Outsourcing violates labor rights

An investigation carried out by the Tax Administration Service (SAT) revealed that companies evade on average between MXN $6,000 and MXN $8,198 for every worker annually

Outsourcing violates labor rights
Outsourcing is allowed in Mexico, nevertheless, it is mainly used ton evade taxes - Photo: File Photo/EL UNIVERSAL
English 16/04/2019 09:21 Mexico City Editorial Actualizada 09:27
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Last week, outsourcing sparked polemic in the lower chamber, during the discussion of the labor reform. A group of lawmakers demands its banning in Mexico but in the end, this system was maintained without any changes. One of the critiques against this scheme is that it allows tax evasion.

Today, EL UNIVERSAL analyzes the issue: over 6,000 companies in the country use outsourcing to evade MXN $21,000 million in taxes.

An investigation carried out by the Tax Administration Service (SAT) revealed that companies evade, on average, between MXN $6,000 and MXN $8,198 for every worker annually.

But outsourcing is legal: it was introduced in the 2012 reform to the Federal Labor Law but its use turned into abuse and many companies evaded tax contributions and payments to their employees. Productivity and earnings increased at the expense of workers and public finances.

The labor reform approved by the Senate contains regulations that represent progress for trade unions, such as the free and secret vote to appoint its leaders or the way in which the unions use the resources but other regulations were left out, including the analysis of outsourcing.

Since the 2008 economic crisis, the growing precarity of jobs in Mexico has been a phenomenon that has affected millions of Mexicans. Outsourcing has also been a key factor.

Outsourcing doesn't have to represent the origin of a scheme to violate the workers' rights. For a large number of companies, it is useful to outsource work in some areas. What is required is that the Labor Ministry, Finance Ministry, and the Mexican Social Security Institute (IMSS) supervise and implement strict controls.

The “aggressive outsourcing” model revealed in the SAT investigation is a crime; those who implement outsourcing in order to avoid paying taxes and save money when hiring workers, which affects public finances and work benefits, do so with no consequences. This situation needs to change urgently.


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