Supervision, control and sanction, the mechanism behind the progress of the outsourcing reform

One year after outsourcing reform, the balance is favorable, says Norma Gabriela López Castañeda, director of Incorporation and Collection of the Mexican Institute of Social Security (IMSS). More than 2.9 million people have been recognized by their real employers and there has been a salary increase of 27.5%, in general, and 29% for women. The combination of strong enforcement controls and economic sanctions worked, she reckons.

“We went from an average salary of 468 pesos to 597 pesos. It clearly had no negative impact” on the working market, he points out in an interview. Voices opposed to this modification assured that it would increase unemployment. “There was migration (towards real employers), higher wages, and job growth did not slow down. I think that gives a favorable balance.”

The new definition of outsourcing was approved in Congress in 2020. Said modification to seven laws, including the Federal Labor Law (LFT) and the Social Security Law (LSS), cannot be read outside of the great labor reform completed in 2019. Nor of the labor policy of the current administration, which includes legal modifications that seek to prevent abuses of workers and establishes a new model of justice.

The reform that fully entered into force on September 1, 2021 prohibits the subcontracting of personnel and only allows the outsourcing of services and specialized works that are not part of the corporate purpose or the main economic activity of the organizations.

Before the reform, almost 5 million people worked in a subcontracting scheme. The model was allowed in the LFT in 2012, but many companies abused it. Companies arose to supply personnel that, in fact, were cheap labor, without stable contracts, with which they never generated seniority, in many cases without registration with the IMSS, with low salaries and without all the legal benefits.

The effects of the new subcontracting

Norma Gabriela López makes two dimensions: from the universe of 5 million people subcontracted, not all worked in illegal schemes. For this reason, not all migrated to the payroll of the companies for which they actually worked, but only around 2.9 million people.

“We did not expect 100% to migrate, that amount is practically within the ranges we estimated.” The rest, more than 2 million peoplehe did not lose his job, he remained in the subcontracting model because that is included in the new rules, “perhaps their companies became specialized services or participated in the normal migration that can exist between companies or even in the entry and exit from the labor market.

More than a year later, “migration due to the implementation of the subcontracting reform It’s stabilized.” That amount is the number of people hired directly by your employer and those who will stay on the employer’s side. outsourcing.

38% of the migrated jobs came from the business services sector, 25% from commerce and 17% from transformation. “And whose is it left business services83% are located in the sectors of commerce, information, transport and communications”.

Another effect is that “7% of workers have ceased to be temporary and have become permanent.” Here the specialist in Tax Law wants to clarify another point: “I emphasize, it is not that being temporary is bad and being permanent is good. What is not correct is that we camouflage a permanent casual worker with the purpose of reducing their labor benefits.

in the epermanent jobs, the average contribution to the IMSS is nine months. In the case of temporary urban workers, the average is six months, and three months for temporary workers in the countryside. The more weeks they contribute, the more likely they are to get a pension in a few years and a better home loan, he explains.

“But if we see the benefit immediately, with a higher contribution base salary It implies that you can have access to a disability or job risk that is closer to your real salary.”

Padlocks and sanctions of the model

The prohibition of making transactions with the labor force was accompanied by one of the “compliance schemes stronger”. That’s perhaps why the number of people who had to move payrolls did, as the federal government anticipated, he says.

On the one hand, the Ministry of Labor and Social Welfare (STPS) supervises that organizations are listed in the Public Registry of Subcontracting Companies (Rep) and performs inspections.

“In the IMSS we ask for information on the contracts to verify that the workers of these companies were associated with that provision of services. Infonavit does the same and the Tax Administration Service (SAT) does the same, with a supervision mechanism, where if there is a breach, the sanction is not to allow the deduction of Income Tax (ISR)”.

In general, the control mechanism “generates disincentives to comply, because the sanctions are so strong that it would imply the non-accreditation of the expenses associated with their service.” But, in addition, the fines can go up to about 5 million pesos for providing services and not being in the Repse and up to nine years in prison for simulating specialized services.

“The three main fiscal authorities, which would be the Infonavitthe IMSS and the SAT we are linked We share information constantly, the law mandates it.” In addition, “at IMSS we have developed a system that allows workers to verify their contribution history in real time.” If you realize that this is not the case, “you can immediately tell us what is happening and we can help you restore the right.”

Lastly, “we have just released another mechanism where we allow the compliance opinion, through our mailbox, can be consulted by anyone”. In this way, the companies that are going to hire a specialized service company can be sure that it is fulfilling its employer obligations and will not cause a problem in the future.