The head of the Organization for Economic Co-operation and Development on Tuesday urged Mexico’s President-elect Enrique Pena Nieto to support a proposed labor reform put before Congress by outgoing President Felipe Calderon. According to Reuters, Calderon’s draft bill to soften antiquated labor regulations and make trade unions more transparent faces opposition from Pena Nieto’s centrist Institutional Revolutionary Party (PRI), which ruled Mexico continuously between 1929 and 2000.
The bill seeks to make the labor market more competitive, to make work contracts in Mexico more flexible, and to enshrine trial periods in law while forcing unions to disclose details of their assets and submit to external audits.
Labor reform was one of Pena Nieto’s pledges in the election campaign along with promises to open up state-owned oil giant Pemex to more foreign investment and widen the tax base to improve public finances. Pena Nieto takes office in December.
Mexico’s predicted growth is dependent on structural reforms of the new government. According to Nomura’s senior Latin America strategist Benito Berber, “It is very difficult to fire people in Mexico, so that makes it harder to hire people. Labor, fiscal and energy reform are all important. Energy is dominated by the state, but the new government has been very adamant about the private sector being involved in the energy sector. If that happens, that could boost total production in the Mexican economy.”