Introduction to the Salary Transparency Reform in Mexico
In an effort to eradicate the gender wage gap, Mexican senators Geovanna Bañuelos de la Torre (PT), Martha Lucía Micher Camarena (Morena), and Luis Donaldo Colosio Riojas (MC) are championing a reform to the Federal Labor Law (LFT). This proposed change aims to require employers and recruiters to disclose salary ranges in job postings, ensuring equitable pay and eliminating discrimination.
Three Key Points of the Salary Transparency Reform
1. New Obligation for Employers:
The reform seeks to amend Article 83 of the LFT, introducing a new obligation for recruiters and employers. This modification mandates that they clearly state the salary range offered in every job posting, which must be disseminated through any available medium, internal or external.
Moreover, the reform proposes that salary ranges be expressed clearly and obligatorily from the beginning of the recruitment process until contract formalization. This move aims to reduce salary secrecy and, consequently, the gender wage gap or other forms of discrimination.
2. Prohibition on Inquiring About Salary History:
Although the reform does not explicitly prohibit recruiters from asking candidates about their previous salaries in the LFT, it references the EU Directive (EU) 2023/970 on remuneration transparency as inspiration. The proposal limits inquiries about candidates’ past salaries to prevent discrimination, particularly against women who often face a disadvantage when negotiating their salaries and tend to receive lower offers than men.
3. Reduction of the Gender Wage Gap:
This is the central objective of the LFT reform proposal. The persistent gender wage gap in Mexico, with a 15% disparity between men’s and women’s earnings according to the Instituto Mexicano para la Competitividad (IMCO), is influenced by the lack of salary transparency. By publishing salary ranges, workers—especially women—can identify potential wage discrimination and exercise their rights. Employers can also eliminate unconscious biases.
Context and Impact
Salary secrecy is a common practice in Mexico, hindering the identification of wage gaps. Paola Vázquez, coordinator of Sociedad at IMCO, explained to El Economista that this lack of transparency prevents workers from knowing if there are disparities in their compensation compared to their peers. By adopting salary ranges, employees can better understand their income relative to colleagues’ earnings.
Key Questions and Answers
- What is the proposed reform about? The reform aims to amend the Federal Labor Law (LFT) by mandating employers and recruiters to disclose salary ranges in job postings, ensuring equitable pay and eliminating discrimination.
- Why is salary transparency important? Salary transparency helps combat wage discrimination, fosters gender equality, improves fair salary negotiations, reduces labor exploitation, and attracts talent.
- How will the reform address the gender wage gap? By making salary ranges public, workers can identify potential discrimination and exercise their rights. Employers can also eliminate unconscious biases, contributing to reducing the gender wage gap.
