It would seem to be a reality that has no place in a country with a tradition of union protection; nevertheless, there are collective bargaining agreements (CCTs) in Mexico that have grown exorbitantly and that today affect the viability of the companies or organizations that allowed them for one reason or another.
The rate of unionization in the country shows several important characteristics. On the one hand, and according to the Inegi [National Institute of Statistics and Geography], only 12.82% of workers are affiliated to a union and, therefore, the control of these organizations is truly low in the labor arena.
The foregoing is added to the low rate of success of union organizations with workers. According with data from the Federal Center for Conciliation and Labor Registration (CFCRL) as of May 30, 2024, only 12% of the requests for certificates of representativeness translated into CCTs.
In face of this difficulty and considering that this process entails a significant investment by unions in promotion campaigns and other mechanisms for convincing workers, these organizations have opted for seeking their growth through motions for union certification and disputes over existing collective bargaining agreements.
In this environment we have the emergence, as strange elements, of CCTs with benefits that far exceed the market, and which today receive a greater pressure by the increase to the minimum wage which is already starting to have an impact on wage scales, which is then multiplied by the impact that the base salary has on the benefits established in collective bargaining agreements. These collective bargaining agreements usually include unproductive clauses that have become fixed and onerous costs, accompanied by an impact on labor liabilities that can easily end up bankrupting the companies that have to pay them.
“Where, then, do we find balance? Unions often push for increases that end up affecting the workers themselves due to the breakdown of the balance of costs, leading to the loss of the sources of employment and the closing of companies.”
Faced with this reality, companies have the challenge of seeking their sustainability and there are few juridical mechanisms that support them and, therefore, the only possible solutions depend on negotiations with unions, hoping for the support of the authorities in this effort.
Prevention, key in the new labor scenario
In this context, the best strategy for the rest of the companies that are starting to live a labor reality that is different due to the changes brought by the reform, is prevention. There are several lessons that we can capitalize on along this line:
1. Unions go as far as companies allow them to
Every personal or labor relationship runs the risk of losing its balance when one of the parties wants to take advantage of the other one; the one under pressure is the one that decides whether it gives in or resists. These pressures normally come from the day to day relationship, where we give up ground through decisions that will have a significant consequence in the long run.
Likewise, when companies put pressure on working conditions and neglect workers or their middle management, they open the door for unions to gain spaces that are not necessarily the most appropriate ones.
2. The pressure of a strike cannot force you into a scenario of no return
The sole idea of having a work stoppage on a business sets off alarm bells and we end up giving in to many of the demands. Conflict, however, can be a necessary mechanism that puts limits to this situation; if it is handled well, it can even represent a solution for reorganizing the labor relationship.
3. It is better to focus increases on salary
With the increase to the minimum wage that is expected in the new six-year period, the impact of increasing CCTs in their entirety will place significant pressure on labor costs.
Therefore, an effective strategy will consist on seeking the stabilization of benefits and allocating the resources on the workers’ base salary. This will be beneficial both for companies and for their employees. For the former because it curbs liabilities and for the latter because it generates greater liquidity to face costs and inflation of the country.
4. Not including new benefits
Negotiation tables occasionally develop creative strategies, seeking solutions to the expectations generated by unions. In this endeavor we saw, for example, how bonuses that sought to compensate losses due to PTU [Employee Participation in Company Profits] appeared, and they ended up becoming a fixed part of the workers’ income. This has been a common practice in the automotive sector, significantly increasing the cost of its contracts.
5. Seeking viability through productivity
The pressure of negotiation often causes that, in order to avoid the outbreak of a strike, we focus on increasing the base salary, but we must recall that companies’ growth is not guaranteed; therefore, seeking alternatives for increases to be associated with business performance is key for sustainability and, at the same time, this generates great consciousness among workers.
Educating workers will always be a positive practice for companies. Today, more than ever, we must be transparent and clear when we speak, so that all parties of the negotiation are aware of the scenario in which they move. Unions should not seek to “shatter” companies and companies must not seek savings in the revision budgets, as this only generates distrust and, in the long run, a price is paid one way or the other.
Today, CCT revisions require better planning, with a carefully reviewed cost architecture in order to take all impacts into consideration and a clear long term vision; in this sense, the recommendation is to plan for the next three years, as a minimum, and understand how to move resources to guarantee a better management of the business and the people within that framework.
