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FM AMEMBASSY MEXICO
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RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
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UNCLAS SECTION 01 OF 03 MEXICO 000354 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILCSR, WHA/MEX AND USDOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON PGOV PHUM PINR MX
SUBJECT:  MEXICAN GOVERNMENT PREPARES TO TAKE ON LABOR 
 
REFORM 
 
REF: (A) 07 MEXICO 6285 (B) 07 MEXICO 5963 
 
¶1.  SUMMARY: Since taking office in December 2006, the 
government of Mexican President Felipe Calderon has launched 
a number of reform initiatives aimed at making long range 
national improvements.  To date his administration has worked 
with the Congress to move forward in areas like fiscal, 
electoral and pension reform and it was widely expected that 
it would next take on the complex issue of energy reform. 
Energy reform however, is an extremely controversial topic in 
Mexico; one sure to generate considerable opposition from 
across the political spectrum.  Perhaps because of this the 
GOM recently decided to hold off on energy reform during the 
current legislative session and on February 1, it announced 
that labor reform would now be given a higher priority.  Any 
real reform of Mexico,s labor law would require a change in 
the country,s constitution.  Constitutional change in Mexico 
is much less complicated process than a similar legal 
modification would be in the US.  That said, most of 
Mexico,s organized labor unions and the political parties 
that support them are vehemently opposed to constitutional 
change in this area.  At present there is no publicly 
available information on the specific reforms the GOM intends 
to propose.  Speculation on possible proposals includes items 
like changing from a daily to an hourly minimum wage, legal 
changes to facilitate outsourcing, restrictions on collective 
bargaining contracts and the right to strike, and increased 
legal status for individual employment contracts.  The GOM is 
expected to present its reform proposals to Congress at the 
end of February. END SUMMARY. 
 
 
LABOR REFORM GETS HIGER PRIORITY 
-------------------------------- 
 
¶2.  From the very beginning of his administration in December 
2006 Mexican President Felipe Calderon has devoted 
considerable time and effort to carrying out much needed 
economic and political reforms.  Thus far the GOM under 
Calderon has worked with Mexico,s national legislature to 
promote change in areas like fiscal, civil service pension 
and electoral reforms.  One of the most talked about topics 
of needed reformed is in the area of Mexico,s energy sector 
and until very recently it was widely assumed that this 
important industry would be the next focus of the GOM,s 
attention.  However, for both historical reasons and Mexican 
perceptions of national sovereignty, energy is one of the 
more controversial items on the GOM,s reform agenda; one 
sure to generate opposition from across the political 
spectrum. Perhaps because of this the GOM decided to hold off 
on energy reform during the current legislative session and 
on February 1, it announced that labor reform would now be 
given a higher priority. 
 
¶3.  As late 2007 the topic of labor reform often became the 
subject of speculation with regard to when the GOM would take 
on this complicated issue.  More recently this speculation 
has grown as the GOM,s Secretary of Labor, Javier Lozano 
Alarcon, made an increasing number of public statements about 
the government,s intention to propose far reaching changes 
to Mexico,s labor laws.  One of the themes stressed by 
Secretary Lozano in his public statements was that any reform 
 
SIPDIS 
proposals would be developed in consultation with both 
organized labor and the private sector.  The ultimate goal of 
the GOM,s reform proposals, the Labor Secretary stated, 
would be to promote productivity and facilitate job creation. 
 Public statements by other senior Labor Secretariat (STPS) 
officials offered assurances to organized labor that the 
reforms the GOM ultimately proposed would not alter 
fundamental worker rights currently protected by the relevant 
articles of the constitution which serve as the basis for 
Mexico,s &Federal Labor Law.8 
 
 
LABOR RIGHTS IN THE MEXICAN CONSTITUTION 
---------------------------------------- 
 
¶4.  Mexico,s Federal Labor Laws are derived from the 
country,s constitution, specifically Article 123, which 
establishes a set of principals and rules applicable to all 
 
MEXICO 00000354  002 OF 003 
 
 
laws regulating labor relations.  Over time these rules have 
developed into an intricately detailed set of regulations 
primarily covering the obligations employers have towards 
employees.  Article 123 and the laws derived from it 
establish such basic protections as the rights to organize, 
bargain collectively and to strike. Federal Labor Law also 
covers such topics as union autonomy, mandatory profit 
sharing as well as compensation guidelines and the formation 
and regulation of unions and their activities. 
 
¶5.  Many of the rules and regulations contained in Mexican 
Federal Labor Law are extremely complex.  In the majority of 
instances the law tilts heavily toward workers and against 
employers.  These regulatory statutes are viewed by many in 
Mexico,s organized labor movement as if they all had the 
force of constitutional law.  Any meaningful change of these 
regulations would probably require some modification of the 
constitution.  Consequently, despite STPS assurances about 
not changing fundamental worker rights, it is difficult to 
envision a situation that would permit significant labor 
reform without in some way changing Article 123 of the 
Mexican constitution. 
 
 
GOM TRIAL BALLOONS ON LABOR REFORM 
---------------------------------- 
 
¶6.  The assurances given by the STPS with regard to 
protecting fundamental worker rights were recently 
re-affirmed by President Calderon himself in separate 
meetings with the leaders of two of the three largest 
national labor federations in Mexico.  Neither Calderon, nor 
anyone authorized to speak on behalf of his administration on 
labor related issues, have provided much detailed information 
on the proposed reform the GOM will ultimately present to 
congress.  A lack of specific detailed information 
notwithstanding, STPS officials have floated a number of 
trial balloons on possible labor reform proposals. 
 
¶7.  During some initial meetings with Mexican Federal 
Deputies (equivalent to US Congressmen), Secretary Lozano 
offered up for discussion the possibility of proposed 
legislation to both strengthen and promote the use of 
individual employment contracts.  Mexico,s national 
petroleum company, Pemex, has already began using individual 
employment contracts as a way to standardize employment rules 
for thousands of workers classified as technical staff and/or 
mid level management (Reftel A).  Lozano also raised the 
possibility of proposing legislation that would allow the 
authorities to withdraw legal recognition from any union that 
failed to update its membership list every six months.  The 
aim of this proposal would be to address a growing problem in 
which the threat of a strike is used, often by bogus unions, 
to extort money from businesses (Reftel B). 
 
¶8.  At approximately the same time Secretary Lozano 
discussing possible labor reform proposals with appropriate 
Federal Deputies, a senior STPS official used a forum 
organized by Mexico,s banking industry to float some 
additional trial balloons.  The official informed forum 
participants that the STPS was in the process of studying the 
viability of 196 different potential reform proposals.  Some 
of the possible proposals aired during the forum included 
such things as bringing some balance to the tilt that current 
Federal Labor Law has toward the worker and against the 
employer; particularly with regard to the extremely expensive 
procedures for firing unsatisfactory or unnecessary workers, 
facilitating the hiring of skilled foreign nationals 
(implement something similar to the H-1B Visa program used by 
US employers), and the establishment of national standards 
for sub-contracting and outsourcing work. 
 
 
ORGANIZED LABOR,S REACTION 
-------------------------- 
 
¶9.  The reaction of Mexico,s organized labor movement to the 
GOM,s reform trial balloons has ranged from a heavily 
condition expression of willing to work with the government 
on its proposal to outright rejection.  None of Mexico,s 
 
MEXICO 00000354  003 OF 003 
 
 
large national labor federations is prepared at this time to 
accept any significant modification of Article 123 of the 
constitution.  Most have stated that the only problem they 
see with Article 123 is that the laws and regulations derived 
from it are not fully enforced. 
 
¶10. At least two of the larger national federations, the 
Confederation of Mexican Workers (CTM) and the Confederation 
of Workers and Peasants (CROC), both of whom are officially 
linked to Mexico,s former ruling party, have indicated that 
they will reserve judgment on the GOM,s reform proposal 
until they have actually been presented in writing to the 
legislature.  A third large federation, the National Workers 
Union (UNT), which is un-officially linked to Mexico,s 
current main opposition party, has rejected the GOM,s 
possible proposals sight unseen. 
 
¶11.  To varying degrees, all of the major players within 
Mexico,s organized labor movement have reacted with 
skepticism to the currently available information on the 
GOM,s proposed labor reforms.  A widely quoted and highly 
respected lawyer and labor expert, Justiniani Alcalde, has 
described the proposed reforms as a method of &stacking the 
decks8 against Mexican workers.  According to Alcalde, the 
currently available information about the GOM,s proposed 
reforms, show that the government,s intent is to use 
outsourcing as a way of reducing the power of organized labor 
and to use individual employment contract as a way to 
undermine the effectiveness of collective bargaining. 
Alcalde also says that the reform proposals would nullify the 
current provisions of Federal Labor Law that require 
employers to implement profit sharing mechanisms and, most 
importantly, severely restrict the constitutionally protected 
right to organize and to strike. 
 
 
COMMENT 
------- 
 
¶12.  The majority of Mexico,s labor laws were written for a 
different time for use under very different conditions than 
those which prevail in today,s global economy.  As currently 
written the current laws are not up to the task of either 
helping Mexico become more competitive or of protecting basic 
worker rights.  This is not to say that the intent of 
Mexico,s labor laws is or should be to do one thing or the 
other but as things now stand these laws fail to accomplish 
either of these goals.  The Calderon administration is right 
to try and tackle the issue of labor reform but the task will 
not be easy.  Labor unions in Mexico genuinely believe that 
workers already suffer from having too few legal protections 
of their basic rights and they are unlikely to quietly accept 
what they perceive as a further diminution of those rights. 
 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
Partnership Blog at http://www.intelink.gov/communities/state/nap / 
GARZA