Many Mexican businesses have been forced to cut salaries, amid a prohibition imposed by the government on the subcontracting of labour.

As a result, thousands of workers in Mexico have had a cut in their monthly wages since May this year, as their employers struggled to comply with the country’s new regulations over labour outsourcing. Mexico prohibited subcontracting labour to third parties, such as staffing agencies, in a historical reform passed by Congress in April this year.

Nearshore Americas reports that more than 2.5 million outsourced workers were hired directly by their bosses in the initial three-month transition period, according to data released by the country’s Institute of Social Security (IMSS).

Of those workers, 77 per cent saw a slight increase in their salary, with the remaining having a reduction in pay.

Non-compliance with prohibition

However, as many as 50,000 businesses were yet to comply with the law as of August 20, despite the fact that September 1 is the deadline to do so. Nearshore Americas further cites local media reports that most of these subcontracted workers are serving in sectors such as construction, transportation and trade.

Some officials at the IMSS have warned employers that they would be investigated, citing that some employers are deliberately avoiding providing employees with all the benefits they are entitled to.

One reason why Mexican businesses have avoided hiring employees directly is that, under the country’s labour law, they should share their profits with their employees.

As such, analysts believe that at least 10 per cent of workers, who are currently subcontracted could ultimately lose their jobs.