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september 19, 2012 • 07:16 PM

Mexico's Pena Nieto optimistic on labor reform bill

Mexico's President-elect Enrique Pena Nieto attends a media conference after a business meeting at the FIESP (Sao Paulo Industry Federation) in Sao Paulo September 19, 2012.
Foto: Paulo Whitaker / Reuters In English
 

Mexico's incoming president Enrique Pena Nieto on Wednesday raised pressure on his Institutional Revolutionary Party (PRI) to back a labor reform proposed by the outgoing administration, saying he was optimistic Congress would pass it.

The draft bill put forward this month is viewed as a litmus test of cooperation between the centrist PRI and President Felipe Calderon's conservatives. The lower house of Congress has 11 more days to either approve or reject it.

The reform aims to soften Mexico's antiquated labor laws and force its trade unions to become more transparent, which has raised the hackles of the PRI's powerful union base.

However, Pena Nieto, who takes office on December 1, fell short of a majority in the new Congress and is likely to need support from Calderon's National Action Party (PAN) to pass his own economic reforms.

The labor reform is also a test of whether the PRI, which has sought to reinvent itself behind the youthful Pena Nieto, is prepared to break with the past by risking the wrath of unions.

Speaking at a news conference after a meeting with Brazilian business leaders in Sao Paulo, Pena Nieto talked up the bill's chances of success when he was asked about it.

"I am very optimistic. I think there's a great chance the debate on this plan will allow common ground and consensus to be found among different political forces," he said.

"I support it and hope all political forces work towards constructing rather than obstructing."

The bill aims, among other things, to make public the accounts of trade unions, which have long been viewed as corrupt and prone to self-enrichment.

PRI union leaders in Congress have already said the bill contains elements they cannot accept. But reformers within the PRI, which became a byword for corruption during the seven decades it ruled Mexico between 1929 and 2000, say failure to pass a bill would send a message that the party has not changed, and complicate working with Calderon's PAN.

If the lower house passes the labor bill, which Calderon is trying to fast-track through Congress, the Senate will have a month to make its own decision on it.

CONSENSUS

Business leaders say an overhaul of Mexico's labor regulations is needed to make Latin America's second biggest economy more competitive, and Pena Nieto himself made labor reform one of his priorities in the election campaign.

In addition, Pena Nieto has said Mexico must widen the tax base to improve government revenues, as well as open up state-owned oil giant Pemex to more private investment - steps he is likely to need support from the PAN to achieve.

Pena Nieto will have to steer a difficult course between pro-business reformers and left-leaning elements in his party to enact the reforms, aimed at boosting economic growth.

Officials close to Pena Nieto say Calderon's proposal offers him a chance to wring concessions from traditionalists within the PRI, which is anxious to present a united front upon its return to the presidency after 12 years on the sidelines.

Mindful that he cannot go too far, Pena Nieto conceded the need to find common ground with unions in crafting labor reform, and PRI officials say the proposal is likely to be watered down.

"We need to build a consensus," said Pena Nieto, who is visiting Latin America this week. "We can't turn our back on the sectors that could be more affected by a labor reform."

Passing a labor reform bill would show Mexicans and the rest of the world his country is determined to overcome old political feuds and make the economy more competitive, he added.

(Editing by Dave Graham and Christopher Wilson)

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