Background on the Proposed Reform
As Mexico prepares to discuss a labor reform proposing a reduction in the standard workweek from 48 to 40 hours, starting June 19, several business organizations have voiced their concerns. The proposed change aims to improve work-life balance but has raised alarms about potential negative impacts on productivity and increased costs for companies, especially micro and small enterprises.
Key Concerns from Business Organizations
The Confederation of National Chambers of Commerce, Services and Tourism (Concanaco-Servytur) conducted a survey revealing that 67% of its members oppose the workweek reduction, and 71.4% anticipate higher expenses.
The Center for Economic Studies of the Private Sector (CEESP), part of the Coordinating Council of the Private Enterprise Association (CCE), warned about immediate economic risks. Micro, small, and medium-sized enterprises (MiPyMEs), which constitute 96% of the national productive fabric, could face up to a 36% increase in labor costs if they opt for overtime pay or a 22% rise if hiring new employees.
The National Auto Parts Industry (INA) expressed its willingness to contribute realistic proposals for balancing economic development, productivity, and labor well-being. However, the organization highlighted multiple and complex challenges in economic, cultural, legal, and operational aspects that need to be addressed.
Challenges for the Auto Parts Industry
The auto parts industry, a primary supplier of vehicle components to the United States, has warned that many Mexican companies still lack optimized processes and technologies to boost productivity per worked hour. This makes it difficult to maintain efficiency while reducing working hours without losing productivity.
Industries with high turnover and a shortage of skilled labor will face additional difficulties in adjusting work schedules or maintaining service or production levels with fewer hours per worker.
“This could lead to pressure for wage increases or improved labor conditions, thereby raising costs and management complexity,” stated the INA.
Call for Support During Transition
Although the federal government has proposed transition periods for labor modifications, the Mexican industrial sector, led by the Confederation of Mexican Business Chambers (Concamin), has emphasized the need for support and incentives. The transition requires investments in digital tools, automation, and training, but access to these resources remains unequal, particularly for micro and traditional sectors.
Octavio de la Torre, president of Concanaco Servytur, reported that 67.2% of 1,200 nationwide respondents opposed the workweek reduction, while only 13.1% agreed and 19.7% expressed uncertainty.
“The sector is concerned about the impact on operations, costs, and employment. We continue advocating for dialogue to build viable solutions for all sectors,” de la Torre commented before the June 19 start of labor reform discussion forums.
Coparmex has cautioned that without addressing structural issues like informality, the reduction could result in fewer formal jobs and business closures, particularly affecting vulnerable sectors.
Key Questions and Answers
- What is the proposed labor reform? The Mexican government plans to reduce the standard workweek from 48 to 40 hours to improve work-life balance.
- Who opposes the proposed reform? Many business organizations, including Concanaco-Servytur and CEESP, have expressed concerns about the potential negative impacts on productivity and increased costs.
- What challenges do industries face in implementing the reduction? Industries like auto parts lack optimized processes and technologies to maintain productivity per hour worked, making it difficult to compensate for reduced working hours.
- What support do businesses need during the transition? Businesses require investments in digital tools, automation, and training to successfully implement the labor reform. However, access to these resources remains unequal, particularly for micro and traditional sectors.
- What are the potential consequences if the reform is not addressed properly? Without addressing structural issues like informality, the labor reform could lead to fewer formal jobs and business closures, especially in vulnerable sectors.
