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RR RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHMT RUEHNG RUEHNL
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DE RUEHME #0780/01 0761824
ZNR UUUUU ZZH
R 171824Z MAR 09
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 5650
RUEHC/DEPT OF LABOR WASHINGTON DC
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMFISS/CDR USSOUTHCOM MIAMI FL

UNCLAS SECTION 01 OF 03 MEXICO 000780 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILSCR, WHA/MEX, USDOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON PGOV SOCI PINR MX
SUBJECT: GOM MAKES PUBLIC ITS PROPOSAL FOR LABOR LAW REFORM 
 
¶1. SUMMARY: On February 9, the GOM finally made public its 
long awaited proposal for reforming Mexico's Federal Labor 
Law (FLL). In addition to presenting the proposal to the 
Mexican Congress the GOM,s Secretary of Labor also placed it 
on his ministry,s website thereby making it available to any 
and all interested parties.  Mexico,s FLL is based on 
Article 123 of the country,s constitution and a large number 
of the GOM,s proposed changes would significantly modify 
what many labor unions and activists consider to be bedrock 
constitutional guarantees of worker rights.  The proposed 
reform is a sweeping initiative in that it touches on such 
topics as how wages are calculated (daily vs. hourly), 
authorizes part-time and temporary employment (practices that 
at present are technically illegal), re-defining union 
autonomy with respect to internal affairs and modifying the 
right to strike.  The GOM's Labor Secretary believes the 
reform could be enacted by the end of April and the proposal 
clearly has the support of Mexico's ruling PAN political 
party and that of the country's business community.  However, 
it has been sharply criticized by organized labor and leading 
figures in Mexico's two main opposition political parties. 
The GOM's labor law reform proposal is unlikely to be enacted 
by the Congress without the support of at least one of 
Mexico's main opposition parties.  END SUMMARY 
 
GOM PROPOSES LABOR LAW REFORM 
¶2. On February 9, the GOM's Secretary of Labor, Javier Lozano 
Alarcon, presented to the Mexican Congress the Calderon 
administration,s long awaited proposal for reforming the 
country's Federal Labor Law (FLL).  The proposal was also 
placed on the Labor Secretariat,s (STPS) website thereby 
making it freely available to any and all interested parties. 
 The GOM's proposal to reform Mexico's FLL is a sweeping 
initiative that touches on numerous controversial labor 
issues, some of which have resisted significant legislative 
change for decades.  In discussing the proposal Lozano stated 
that the GOM,s intent was to formalize in law the use of 
free, direct and secret ballot elections in cases where more 
than one union was competing to become the workers' legal 
representative.  Lozano also highlighted such things as the 
elimination of "exclusion clauses" which have been used to 
compel an employer to fire a worker by expelling that 
individual from a union, incorporating the concepts of 
productivity and competitiveness into the FLL and a variety 
of steps to add greater flexibility to labor/management 
relations.  The difficulty of implementing this type of 
change notwithstanding, Labor Secretary Lozano expressed 
confidence that the reform proposal could be enacted into law 
by the end of April. 
¶3. Not surprisingly initial reactions to the proposal from 
labor activists who commented publically on the initiative 
focused on its more controversial elements.  One of these was 
the proposal,s intent to mandate the publication of 
collective bargaining contracts. Some considered this to be a 
retreat from a constitutional guarantee of union autonomy and 
control over its internal affairs.  Other sensitive elements 
included such things as instituting a change from a daily to 
an hourly wage, authorizing temporary employment (a practice 
that at present is technically illegal), instituting a 
modification to the right to strike and setting a six month 
limit on the amount of wages a worker is eligible for in a 
dispute with an employer. 
 
CONTEXT AND BACKGROUND OF MEXICAN FEDERAL LABOR LAW 
¶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 
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 right to organize, 
bargain collectively and to strike. The FLL also covers such 
topics as union autonomy, mandatory profit sharing, 
compensation guidelines and the formation and regulation of 
unions and their activities.  Any meaningful change to the 
FLL would require amending Article 123.  The last meaningful 
change to Article 123 occurred in the 1970s and even that 
revision was largely dictated by ideas adopted in the 1930s 
by the more progressive elements of the then ruling, 
Institutional Revolutionary Party (PRI). 
¶5.  Discussions in Mexico over the country's FLL usually are 
between supporters of labor and union on one side and 
supporters of management and the private sector on the other. 
 
MEXICO 00000780  002 OF 003 
 
 
 When pressed, both sides will grudgingly admit that Article 
123 was very much designed for a different time and very 
different social and economic circumstances.  Consequently, 
when discussing the matter calmly, both the proponents of 
labor and of management often acknowledge that Mexico's labor 
laws are in serious need of reform.  However, their 
definitions of what form that reform should take are vastly 
different. 
¶6.  For the proponents of the business sector, reform means 
greater labor &flexibility8 with that term being defined as 
the ability to fire workers more cheaply and easily. 
Mexico,s private sector has a point when it says that under 
current FLL it is difficult and expensive to fire workers. 
The historical reason for this is that since Mexico does not 
have unemployment insurance the FLL mandates a complicated 
and expensive severance package when an employee is fired 
known as "liquidation."  Employers are often reluctant to 
hire new workers during good economic times because the FLL 
makes it very difficult to fire them if conditions change. 
Moreover, many of the FLL,s regulations tilt heavily toward 
workers and against employers.  Labor activists often 
complain, correctly, that the FLL is not routinely enforced. 
 Nevertheless, the FLL is Mexican law and the private sector 
must deal with it. 
 
ORGANIZED LABOR REACTS 
¶7.  Many labor unionists firmly believe that Article 123 
forms the bedrock upon which all constitutional guarantees of 
worker rights are based and they are strenuously opposed to 
amending it.  Mexico,s organized labor movement is a complex 
grouping of competing organizations which run the gamut from 
very good to very bad and frequently disagree with each 
other. Nevertheless, they were fairly consistent in 
describing the proposed reform as a total surrender to the 
interests of management over those of the workers.  Many were 
particularly upset that the proposed reform does nothing to 
address the problem of &protection unions.8 Protection 
unions are labor organizations that exist only on paper and 
enter into collective bargaining agreements without the 
knowledge or consent of the workers they purport to 
represent. In such cases the workers have no opportunity to 
vote either on what union will represent them or on the 
contract that determines their working conditions. 
¶8.  Some of the points most strenuously objected to include 
one that would limit the amount of loss wages an employee 
could recover in a dispute with an employer.  Such cases 
often take years to resolve.  Under the proposed reforms, no 
matter how long a case takes to resolve, if the worker wins 
he would only be entitled to a maximum of six months back 
wages. Another point that labor unions object to is the 
reform proposal,s move to change how salaries are 
calculated.  At present salaries in Mexico are calculated in 
terms of a daily minimum wage.  The GOM,s reform proposes to 
have wages calculated on an hourly basis.  Many labor unions 
oppose this believing it would undercut the 8-hour work day 
and the calculation of paid benefits. 
¶9.  A particularly controversial element contained in the 
proposal is a change that would modify the right to strike. 
Article 123 guarantees that right but in order to exercise it 
the FLL establishes several administrative prerequisites, the 
two most important being: (1) that only officially registered 
unions can call for a strike and (2) before a strike can be 
considered legal a union must receive prior approval of a 
strike notice from the appropriate labor authorities.  The 
reform being proposed by GOM would require unions to provide 
the name of every dissatisfied worker before a strike could 
be approved. Labor activists claim that providing individual 
names in this fashion would subject workers to harassment and 
retaliation. 
¶10.  Regardless of where an organization may be on that gamut 
of good or bad nearly all voiced concern about the proposed 
reform elements dealing with union autonomy.  Labor leaders 
consider this constitutionally protected autonomy to be the 
basis for independent unions.  The majority of Mexican labor 
experts and a good portion of its political class strongly 
support union autonomy as one of the bedrock principles 
underpinning the growth of a more democratic Mexico.  Union 
autonomy is viewed as one of the ways the broader human 
rights of freedom of speech and association are guaranteed. 
¶11.  In theory, union autonomy prevents government attempts 
to take over an organization intended to promote the economic 
well being of average Mexicans and using it for political 
gain.  In practice, union autonomy in Mexico seldom appears 
to be about protecting human rights.  More than anything 
 
MEXICO 00000780  003 OF 003 
 
 
else, &union autonomy8 has come to symbolize one of the 
things that most clearly demonstrate the need for urgent 
labor reform; specifically union leaders who are accountable 
to no one.  As noted above the laws derived from Article 123 
provide a great deal of detail regarding the obligations of 
employers toward workers but it is all but silent with 
respect to obligations unions have toward their members.  The 
FLL does not obligate unions to divulge any information 
whatsoever about their internal administration. 
Consequently, labor leaders closely guard such information 
claiming that the details of internal union administration 
are freely available to their organizations, membership 
since they are the only ones who really need to know.  In 
reality, since the current FLL does not require labor leaders 
to release information about the internal workings of their 
unions, most of them do not do so. 
 
COMMENT 
¶12.  Although both sides of Mexico,s labor/management divide 
agree that the country is badly in need of labor reform, the 
two groups do not really agree on much else.  Many of the 
GOM,s reform proposals, available on the STPS website, are 
logical and a case could be made that the majority (although 
certainly not all) are beneficial.  However, the proposals 
would definitely require Mexico,s organized labor movement 
to operate very differently than it does now and there is 
little in the GOM,s initiative that the unions could point 
to as an example of what they are getting in exchange.  The 
GOM,s reform proposal has the support of the business 
community and the country's ruling PAN political party. 
However, the PAN by itself does not have the votes in 
congress to enact this reform into law and it is unlikely to 
pass, especially by April, as suggested by Labor Secretary 
Lozano, without the support of at least one of Mexico,s two 
main opposition political parties.  The GOM,s best hope for 
getting the votes it needs in congress is to make some sort 
of deal with the PRI but that may be difficult.  Keenly 
focused on the upcoming mid-term elections scheduled for 
July, the PRI,s national party leader has already gone on 
record as saying the party will not support any reform 
legislation that is not first negotiated with Mexico,s 
organized labor movement.  Some members of the PAN have 
privately questioned the political wisdom of proposing labor 
reform viewed as potentially harmful to labor unions and 
workers in the midst of a recession and in the run-up to 
elections.  Depending on how negotiations over this proposal 
are conducted, the only way such a bill could pass in 
Congress would be if its more substantive, controversial 
elements were significantly watered-down. 
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http://www.state.sgov.gov/p/wha/mexicocity and the North American 
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