Fernando Cuadros: “Outsourced workers earn less than those of the main”

A few days ago, the Ministry of Labor and Employment Promotion (MTPE) made official the modifications to the regulations of the outsourcing law. For the former Vice Minister of Employment Fernando Cuadros, it is a good step, since this modality has been used fraudulently by companies.

How do you consider the changes to the regulations of the outsourcing law?

They are making this precision for two reasons: on the one hand, a continuous inappropriate use by some companies of this figure of labor outsourcing and, on the other, a current weakness in labor inspection, which prevents a good inspection of the good use of this modality. There are two problems that are sought to be solved via this precision in the regulation.

But is it on the right line?

It could be a temporary solution, but the optimal thing would be to seek to prepare a bill in the medium term that is presented to Congress where all these changes are included in a new labor outsourcing law, and more demanding requirements are set at the level of the law itself to avoid this fraudulent use of labor outsourcing.

The business associations point out that there would be an impact on employment. Do you share that position?

They are jobs that are there because they are necessary, I don’t think they will be lost. What is going to happen is that instead of being hired by third parties, they will have to be hired by the main company, as the Ministry of Labor standard says. As long as they are necessary and permanent activities, I don’t think jobs will be lost, because the outsourcing law itself says that workers from third-party companies who are prominent in the main one must have access to the same employment benefits. There should not be a difference that makes it difficult for companies to assume this contract.

Is there wage inequality with outsourcing?

Third-party company workers earn less on average than the main company. What happens there is that workers from a third company are hired to perform similar or equal tasks to those carried out by the workers of the main company, but the one from the third company ends up earning less than the one from the main company despite do the same. If the worker was part of the main company and does the same or similar work as his peer, he will receive the same remuneration level.

Did companies save costs through outsourcing?

Yes, this situation could occur in some cases, which is a way to reduce labor costs itself. Outsourcing in itself is not bad, because it can help make smaller companies productive, but the problem occurs when it is used inappropriately or becomes a mechanism that is used to reduce labor costs, restrict rights such as unionization, collective bargaining and the possibility for workers to improve their remuneration. It could even be the case that these third-party companies are registered as micro or small companies and, therefore, pay less labor rights to their workers. ❖