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USMCA’s Third Labor Case Closed with Unprecedented Contract by Independent Mexican Union

A Panasonic facility in Reysona, Mexico recently reached a deal with its newly-elected union with a 9.5% salary increase and reinstatement of wrongfully terminated workers. The union, backed by Susana Prieto and representing multiple facilities in Mexico’s northern border, has demonstrated its ability to successfully lead a collective negotiation with a global employer, leverage support from the USMCA and international unions and organizations, and most importantly, the ability to call for a strike. Global employers in Mexico, especially those along the Northern border, should be aware of the new developments.  

Background:  

Last September, workers in the facility voted to terminate a pre-existing contract with a CTM-affiliated union. However, the company signed a new collective bargaining agreement with another CTM-affiliated union without a proper voting process in March. In April, the independent union SNITIS filed a petition to represent the employees and subsequently won the election. Meanwhile, SNITIS also filed a complaint under the USMCA for the illegitimate contract. In May, U.S. DOL and USTR asked Mexico to review the case and had suspended all unliquidated entries of goods from the facility through Rapid Response Labor Mechanism under the USMCA.  

Historic CBA: 

Mexico accepted the request and has been working with the two parties on a contract. An agreement was reached earlier this month including: 

  • 9.5% salary increase, higher than the inflation rate and the 8.5% deal negotiated in May between a global automaker and its independent union, however, it is lower than the 40% increase initially proposed by the union 

  • Payment of a one-time bonus  

  • Reimburse the illegally deducted union dues to the previous union  

  • Establish a Truth and Justice Commission to help ensure workers’ collective and individual rights 

  • Reinstate workers who were dismissed due to their union activities on July 1 

Notably, the union called for a strike prior to reaching the agreement. Even though it was eventually canceled, it reflected the union’s strong influence on the workers.  

Role of labor attachés:    

Employers should also pay attention to the role of labor attachés in this case. They were posted by U.S. DOL to monitor implementation of the USMCA labor obligations and support bilateral cooperation on labor and employment matters. In this case, labor attachés have “visited Reynosa to interview stakeholders, conduct worker testimony, and further the department’s ability to collect case evidence crucial to the successful resolution.” according to DOL’s new statement. It’s not clear how much power this position has, but undoubtedly, they will play an increasingly important role in the future.   

Outlook: The key for any new independent union is to see if they can gain trust from workers through grassroots campaigning. SNITIS has shown the workers their ability to negotiate better wages and benefits. We are likely to see it continue to leverage the USMCA and international unions, expand its influence in the region, and try to organize more companies.  

Published on: July 20, 2022

Authors: Wenchao Dong

Topics: Latin America

Wenchao Dong

Director, Global Affairs, HR Policy Association

Detailed Bio

Contact Wenchao Dong LinkedIn

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