Mexico to Seek Labor Rules for Gig Workers, Minister Says

Mexico is evaluating how to regulate worker conditions in the nation’s fast growing gig economy, which could involve legal changes, said Labor Minister Luisa Maria Alcalde.

The country is working with the Social Security Institute and Mexico City authorities on a plan to regulate digital platforms, Alcalde said in an interview Thursday. There’s no proposal yet, she said, but there should be a clearer plan in the coming months.

App contractors around the globe have pushed for an expansion of labor rights, leading the U.K. Supreme Court to rule that Uber Technologies Inc. drivers are workers who should get paid for wait time, and Spain’s Labor Ministry to pledge access to social security. Companies like Uber and DiDi Global Inc argue that the current arrangement gives drivers freedom to be their own bosses and put otherwise idle resources to use. 

“There are several ways” to go about it, Alcalde said. “We can set up a flexible mechanism with the Social Security Institute that wouldn’t necessarily require changing the law. But of course, modifying the law will be necessary to give clarity to those new activities.” 

Companies have been involved in some of the talks related to granting social security, she said. In the gig economy, drivers, messengers and food delivery people are deployed through smartphone apps created by technology companies, but the workers aren’t considered employees.

Outsourcing Ban

Last month, Uber and Lyft Inc. drivers in major U.S. cities staged a strike demanding better pay and the right to unionize, a sign of the intensifying fight by gig workers for more labor protections. 

In April, Mexico banned labor outsourcing as part of efforts to fight tax evasion. Some companies had used separate entities to employ their workers in order to avoid payroll taxes and social security dues. The new law is working, Alcalde said, and over 2.6 million employees have been recently absorbed by their main employers. 

There won’t be a new extension of the deadline companies had to end the outsourcing practice beyond the beginning of September, Alcalde said. 

Spare-Time Workers

As for the gig economy, the minister said the pandemic boosted demand for services such as package deliveries, making it a priority for the government to regulate the sector.

“We want to reach a balance,” Alcalde said. “We know many of these workers have other jobs and only drive an Uber in their spare time. And it’s different from outsourcing because they’re not recognized as employees at all.”

Mexico has looked to bring companies into compliance with a 2019 national labor law and worker rights provisions outlined in a revamped North American free trade agreement. This week, workers at the General Motors Co. truck plant in Silao, Guanajuato, voted to cancel their union contract. The vote emerged as an important test case for the trade deal, after reports of labor rights violations at the plant.

Under a new labor law, all collective contracts need to go through a vote to be ratified by workers within four years, Alcalde said. 

“The auto sector knows what happened at the GM plant is a red flag and they’ll take the necessary precautions so it doesn’t happen again,” Alcalde said.

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