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(With thanks to our colleagues in Mexico for this alert.)

What’s changed?

On January 25, 2019, more than 45,000 employees from 45 different manufacturing sites in Matamoros, Tamaulipas initiated a strike, which was allegedly incited by an activist outside the region. Their demands were a 20% salary increase and a significant increase in annual bonus to MXN $32,251.40 (about USD $1,600) per employee.

In Matamoros, one union has negotiated 45 of the 101 collective bargaining agreements with companies in the maquiladora industry (13 of these 45 are within the automotive industry). Employees were entitled to an annual bonus amount that is equivalent to the annual minimum wage increase, multiplied by 365. In previous years the increase to the minimum wage and therefore to the bonus amount was not significant. However, in 2019, President Andrés Manuel López Obrador announced that minimum wage would increase from MXN $88.36 to MXN $176.72. Consequently, the new bonus then amounted to MXN $32,251.40 per employee. However, employers refused to pay this amount, asserting that the governmental resolution has been interpreted incorrectly and that there is a different interpretation of this resolution.

An activist from outside Matamoros then became the representative of the employees. She incited them to strike and advised that, in negotiations that will surely ensue, they should not agree to any amount that is lower than what the 20% increase entitles each employee, and that they should insist on the full MXN $32,251.40 annual bonus. She also disregarded the formal representation of the union. The activist organized the strike through several daily live broadcasts via Facebook.

All 45 companies took legal action, including filing motions to nullify the strike and/or challenge its legality, as well as motions on the ground of lack of jurisdiction. However, after three weeks of the strike, all 45 companies had to accede and meet the striking employees’ demands so that operations could be re-initiated. All in all, the disruptions cost the maquiladora industry in Matamoros very significant losses.

What it means for you?

The conflict in Matamoros is a clear reflection of the new union environment that employers across Mexico will face in the coming years. The increased involvement of international unions, activists and non-governmental organizations promoting freedom of association rights and better working conditions should also be expected.

It should be noted that companies are frequently not in full compliance with their collective bargaining agreements. Under other circumstances, the union contract they do have in place is not made available to employees. Nevertheless, companies in Mexico are usually aware of the concerns and needs of their employees. Under these circumstances, employees tend to be vocal about company practices that include, but are not limited, to poor management regarding salaries and payment structures, mistreatment and harassment, safety, and other issues unrelated to salary increases.

Actions to take

The Matamoros situation is a clear example of how union activity could change in Mexico. As such, it is time for companies to revisit their current union structures and anticipate potential collective conflicts. Employers in Mexico should undertake the following:

  • Implement policies and practices that promote positive employee/employer relations, such as social benefit programs, leadership programs, HR training, etc.
  • Analyze their relationships with unions.
  • Audit their compliance with existing employment and social security laws, including health and safety, internal work rules and anti-discrimination laws.
  • Review salaries and compensation packages vis-à-vis market trends.

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