.  A 
&trusted employee8 might or might be authorized to exercise 
the same level of authority as a manager. 
 
¶6.  In a meeting with Mission Mexico,s Labor Counselor, 
Flores and several UNTCIP members clarified that at present 
the UNTCIP was only a civil association and not yet a legally 
recognized union.   UNTCIP, they said, had applied for union 
status but federal labor authorities denied the application 
on a technicality because their use of the phrase &trusted 
employees8 did not meet the legally accepted definition. 
According to UNTCIP, in order to be considered &trusted 
employees8 as legally defined its member would have to meet 
four criteria; hold mid-level positions, function as 
supervisors, exercise inspection authority and be authorized 
to hire and fire.  UNTCIP members meet the first three 
criteria but they cannot hire or fire. 
 
¶7.  For the most part UNTCIP members are engineers, 
accountants, geologists, and other technical specialists with 
limited supervisory responsibilities.  The position of the 
UNTICP members is that since Pemex never granted them the 
full authority to make management level decisions (even if 
they do earn management level salaries) it cannot 
unilaterally now define them as management. They recognize 
that they are not legally part of the STPRM union but they 
contend that Mexico,s constitution, as codified in various 
articles of the country,s Federal Labor Law, grants them a 
certain floor level of benefits which all employers, Pemex 
included, are required to respect. 
 
 
NEITHER SIDE OPEN TO THE OTHER,S PERSPECTIVE 
-------------------------------------------- 
 
¶8.  In the disagreement between Pemex and UNTCIP over IECs 
neither side seems particularly open to the concerns of the 
other.  For its part Pemex is trying to resolve a situation 
that was years in the making.  At some point in its past 
Pemex began hiring skilled technicians on what was 
undoubtedly thought to be on an as needed basis and temporary 
basis.  Ultimately thousands were hired but without going 
through the process of documenting them technical permanent 
employees of the trouble and expense of formally terminating 
them.  For the most part these employees were treated as 
permanent unionized staff and routinely received all of the 
benefits extended to workers formally covered by collective 
bargaining agreements.  Over time these employees began to 
think of themselves as unionized workers and to insist on 
receiving equal status as that accorded to their union 
coworkers.  However, as these employees were not unionized 
and their employment status left intentionally vague, 
whenever a labor dispute or human resources related 
disagreement arose the only legal framework available for 
deciding these disagreements was Mexico,s Federal Labor Law. 
 
¶9.  Mexico,s Federal Labor Law significantly favors the 
employee over the employer.  This preference given to the 
employee is often unevenly applied in cases involving private 
sector employers.  However, in the case of the public sector, 
and Pemex is a government entity, the norm is for the courts 
to give not just preference but rather overwhelming 
preference to the employee and against the employer (i.e. the 
 
MEXICO 00006285  003 OF 004 
 
 
GOM).  This partiality in favor of the employee against Pemex 
has lead to cottage industry in legal suits against the 
national petroleum company.  According to an attorney for 
PEMEX,s as of September 31, 2007 there were 22,000 labor 
related legal suits pending against the company and 
approximately 30 legal firms whose sole business is dedicated 
to litigation against Pemex.  From the national oil 
company,s perspective, the IECs offer a way to resolve a 
long neglected personnel issue and bring to an end the 
endless labor suits against it. 
 
¶10.  Looking at the matter from UNTCIP,s perspective, IECs 
are an attempt by the company to impose upon them the legal 
framework needed to terminate their employment.  UNTCIP 
believes that the current system under which they are 
employed by Pemex can be modified to address the company,s 
without violating their legal rights.  If imposed as is the 
IEC,s, they say, will eliminate the current system for 
hiring &trusted employees8, prevent such employees from 
earning overtime, eliminate benefits routinely given to other 
(unionized) employees, do away with seniority currently help 
by &trusted employees8, convert permanent employees in 
contract employees hired on a annual basis, allow PEMEX to 
transfer employees at will, even against the wishes of the 
employee and will prevent &trusted employees8 from filing 
legal actions against Pemex in cases when the worker believes 
his/her employment has been terminated without cause. 
 
¶11.  In November the UNTCIP presented PEMEX with a petition 
signed by over 2,000 employees urging the company to 
discontinue its forced imposition of IECs.  To date there has 
been no public response to this petition.  UNTCIP is 
convinced that Pemex intends to impose IECs on them with or 
without their consent.  Once that happens the UNTCIP 
contends, IECs will be used to facilitate the outsourcing of 
job currently held by &trusted employees8 after that the 
company will have nothing to prevent it from opening the door 
to the privatization of Pemex.  Thus far there is little 
reliable information to support this contention and it may 
simply be a parroting of PRD (Mexico,s main opposition 
party) political slogans.  Nevertheless several UNTCIP 
members asserted this point to post,s Labor Counselor as if 
it were an inevitable fact.  UNTCIP is completely distrustful 
of Pemex,s intentions with regards to the IECs and seems 
unable to credit that the oil company might simply wish to 
address significant shortcoming in is personnel system and 
reduce the problems and expense generated annually by nearly 
endless litigation. 
 
COMMENT 
------- 
 
¶12.  The long running problems of PEMEX,s haphazard 
personnel system for &trusted employees8 clearly needed 
some sort of solution and the decision to address this 
dilemma with IECs was certainly one way to address the 
situation.  Undoubtedly the IECs will take care of the 
problem from the company,s perspective.  However, it seems 
that Pemex did not anticipate (and may not have cared) that 
the changes it believes make sense from the perspective of 
ease and efficiency might not be viewed that way by the 
employees being asked to sign the IECs.  Some advance 
consultation with the effected employees would have been 
useful.  On the other hand, the employees affiliated with 
UNTCIP are not being realistic in accusing Pemex of only 
wanting to get rid of them, cut back their benefits and then 
privatize the national oil company.  The irregular employment 
situation and the mounting legal costs arising from this long 
neglected personnel arrangement could not be allowed to 
continue indefinitely. At this point it is unlikely that the 
issue of IECs will have any immediate impact on Pemex,s 
operation but if the matter is not dealt with properly it 
could become another intractable labor issue on top of the 
many others the oil company already has. 
 
 
 
 
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http://www.state.sgov.gov/p/wha/mexicocity and the North American 
 
MEXICO 00006285  004 OF 004 
 
 
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