Breakdown: Atento Probed by US & Mexico Over Union Busting Claims

Atento’s Mexican subsidiary is being probed by both labor and trade authorities in Mexico and the US over allegations of union busting. 

If the accusations hold water, Atento could find itself in a unique and unflattering position as the first BPO provider to be sanctioned under the labor dispute resolution mechanism launched with the US-Mexico-Canada Trade Agreement (USMCA).

What happened?: On December 18, 2023, Mexico’s main union for telecom workers –known as STRM– issued a formal complaint under the USMCA Rapid Response Mechanism (RRM), alleging that management at one of Atento’s delivery centers in the state of Hidalgo denied workers the right to choose which union would represent them as a collective. The facility provides service to banking giant BBVA.

• The United States Trade Representative (USTR) announced on January 19, 2024, that it had found “sufficient, credible evidence” of labor rights violations at Atento’s facilities. The agency made the allegations known in a press release, formally asking Mexico’s Labor Ministry to initiate a probe of its own.

• “The U.S. government’s investigation revealed egregious employer conduct at the Hidalgo facility. This conduct constituted retaliation against workers for their union activities and interference with union organizing,” stated Deputy Undersecretary for International Affairs Thea Lee in the press release. “We look forward to working closely with the Government of Mexico to find solutions to these issues in this strategic sector.”

• Atento had “no further comment” about the USTR’s announcement, a company spokesperson told NSAM.

.@USDOL and the @USTradeRep today requested the government of Mexico conduct a review at Atento call centers in Pachuca de Soto, Hidalgo, after finding evidence that workers’ freedom of association rights have been denied at the facility. https://t.co/2UVfwi87jX #USMCA

— @USDOL's Bureau of International Labor Affairs (@ILAB_DOL) January 19, 2024

What’s next?: Mexican authorities have 10 days to determine if they will agree with the USTR’s request for an investigation. If they do, they’ll have 45 days to conduct a review and determine if the allegations are true. 

What could happen?: Sanctions could be imposed on Atento if the allegations are proven true. 

• RRM-related sanctions include: suspension of preferential tariffs; sanctions imposed on a specific product or service; and blocking the company from exporting its products/services.

• Assuming sanctions are imposed, the whole process, from Mexico’s probe to the determination of proper sanctions, could take around 148 days.

There’s the possibility for an agreement between Atento and US authorities. This has happened with other RRM complaints. 

For your consideration: RRM-related sanctions are facility-specific. An Atento spokesperson assured that the Pachuca site (staffed with around 1,000 agents) does not provide service to customers in US soil.

Background: Mexico underwent a major overhaul to its labor laws and policy, pushed and enforced in great part by the USMCA, which came into force in mid-2020.

• The trade agreement gave Mexican workers involved in “export intensive” industries an avenue to take their labor complaints to a transnational stage, where other forces can exert pressure on Mexican authorities and companies operating in its territory.

• The complaint against Atento marks the 19th time the RRM has been invoked under the USMCA. 

• Most RRM complaints have involved the manufacturing sector. Atento’s is the first for the telecommunications sector, which includes call centers.

A history lesson: For decades, Mexican unionism was defined by what’s known as “protection agreements”; collective bargaining agreements designed to protect the interests of corporate management, union leaders and, in some cases, politicians directly or indirectly connected to business or union leadership.

• Part of Mexico’s labor overhaul included a legitimation of all collective agreements. Workers voted to decide whether they would keep the agreements in place or negotiate new ones, either under the same union, a different one or none at all.

Flashback: In December of 2022, workers from Atento’s call centers in Hidalgo claimed that management had harassed and unjustly fired a group of workers following the ratification process of a collective bargaining agreement.

• According to the workers, the company retaliated after they refused to ratify a protection agreement from a specific union, barring them for forming a union of their own.

• A contract legitimation process took place in the Pachuca site on December, 2023. Mexico’s labor authorities have yet to determine the results of that process. Consequently, workers at the site have no official representation at the moment.

Zoom out:  As reported here before, transnational union activity has been heating up in the Americas. In Mexico, communication with unions outside of the territory is usually limited to the manufacturing sector. Nonetheless, conversations seem to be happening in the communications sector too.

• The Communications Workers of America (CWA) applauded the USTR’s call for a probe.

• UNI Global Union, an international trade union federation, has worked with Mexico telecom unions before. Last year, the organization signed a major deal with Teleperformance which is now active in Colombia, Jamaica and El Salvador.

NSAM’s Take: Despite its name, the rapid response mechanism usually takes a while to reach a resolution. Atento’s case could be resolved by the first or second quarter of this year, depending on if it is determined that sanctions are called for.

A faster option for the company would be to reach an agreement with US authorities and the complaining workers. Such was the path followed by automotive parts company Tridonex, which made its dispute last about a month. 

It will certainly be painful for Atento if sanctions are imposed on its Pachuca facility, but we doubt it will be a major hit for company operations in Mexico. Atento has at least 15 delivery centers in the country.

Nonetheless, Atento will have to deal with the reputational hit of being accused in such a visible stage. The company rarely sees any coverage in mainstream news. In Mexico, given how much weight is given to the USCMA and the recent history of RRM activations, most major outlets in the country dedicated at least a couple paragraphs to the USTR’s announcement. 

The potential PR firestorm could add to Atento’s financial headaches, which we’ve covered here. The company has a lot on its plate already renegotiating its debt and attempting to convince investors that the ship isn’t sinking. 

Gartner predicted that, in 2024, companies will feel the need for labor diplomats with “employee conflict resolution” skills due to a global increase in labor strikes and disputes. If anything else, such a sour experience could push Atento’s leadership to be more vigilant of how labor rights are managed in its Mexican facilities. The company is already a signatory of the UN’s Global Pact, which includes a labor chapter. 

The USTR’s actions point to a potential increase in scrutiny by government authorities, unions and other parties interested in labor rights within the BPO industry. The US’ Labor Department is already gunning for a controversial company in the sector. The USTR has the authority and power to push that agenda cross-border.