The Day at a Glance | April 14 2021

The Top

*Chamber of Deputies in Mexico approve outsourcing labor law reform; it will be turned over to the Senate.

*European Commission will place 150 million euros in debt every year until 2026 in order to finance the region`s recovery fund.

*If the accumulated savings among households during the pandemic is allocated to spending, the economy could grow 0.5% more in 2022: OFCE.

Economic environment

The Chamber of Deputies approved an outsourcing labor law reform yesterday, which modifies 7 laws. After two years of discussing the bill, the Lower Chamber approved the reform by majority (348-77) and will now be turned over to the Senate. The reform proposes changing labor, fiscal and social security laws. The initiative contains guidelines regarding timelines and processes for the regularization of workers and a limit on utility payments (90 days), according to negotiations with the private sector. The reform establishes that private companies and the government could only outsource workers for their services that don`t form part of the dominant economic activity ore social purpose; employment agencies would not be patrons of workers that they place in companies and the outsourcing companies would be liable in case the hiring company doesn’t comply with its patronal duties; the outsourcing companies would have to register and form part of a roll in the Secretariat of Labor and Social Prevision; outsourcing could only be carried out through the Secretariat`s permission; and periodic reports must be filled out regarding the employee`s situation. Lastly, the reform considers that the use of simulated outsourcing schemes would be considered tax evasion. The bill seeks to revert changes in the flexibility of outsourcing of workers that started being implemented in 2012, in efforts to protect labor laws and avoid tax evasion. Oppositionists fear a rise in company costs and less incentives to create jobs.