For many years, Mexico has been questioned at international levels for the practice of recognizing inactive unions (“protective” unions) and executing collective bargaining agreements (CBAs or “drawer contracts”) with them as a breach to the principle of freedom of association and the right to organize as set out in ILO Conventions 87 and 98.
During the last period of President Obama’s administration, negotiations to form the Trans Pacific Partnership (“TPP”) started. Mexico had great interest in becoming part of the TPP, and chapter 19 established the adoption of labor rights in the laws of the signatory countries. This was the main motive to amend the Mexican Constitution and substitute the Conciliation and Arbitration Boards by Labor Courts, depending on the Federal and Local Judicial Branches.
Due to the constitutional amendment, the right to strike, to demand the execution of a CBA, is now conditioned to the demonstration of the actual representation by the trade union of workers involved, thus avoiding extortion calls to strike; also, the amendment provides for the creation of a decentralized public organization with management autonomy to be responsible for a conciliatory process previous to any litigation, as well as for the trade unions’ certification and the registration of CBAs. Also, bills to amend the Federal Labor Law have been submitted to the Congress by Mexico’s President, to guarantee the freedom of association and the right to collective bargaining free from employers’ interference, with the purpose of eliminating the practice of “protection CBAs” or “drawer contracts”, executed without the workers’ knowledge and consent.
On July 17, 2017, the U.S. Government officially published and served the Canadian and Mexican Governments with a document entitled “Summary of Objectives for NAFTA Renegotiation” which introduces a substantial chapter on labor rights. This new labor chapter of NAFTA addresses the same concerns as the Trans Pacific Partnership (“TPP”): freedom of association, right to collective bargaining, minimum wages, fair and transparent labor justice.
Companies doing business in Mexico must be prepared for a significant change in the labor paradigms and practices currently in place, and assume a more proactive stance towards their workers and Unions, to be able to manage a smooth and controlled transition to a system of independent and fair collective negotiations. Failing to anticipate these new circumstances might entail conflicts, resulting in economic loss and undesirable labor outcomes.