Reform in Mexico: Labour pains

The Economist, 11/30/2012

WALK into a restaurant in Mexico mid-morning and you will find a surplus of idle waiters. Return at lunchtime and you will find the same number of staff rushed off their feet. Like many Mexican businesses, restaurants are alternately over- and understaffed because the ancient labour laws restrict part-time work.

The labour code was last overhauled in 1970, and it shows. Mexico is the only country in Latin America where it is legal to sack a woman for being pregnant. Probationary periods are not recognised. The rigid rules are intended to protect workers. But they are so cumbersome that many smaller businesses ignore them, leaving workers with no rights at all. Mexico has one of the largest informal economies in Latin America. The World Bank reckons that less than 30% of workers pay into a pension (one indicator of formal employment), compared with nearly 60% in Brazil and Chile.

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