Mexican draft labor bill weakened by congressional body

MEXICO CITY Tue Sep 25, 2012 6:00pm EDT

MEXICO CITY (Reuters) - A Mexican congressional working group has gutted a planned reform of several measures intended to make trade unions more transparent before a vote on the bill later this week.

Put forward by outgoing President Felipe Calderon at the start of the month, the draft labor law aims to make it easier for companies to hire and fire employees and combat abuses by the country's trade unions.

Viewed as a litmus test of cooperation between Calderon's conservatives and the centrist Institutional Revolutionary Party (PRI) of incoming president Enrique Pena Nieto, the bill must be voted on by the lower house of Congress this month.

No major labor reform has passed Congress for four decades to the frustration of business leaders in Latin America's second biggest economy, who say the rules must be updated to allow Mexican companies to compete.

Calderon's original proposal had sought to impose external audits on the unions, force them to divulge details of their balance sheets to members, and give workers a legal right to seek suspension of the fees they must pay to unions.

The revised bill, seen by Reuters, replaces these terms with a general pledge to impose "rules on accountability" that will "consider" the right of workers to receive information on how funds are spent and procedures to resolve disputes.

The changes did not stop hundreds of people from protesting against the bill outside Congress on Tuesday.

The PRI insisted it had the country's interests at heart.

"The PRI is only protecting workers' rights," said Manlio Fabio Beltrones, head of the PRI bloc in the lower house. "I am convinced that combining respect for rights with labor flexibility and modernization is what this country needs."

The new document, which could still be revised again, also strips out a clause that insisted the election of union leadership would have to be free, direct and secret.

It retains measures from Calderon's bill that will make work contracts more flexible, such as by providing for trial periods for new employees. And it stipulates that productivity, not seniority, should take precedence when new jobs are awarded.

The measures also seek to streamline the settlement of labor lawsuits which can be costly and time consuming.

The changes to Calderon's original bill reflect the PRI's desire to defend the power of unions, which have been a keystone of support for the party that long dominated Mexico.

However, critics say too many unions are corrupt, squander funds and must be opened up to greater scrutiny.

Lawmakers from the PRI and Calderon's National Action Party (PAN) have said a labor bill is likely to be approved. If it passes the lower house, which could come as soon as Thursday, it must still go through the Senate.

The PRI ruled Mexico for 71 consecutive years between 1929 and 2000 before its defeat by the PAN under Vicente Fox, Calderon's predecessor as president. (Additional reporting by Dave Graham, editing by Philip Barbara and Christopher Wilson)