Monday, June 27, 2005

Social security conflict update

Last week (or maybe the week before), I met with a SNTSS (social security) union leader who mentioned he had just come back from Switzerland, where they had filed a complaint against the Mexican government in their on-going dispute over a August 2004 reform law to their pensions. The story has just been covered by the Mexican media, so I feel it is safe to comment. For an academic discussion of the context of the conflict, I have just finished a paper that is under review for publication.

Essentially, in the October 2003 labor contract negotiations, unionized IMSS workers failed to approve a reform to their pension scheme. (Many IMSS workers retire earning more than 100% of their last salary at only 55 years old.) In response, the administration of IMSS (with the support of employers organizations and corporatist or official unions) sought a reform law that had three effects:

1. Any new hires have to be approved by the tri-partite governing board of the IMSS.
2. Any new IMSS workers would be covered by the pension scheme of all private sector workers, not that of the current labor contract.
3. Contributions of workers covered by IMSS cannot be used to fund benefits for IMSS workers.

In response, the IMSS union filed a court case claiming that their pensions were a matter for their labor contract not law. The case has been passed around the courts, but soon it is expected that the courts will rule against the union. This will potentially open the way for similiar legislation to reduce by law the benefits negotiated in labor contracts by other powerful national industry unions, like Pemex, Luz y Fuerza del Centro, and the CFE.

Given the likelihood that the domestic courts will rule against the union, the union filed a complaint against the government with the OIT. In particular, the complaint points to the failure of the IMSS administration to replace retired and other workers who have left the IMSS since 2004. The IMSS administration has frozen hiring until the court case is resolved because they do not want to hire new workers under the old labor contract with high retirement benefits. The union is protesting this policy.

All of this conflict is likely to become more severe as the union and IMSS begin to renegotiate the labor contract again this fall.

posted by Michelle @ 12:09 PM,

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