Mexico’s Calderon Calls Pena Nieto’s Bluff on Labor Legislation

Mexican President Felipe Calderon’s move to make Congress vote on an overhaul of the nation’s labor code is calling the bluff of president-elect Enrique Pena Nieto, who campaigned on a promise to pursue similar changes even after his party blocked prior proposals.

In his final state of the union address today, Calderon said he would push through legislation to make it easier to hire and fire people in a country where one in three workers is in the informal sector. The bill will be fast-tracked, giving the two chambers 30 days each to approve it prior to Pena Nieto’s inauguration on Dec. 1.

Calderon’s National Action Party has pushed for similar changes during his six-year term, only to be blocked by Pena Nieto’s Institutional Revolutionary Party, or PRI. Pena Nieto then made a labor overhaul one of the three economic pillars of his campaign, and Calderon’s move co-opts that agenda.

“The proposal will make it possible for millions of people who don’t have jobs to have access to work, particularly women and young people,” Calderon said. The bill will also increase transparency of unions and guarantee “a secret and direct vote” of its leaders, he said.

Calderon sent Congress his longer annual written message two days ago along with two pieces of legislation; the labor bill and a measure to increase local government transparency.

“This is a play by Calderon to say ‘we’ll approve it, but under my government,’” Jose Antonio Crespo, a political scientist at the Mexico City-based Center for Economic Research and Teaching, said by phone. “He’s robbing some of the credit. And if the PRI doesn’t want to approve it, it will be proof that they are just out to gain credit themselves.”

Labor Laws

Factions within the PRI have rejected opening labor unions to more transparency, making those clauses within the bill a hard sell for the party, which holds the most seats in Congress, Crespo said.

Pena Nieto’s press office didn’t have an immediate comment when contacted by phone today.

Mexican law makes it difficult for companies to fire workers and to hire them part-time or on a trial basis, which leads firms to delay hiring decisions.

The country’s electoral tribunal on Aug. 31 named Pena Nieto as president elect, rejecting a challenge by Andres Manuel Lopez Obrador of the Democratic Revolution Party, the runner-up in Mexico’s July 1 vote.

Economic Growth

Calderon has lobbied Congress to pass the labor changes, overhaul the tax system to increase government revenue and open the oil industry to more private investment, priorities shared by Pena Nieto. Mexico’s gross domestic product has expanded an average 1.9 percent a year under Calderon, about half the pace of Brazil, though Mexico’s growth rate has overtaken that of Latin America’s largest economy in the past two years.

“I know well that growth is still insufficient,” Calderon said in his speech today, “but that is clearly explained by the lack of reforms, which have been denied to the country either for ideological reasons or political calculations. I hope that the new Congress can overcome these differences and give Mexico the reforms that it urgently needs.”

To contact the reporters on this story: Eric Martin in Mexico City at emartin21@bloomberg.net; Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.

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