Nearshore Americas

Union Fever is Striking Mexico, and Call Centers are Not Exempt

A new dawn is rising for unionization in Mexico, and the heat could make its way into call centers throughout the country.

Though far from the monster numbers boasted by other sectors in the Mexican economy, the contact center industry has grown big enough to attract the attention of local and foreign investors. Call centers employ around 700,000 people in Mexico (most of them students or young professionals), according to the Mexican Teleservices Institute (IMT). Consulting firm Frost & Sullivan expects the industry’s revenue to reach US$1.4 billion by 2025 in the country. (As often is the case, such figures include both ‘domestic’ Spanish language services, as well as exported services, mostly English under the Nearshore model.)

The picture is not entirely rosy, though. Call centers are perceived in Mexico as nests of precarious employment. Though a legitimate source of work for young people with little to no access to job opportunities in other fields, the industry is known for its low wages, short-term contracts and narrow margins for professional advancement.

Nobody knows this better than the call center workers themselves, and some of them are rising up. About 3,500 unionized employees of a Grupo Carso call center in the state of Tlaxcala went on strike last year, successfully bargaining for a more substantial wage raise and heftier benefits to be incorporated into their collective agreement.

Though not as present as in the manufacturing sector, union activity in call centers might start to heat up. Alejandro Martínez, a union leader affiliated with the Mexican Workers Confederation (one of the country’s biggest union federations) has commented on the rising interest for unionization among contact center workers. This is surprising, considering that young white-collar workers in Mexico have historically shown little interest for unions or outright disapproved of them.

“We visited a call center company some weeks ago. Out of almost 2,000 workers there, only 30 were not interested in unionizing,” Martinez told Mexican daily El Economista. About 85% of them were centennials, he added.

 

The US is Watching Closely

The United States-Mexico-Canada Agreement (USMCA) kicked workers’ rights in Mexico into a new gear. For call center workers, there’s no better time than now to unionize and put pressure on companies at the bargaining table.

The treaty compelled the government to overhaul its federal labor law and opened a new channel for workers who want to denounce a trampling of their labor rights. To enforce this part of the agreement, US authorities keep a watchful eye on actual compliance with the new guidelines.

Eusebio Hidalgo, associate and Executive Director at Ansley International Consulting

The agreement’s Rapid Response Labor Mechanism (a hotline of sorts for labor complaints that connects Mexican workers with US authorities) has already been activated twice against companies operating in the territory. Unions have begun to threaten its use as a way to pressure employers in the bargaining table and the US government remains watchful. Due to this, labor experts expect a more frequent breaking of the glass in the coming year.

“In the next months we will see a more frequent use of the RRLM, and it’ll come from everywhere: from independent unions in Mexico, from the US government and even from union federations that already hold collective agreements,” said Javier Ambriz, a labor attorney at the firm Vega, Guerrero & Asociados.

Ambriz doubts that the US government has a strong enough interest in defending workers’ rights in call centers. Even though it is implied that the industry is covered by the RRLM, he argues, it is not explicitly mentioned in the USMCA as a “priority sector”.

Other experts disagree. “Call centers are explicitly included [as a priority sector] in the US Congress Implementing Bill. Besides, the services industry is mentioned in chapters 31-A and 31-B of the USMCA. It might sound too broad, but that includes services such as BPOs and call centers,” said Eusebio Hidalgo, associate and Executive Director at Ansley International Consulting.

“Call centers, as strategic allies and business partners for companies within the priority sector, could certainly be an easy target for unionization”– Gabriel Ortiz-Aguilar

Gabriel Ortiz-Aguillar, labor expert at the law firm Baker & McKenzie, considers call centers to be particularly exposed to unionization due to the fact that many of them operate under the umbrella of other priority sectors explicitly listed in the USMCA, like automotive, aerospace, glass, steel, cosmetics and pharmaceuticals.

“Call centers, as strategic allies and business partners for companies within the priority sector, could certainly be an easy target for unionization. This will surely depend on the region of the country where the call center is located and the type of industry they particularly focus on, but given the broad range of sectors that the call centers usually work with, this should not come as a surprise”, he said.

A Ticking Time Bomb

Union activity is brewing up in Mexico. The new labor reform and the USMCA gave independent unions a shot at representation after decades of domination by “official unions” accused of maintaining protection contracts that screw over employees.

The reform mandates that all collective contracts in the country should be legitimized by May 1, 2023. By the government’s own estimates, less than 1% of the contracts had been voted on by early May of 2022. When time runs out, contracts that are not legitimized will be suspended, opening the door for any group who seeks to claim representation.

“Companies need to be much more intelligent with their offers at the bargaining table. And even more so now that there’s a real danger of workers going on strike” — David Puente

Though great news for workers, it could result in major headaches for corporations that are unaware. Raul Maillard, president of the Labor Commission at Canacintra (one of Mexico’s biggest industry groups), expects an “explosion” that threatens companies with poorly prepared legal teams.

Gabriel Ortiz-Aguilar, labor attorney and associate at Baker & McKenzie

“There’ll be a sort of union fever because of how protection contracts were maintained for so long. Now people will truly begin pushing for a more level field in their employment,” said David Puente, labor attorney at Basham, Ringe & Correa. “What changes is the dynamic. Companies need to be much more intelligent with their offers at the bargaining table. And even more so now that there’s a real danger of workers going on strike,” he added.

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These new labor dynamics might extend beyond Mexico, catching up with other US trade partners. In a document published by the Brookings Institution, Ambassador Katherine Tai -who leads the USTR- stated that “the Biden-Harris Administration is committed to using the USMCA as a model for how trade agreements can put workers and their interests first.”

Cesar Cantu

Cesar is the Managing Editor of Nearshore Americas. He's a journalist based in Mexico City, with experience covering foreign trade policy, agribusiness and the food industry in Mexico and Latin America.

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