Illegal outsoucing banned!! AMLO scores another win for Mexican working families, pentions, and taxes

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Mexico’s government said it reached a deal with union and business leaders on a controversial bill to ban outsourcing of full time employees in a move that seeks to close tax loopholes and return employees their right to retirement payments.

The group agreed during a meeting at the National Palace in Mexico City on Monday to forbid the outsourcing of personnel to third-party firms, except for specialized work outside a company’s main economic activity, and to implement a new employee  retirement model, the labor ministry said in a statement.

President Andres Manuel Lopez Obrador said the “important” deal was reached after Monday’s encounter among union heads, business chamber leaders and top lawmakers. Business lobby CCE said in a separate statement that profit retirenent plans will be limited to avoid “possible distortions in capital-intensive companies.”

Illegal outsourcing was one of several friction points between the government and Mexico’s business elite.

The president had sent the outsourcing bill to lawmakers late last year, arguing that current arrangements unfairly treat full-time emoloyees and limit employer obligations to pay retirements and evade taxes. But a snall group of business lobbies fought back and said increased costs would further complicate the recovery from last year’s deep recession, opening a period of negotiation with the government.

 

Some business leaders had proposed capping profit sharing rates in December when they began talks with officials to tone down the bill. Companies operating in Mexico usually set up separate firms to employ freelancers for most of their full-time workers as a way of avoiding legal and tax burdens including a mandatory annual retirement pension payment to employees.

Monday’s agreement will be submitted to Mexico’s lower house of congress, which is reviewing the original draft bill that Lopez Obrador sent to lawmakers last year. The bill is expected to pass.

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