How outsourcing jobs have made an impact on formal employment in Mexico

Though outsourcing is regulated by Mexico's Federal Labor Law, there are still many legal loopholes
How outsourcing jobs have made an impact on formal employment in Mexico
Outsourcing represents an efficient administration tool that facilitates the delegation of tasks through the use of specialized companies - Photo: Vivek Prakash/REUTERS
05/10/2018
18:58
Rubén Migueles
Mexico City
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Out of all 20 million workers subscribed to Mexico’s Social Security Institute who are formally employed, 16 million (80%) are registered with a boss different from the one they actually work for, according to Héctor Márquez Pitol, director of commercial development and institutional relationships at the Manpower Group, a company that specializes in human resources.

The directive added that said people are working both under outsourcing and insourcing work schemes, meaning that they are registered under companies that have different names than the ones they work for, mostly companies dedicated to staff recruitment.

Outsourcing represents an efficient administration tool that facilitates the delegation of tasks through the use of specialized companies. Said tasks range from maintenance to more complex processes such as accounting and recruitment of staff. This gives organizations more space and time to conduct more specific activities and processes.

Outsourcing has been regulated by Mexico’s Federal Labor Law for almost six years; however, experts agree that there is more to be done regarding the prevention of bad practices and tax evasion so that it may truly contribute to the country’s job formalization. Currently, only 57% of the occupied population (30.4 million workers) are formally employed.

Márquez Pitol stated that organizations currently affiliated to the Mexican Association of Human Capital Enterprises (AMECH) have discussed the need to propel a reform initiative for article 15-C of Mexico’s legislation, aiming to avoid the abuse of outsourcing in the job market.
 

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30 million people working informally, INEGI reports

During the first trimester of 2018, informal employment registered an increase of 1.2% compared to the previous year
30 million people working informally, INEGI reports30 million people working informally, INEGI reports

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