Compensation Around the World: Mexico
With Jaime Morfin Stoopen, Warren Heaps, and Justin Hampton
In our continuing series about Compensation around the world, Warren and I connect with Jaime Morfin Stoopen to discuss how compensation in Mexico is unique.
The accompanying presentation can be downloaded by clicking the link at the bottom of this page.
Jaime Morfin Stoopen:
Okay, let’s jump into the issue. Okay. What I’m going to talk about in the session, is basically three major components. We’re going to review quickly the regional labor markets in the country, with a high focus on really looking at how the different regions can be understood. That’s one way to see it, and also to understand the different levels of income within this particular region.
Jaime Morfin Stoopen:
The other element that was very important to consider when you start talking about compensation strategy in Mexico is gender inequality, which is present. We understand in the [inaudible 00:00:47] in this country because of the culture and where we come from, it is very important to consider.
Jaime Morfin Stoopen:
The three elements is how compensation and public agenda match. As a country, of course, the models of compensation and income for families is very much into the public agenda in the country. We’ll talk about further later on. Okay.
Jaime Morfin Stoopen:
Let’s jump into the first section. This is a map of, I probably heard about this, HID human development index developed by the United Nations, and it’s a great way to see how the diversity of the countries are [inaudible 00:01:38] in terms of not only income but also other elements as considered also part of human development as education and health.
Jaime Morfin Stoopen:
So as you can see it very clearly, Mexico, we can see it in the middle of the different ranges with this light green that it shows. So with this perspective, we can see in a greater detail really where in terms of development, human development in this country. Why I’m talking about this specifically? I believe the international media, there’s a general misconception of where the Mexican economy really is. It is common to see, for example, supporting world economy, which it is, the first U.S. trade partner and a pushing member with G20. That’s an international organization, I’m sure you know, comprises the 20 largest economies of the world. So having this particular focus on human development, I think things might change a little bit.
Jaime Morfin Stoopen:
[inaudible 00:02:50] requested to me to give you an idea, true idea, of where compensation it is in the country. So that’s one of the reasons, which I’m taking this basic information. Now this is a way to see in Mexico, a [inaudible 00:03:06] picture, big picture. I’m going to take you through a closer look.
Jaime Morfin Stoopen:
Let’s zoom into this information. This is a map to show you how the regional diversity in the country exists, how different regions of the country are within the same borders, but at the same time, with a hugely, completely different levels of development. This is a definition of poverty, and it’s marked in different colors, of course, taken from the Mexican census. The better you go into the colors, the less developed that region is.
Jaime Morfin Stoopen:
So if we can see that way, we can certainly see different regions that are [inaudible 00:03:54] very quickly. Let’s see. Let me know if you can see this. For example, the southern part of Mexico City, which is around this area, it is absolutely the less developed area of the country. I’m going show you contrast, the greater contrast, the following graph, but just to show you … I want to show you specifically where are the main regions are.
Jaime Morfin Stoopen:
But other regions, which is a completely different in terms of development and income and, of course, in compensation is a central part of [inaudible 00:04:30], which comprise Mexico City and a little bit Northern. It’s called the [Bajillo 00:04:33] region. And the dense area that you can see here, it is absolutely another world completely, another economy. This region is mostly linked to the United States in terms of industrial and service provider strategy. And that, of course, the level of development is completely different from the other two, particularly between the north and the south.
Jaime Morfin Stoopen:
It is very common to talk about [inaudible 00:05:05] not only in terms of income, but also in terms of the different aspects that are generated by the income, for example, social development and even political ideology. Okay. So that can give you some idea how different the country is.
Jaime Morfin Stoopen:
Let me try to jump to the next one. Okay. Now this is a graphic that is exactly the same information from from another perspective. Again, using HDI, the human development index, I want to show you how disproportional the inequality of Mexico it is.
Jaime Morfin Stoopen:
The same border, like I was saying, you will find a level of development compared to Norway, which is on your left side, your left corner of the … I’m struggling a little bit with the painting too. But anyway, on the left side of your, right here on your screen, there are some regions of Mexico that the level of the human development, it is exactly as Norway. For example, the Benito Juarez, where actually we’re standing in Mexico City where our offices are. And also for example, Garza Garcia and Monterrey probably will be exactly the same level of development.
Jaime Morfin Stoopen:
Now, if we move it and this slide that crosses along the different regions of the world, Central Asia, Latin America, and then the world [inaudible 00:06:38] also Sub-Saharan Africa, which is a little bit further on the south … below, I’m sorry. But if we follow this line right here, we can compare using exactly the same index, the less developed municipality in Mexico, Cochoapa el Grande in the state of Guerrero, which is about an hour, an hour and a half from Acapulco. And probably, you heard about Acapulco. And that region specifically, the level of development, it is very close to consist of Iberia and El Congo.
Jaime Morfin Stoopen:
Now think about that. It is absolutely contrasting how to see, and that’s one of the reasons I wanted to present you this is graphic, how within the same country, you have such a different levels of, of course, income, remember, health and remember the [Cajun 00:07:37], which are part of the index that I’m using for this graph, okay?
Jaime Morfin Stoopen:
What about compensation? Of course, there’s a social implication then there is a close link between this graphic and the different levels of compensation you’re going to find within the country within, exactly in the same country. Just tell me a single strategy for compensating my workers, my collaborators in Mexico. My answer, there’s no single strategy. You might want to take a look much into great detail where you’re going to locate your offices. And from there, we can think about what’s an accurate way of compensating your people, okay?
Jaime Morfin Stoopen:
Now let’s talk about another form of inequality, very much existent in the country, which is gender inequality. Like I said, it is shows in every country. It is a matter of every country. But in this country has some specific matters that our perspective that I want to present to you. We are represented in this very nice purple color in the left. And there are other orange representations are particular levels and, of course, the gap between not exactly the same person, male person and the different levels of compensation for females attracting the same position.
Jaime Morfin Stoopen:
This is a very interesting study, which I’ll try to convey to you to Warren and Justin, made by McKinsey & Company. I think it’s very accurate, and it’s got the Mexican market. So as you can see, in this structure, in this graphic, the higher you go in the ladder, the wider the gap goes, which is something that it tells you that the colors don’t [inaudible 00:09:56]. And you also need to take a look when you’re thinking about compensation in Mexico. Of course, and there is a study that I also want to present it to you, send it to you by the ILO, International Labor Organization that work specifically and talks about specifically gender. And the main conclusion of that story, which applies, of course, in most of the countries in Latin America, particularly in Mexico.
Jaime Morfin Stoopen:
You can try to find different reasons to understand why we acquire this gap. But mostly, it is culture. It is a cultural conception. It is a culture of an idea that women and that is the representation of the particular graphic, do not … when there’s a scarcity in jobs, who should be taking the job position? According to the Mexicans, 70% of this particular survey, they will say that it has to go for a man. Also in terms of education, if there’s a need for college education, who should be getting it? A male or a female? According to this study, 30% will have to go to [inaudible 00:11:15]. And that goes for going on and on in different questions on this particular study. So of course, it is rooted in the culture. Of course, it is part of our male-oriented culture society.
Jaime Morfin Stoopen:
Let’s jump to the following graph, some other interesting graphic that are also part of this survey. Gender inequality is probably not really an issue to be discussed within CEO’s conversations and within the corporate structure in Mexican companies. If you can see this graph, if you compare basically how much of Mexican companies are doing in terms of working in terms of the goals and programs to reduce this or to increase the gender diversity within the country, just a few. Not too many are talking about that. And compare it basically for foreign companies based in Mexico, how many of those are talking about this topic?
Jaime Morfin Stoopen:
They are basically a lead to follow, focus to take a look at because they’re absolutely doing great on this matter. But again, within the Mexican culture, we don’t see too much of this conversation even though there’s regulation, and there has been great talk in the public and public agenda about this. And when we talk about public agenda, one of the things that we’ve seen specifically, we’ve seen different legislation, for example, NOM25. I talk specifically of what the companies need to do in order to recognize equality or look for the quality and to establish nondiscriminatory policies within the company. That was approved in 2012.
Jaime Morfin Stoopen:
Also, there’s a gender equality law approved in the 18. And recently, just pushed by this current administration, the equal pay reform that talks about, for example, a very interesting definition of economic violence.Salary gap is defined by economics within that legislation. It is still in conversation. It has to be approved. But to be honest, it is not coming within the Mexican companies, the true reforms, the true policies. It is coming from the government, to be honest, because absolutely, it is a matter of public policy, okay?
Jaime Morfin Stoopen:
Now what about the public agenda? We talked about two ways of seeing inequality in the country. One, regionally inequality, the other one is gender inequality. Of course, when you talk about compensation, you need to talk about … I’m sorry, when you talk about human development in the country, when you try to talk about distribution in the country, you need to bring it into public agenda. There’s no way you can talk about and try to work and better the conditions of the Mexican population without talking about compensation. It is absolutely linked. And it comes from different perspectives, from different ideologies, from the right, from the center, from the left. They all come from a different perspective, and it’s pretty much what I want to show you.
Jaime Morfin Stoopen:
The current government, for example, it really focuses and it is very much part of the current agenda, of their agenda, to focus on improving employment compensation through basically three different strategies and policies. And one is limiting federal government compensation. I’ll elaborate a little bit further. The second one is to regulate outsourcing. And the third one is to modernize company union relationships. That is exactly their focus, okay?
Jaime Morfin Stoopen:
And let’s talk a little bit further about that. Mexican President makes a very clear statement when taking government. He said, basically, there is no way you can have a poor country without rich, and he was talking about mainly how high does the government compared to the rest of the population, how high the government compensation was. So what he did basically and this has been approved. It has been approved, and I believe in a couple of years, two years ago was approval, sorry.
Jaime Morfin Stoopen:
And what he did is basically put a cap on the amount of people, particularly the federal government, on how much employees can make. That amount is not to be highly competitive. It’s about 100,000 annually. But anyway, that’s exactly what he wanted to show, a political message to the rest of the country.
Jaime Morfin Stoopen:
All Federal government positions are now part of a common salary tab, which could be very different. There were different compensations within different institutions, different ministers. And also, an element of this regulation is to ban and take out all privately-owned benefits that they were higher outside of the state-owned benefit institution, which is the [ESTE 00:17:03] that we hired from the outside just to provide a better quality benefits for their employees.
Jaime Morfin Stoopen:
Was this really a good idea? Or do they have a positive impact? If we see it from a budgetary perspective, absolutely, the reduction of the payroll whilst was completely extreme. However, they also had impact in terms of employment retention. A good number of highly trained public servant moved away from the government and decided to quickly run to the private sector to make probably the same money that were making previously.
Jaime Morfin Stoopen:
So that’s something that it’s worth mentioning because they didn’t mind get the results that they wanted. Regulation also trying to increase the competitive conditions of employment in Mexico. It is the outsourcing regulation that was just recently approved. What are the changes here? And this affects absolutely into private companies, the private institutions. First of all, in-sourcing, the concept of me hiring my employees from a third party is absolutely banned. That is not longer the case. You cannot do it anymore in Mexico unless you want to have a very good penalization by the labor ministry.
Jaime Morfin Stoopen:
Outsourcing is accepted though only by complementary or seen by complementary service providers. For example, in my case, an IT provider would be a complementary provider. That is not in my payroll and [inaudible 00:19:09] to provide good services. So that’s basically the main changes. In exchange, some of the benefits, for example, profit sharing, which was 10%.
Jaime Morfin Stoopen:
Let me explain to you very quickly. 10% of the profits of the company needed to be according to that legislation to be [inaudible 00:19:34] used in equal terms regardless of the level, regardless of their efforts within the company, and the results, they actually need to be distributed within the employees. That’s a key huge impact in terms of investment for any company who wants to do business in Mexico.
Jaime Morfin Stoopen:
Now it’s limited. That’s one of the changes that happened with the negotiation of this particular law, because outsourcing, that number that I heard is that about 14 million person were outsourced in the country. Now what is the goal in terms of compensation of this particular legislation was to increase and do provide and do give all the legal benefits or the mandatory benefits to the employees in the company. That is basically what we were looking for in this specific legislation.
Jaime Morfin Stoopen:
The [thoroughly 00:20:35] legislation, and affected mostly [inaudible 00:20:38] it has different elements, both in terms of compensation impact. The focus of this law reform that had happened three years ago was to really increase the bargain power of unions in the country to really try to push forward or give … yes, again, increase the bargain capacity of those unions to make them and to bring the discussion of benefits and compensation within that political conflict within inside of the company. That was very much the goal of this reform.
Jaime Morfin Stoopen:
On the same token, because corruption in unions, Mexican’s union abound, to be honest, the objective of this legislation was to provide greater transparency in union elections and budgets for the workers, for the affiliates of the unions, so they can have a better representation, okay? We don’t see that this is going to have immediately the compensation levels or compensation strategy of the company. We see it more that it’s going to happen later on through time, probably three or four years once all the elements of the law are in place, and once really the bargain power of the unions are established or redefined.
Jaime Morfin Stoopen:
So these are the different elements of inequality in Mexico. We have seen some of the elements of legislation that’s already in place that will affect the compensation strategy in the country. Now let’s take a look at compensation, a closer look at compensation within the company. What is required? First of all, let me show you this particular graphic, which is I also find very striking. What we see here is an average real wage index for G20 emerging markets between ’08 and ’19. This is an ILO estimate again. And the little red line that we see right here, it is Mexico. And we see China here, and we see Saudi Arabia right here. So as you can see, this is a completely flat line. There’s absolutely no movement in terms of increasing compensation or increasing benefits to workers in Mexico.
Jaime Morfin Stoopen:
This comes from public understanding that in order to attract or misconception, we can say it that way, in order to attract foreign investment in the country, the best way to do it was to limit the possibility of a grow of salaries in the country. So of course, this is not market oriented. This is a highly regulated market that happened before the current administration, and that has been changed very much. We’re going to start seeing the Mexico moving much faster in the following years. But just to give you an idea of where I would exactly say where are we in terms of salary competition across the world.
Jaime Morfin Stoopen:
Now let’s take a closer look of the different levels of compensation throughout the country itself. Again, [inaudible 00:24:22] regionally, when you start establishing your strategy in terms of compensation in the country. This is just a comparison between the 31 states at Mexico or exactly the same position that is common everywhere. It’s a sales clerk. I’m a sales clerk in the mall, for example. That’s basically what we measure here. And as you can see, the compensation, the gap between the first one would be Oaxaca and the state of Durango is about 38% within, again, the same country, okay, and exactly the same position. So the variation of the levels are huge, are enormous. And that’s one way to see the variation of regional variation.
Jaime Morfin Stoopen:
Now let’s see another way to see compensation within the company. This is sueldo.com information. And what we did is make a comparison between three different levels of an organization coming from the lowest level, at the operational level, blue collars, we can say it that way. The staff, which is [inaudible 00:25:41]. Managers, midsize managers and C-level of the organization.
Jaime Morfin Stoopen:
Now as you can see, the impact of public [inaudible 00:25:52] and, of course, the high availability of resources and talent at this particular level have made that again. The line has been staying completely flat. If you take the competition really in terms of talent, it really goes in this level, and of course, in this level. But what is happening again because of that strict control at this level, it is widening really greatly the difference between the C-level and the lowest level within the organization.
Jaime Morfin Stoopen:
I found it really striking. I found it that some [inaudible 00:26:33] has to be done to, again, talk about sharing the wealth in order to have a good and consistent strategy within your organization. And the amounts, these are in pesos, total amount retribution, but the amounts are normal from one or the other, okay? Warren is going to talk a little bit further about this, because he knows the developing countries market. And when we talked about this, he told me, well, it is very much and it’s very close to the same … what happens exactly the same in some other countries.
Jaime Morfin Stoopen:
I’m going to jump into this slide. I think it says basically the same thing that we just saw before. The only thing that it shows is that the recovery of executive positions, recovery from their bargaining and the purchase power, it is up 69% when you compare it to non-executive position, it is 32%. Okay. So that wides the gap between who are higher level payment, lower level payment within the company.
Jaime Morfin Stoopen:
Now another thing that you might want to consider when you talk about, and we get this question frequently when we talk about compensation and what are the mandatory benefits that are in the country? And how much do they take into my strategy in terms of budgeting? These are the mandatory benefits for Mexico. Some of there are cash benefit, for example, Christmas bonus, the profit sharing, the paid holiday, and probably the seniority primary also all these are considered cash benefits that they need to include of all strategies. All the others are more time off and health benefits such as the social security and the maternity leave, [tell that way 00:28:38].
Jaime Morfin Stoopen:
Now the impact of what we measure is not really when you can talk about defining the strategy in Mexico. The impact is about between 10% to 13% if we see it on a clerical level. An executive level goes below that, because the variable compensation will increase, of course, on that level, okay? So I’m sorry, I brought this because, like I said, it is a very common question for our clients that are starting practices strategy in the country, okay?
Jaime Morfin Stoopen:
Now I don’t think that we also would like to recommend you specifically when defining strategy is talk with your employees and think about not necessarily what should be in order for you to have an attractive compensation pack to bring the right talent to the company. Talk with your employees to see what exactly what they found. This is a comparison between that for a study we did for a major retail company in the country.
Jaime Morfin Stoopen:
First, we asked managers what exactly they were offering, which is this graphic. And basically, whether we’re offering basically on their perspective, where this particular benefit, for example, things like commissions and bonuses, leave of absence, third-party discounts. Now when we contrast [inaudible 00:30:24] exactly the kind of employees like it, and this was a direct question to the employees, whether they like it was not probably exactly the same thing.
Jaime Morfin Stoopen:
These are the top five answers to that exactly the same question. So the need for a leave of absence was highly requested and was not really given by the company. Same thing for third-party discount was highly requested and not really given by the company. So do think about what people like and try to understand the population and where it’s aiming to. Of course, some benefits in Mexico are tax deductible, and that is also affecting and should [inaudible 00:31:10] strategy when defining a new strategy or you want to modify your strategy for compensation in Mexico.
Jaime Morfin Stoopen:
Some other items that employees would like to see, because this is a very young population. Think about that. Most of the [inaudible 00:31:29] Mexico around, I believe, 35% to 40% are younger than 20 years old. Of course, they’re going to look for things that they are good for their career, and they also have a moral perspective of compensation. And I’m talking about specific social impact of the company.
Jaime Morfin Stoopen:
They would like to [inaudible 00:31:55] that was part of the service that employee mentioned. The young people would like to work on institutions which have a social impact, with a company that has a real social impact. On other elements, remember, this is a highly family-oriented culture, and bringing it to the company and the families to see whether what the parents are working on, it is highly regarded. It’s highly seen as the right strategy, okay?
Jaime Morfin Stoopen:
And just to summarize, we’re getting into the end of the presentation. We would like also to hear your questions and your comments, Warren, Justin, [inaudible 00:32:44] for open forum, so that’s we’re going to do at the end of this presentation.
Jaime Morfin Stoopen:
Just to summarize. When thinking about strategy or designer compensation strategy in Mexico, we recommend you to think regionally like we mentioned. Please consider not only strategies or a strategy that works particularly well for Mexico City. It probably won’t fly as good as if you want to position your plant or your team in Aguascalientes or some other regions. So think regionally when defining the structure.
Jaime Morfin Stoopen:
Second, do expect legislation changes constantly, particularly in this administration. This administration is coming from another, we can say, leftist perspective. So we have seen it, and we’re going to see in the upcoming years. So what we see probably in this moment is going to change probably in the following years. So do expect those changes. Then, of course, do think about equitable pay that is key for success. And when I think about equal pay, not only by gender, but also by level specific. We don’t see too much career paths or strategic career paths within the company. We see a lot of rotation on the lowest level and high stagnation in the upper level.
Jaime Morfin Stoopen:
So if you want to grow a company, you might want to think accommodate that curve so people will really expect a good treatment and a good career with inside the company. And of course, yes, do comply with mandatory benefit, but you need to go much more further. You need to go at all levels of the organization, particularly for your young population. You need to go and think more exactly for what they need and do understand the market trends, which are changing rapidly. Of course, the pandemic [inaudible 00:35:06] our perspective of retention on how attractive the company might be to our teams. Basically, what I have on my deck. Please, I’ll give you back the microphone, and please, I would like to hear your questions. Let’s open the mic to everybody.
Warren Heaps:
So first, thank you, Jaime, for a very, very informative presentation. I think those in attendance will join me in a round of applause. It was very nice and very informative. There are some questions in the chat that we should try and get to. A couple of people asked a little bit more about regional pay differentiation. Emmanuel asked, is there a regional pay differentiation within most companies? Or do most companies stick to a national pay philosophy? So can you just comment on that? Do companies take a more of a localized approach or do they go for a national approach?
Jaime Morfin Stoopen:
It depends on the size of the company, of course. But what we see normally is that the organization that start to grow regionally do not have the real structure to think about local in terms of compensation. So they just export basically the [inaudible 00:36:48] into regions, and that is exactly when we start seeing problem. Because there might be interesting at the beginning just to make the same money as a manager or the clerk in Mexico City, when you’re working in Oaxaca state, which is in the southern poor region of the country.
Jaime Morfin Stoopen:
But at the same time, that is going to take your payroll high and that’s one issue. And if it happens the other way around, if you’re paying less for that particular region, you’re going to have a great turnover on the person now. So just to answer the question, we’ve seen around, depending on the size, for example, of the organization to have offices in about, I don’t know, 10, 15 different companies, we see four different payroll for that to attack and to really comply with the market request, market needs. But that is not the norm. Most of the companies only have only one single policy and one single market strategy for the country. I hope I’m clear.
Warren Heaps:
Okay. Thank you. A couple of people are asking about, well, Ramesh actually had two questions. One, I think Ramesh, you were the one who asked about unions, too. Whether it was common for unions to be active in the IT industry?
Jaime Morfin Stoopen:
No, not at all. I haven’t heard about any union in the IT sector. Most of the unions, and just to give you an idea of the size of the unions in Mexico, about 13% of the population are unionized, which is not too great. The unions in Mexico come from a larger provision of political linking with other party. The three, I probably heard about this is a very old party that came out perhaps, it was formed after the Mexican Revolution 1920. So thanks to that corporative structure of the party, unions in Mexico grow. They grow mostly in traditional sectors such as manufacturing, such as great role, which is definitely more such as power, production, et cetera. The new sectors of the economy, which is IT, which is digital, which is data analysis, absolutely not. You don’t see it at all.
Warren Heaps:
Okay. Thanks for that. And Ramesh also asked if there were good sources, if he wanted to dig into more information about Mexican comp. And I think Jaime, you and I both can offer good sources for that. Both our companies conduct salary surveys in Mexico.
Jaime Morfin Stoopen:
Absolutely.
Warren Heaps:
So that would be a start. And there was another question from Felipe about whether or not we’re seeing for IT professionals, whether companies are using traditional salary structures or bands or whether there are, I guess, key implications. Or if they’re not, are they using market pricing?
Jaime Morfin Stoopen:
I’m sorry. What? I didn’t get that question right, I’m sorry.
Warren Heaps:
For IT professionals, is there a tendency in the market to use traditional salary structures and bands? Or is it more of a market pricing environment?
Jaime Morfin Stoopen:
I would say it’s more on market pricing environment, particularly in the IT world, which moves very quickly. Every time there is a new technology coming on, for example, security, which was huge, and cybersecurity was huge for this work years, well, it was a huge line going up in terms of salary market compensation. Now we’ve seen probably as an older economy, which in very steep levels of increase in the digital positions. For example, anything that goes to digital marketing is growing very rapidly. Also, that analysis is going very quickly in the IT world, and I’m talking about information and technology as an overall. Developers also, although it’s a little bit stagnant, because we have that acquisition now, we have seen it in at least in 30 years back in the market on new technologies, I’m sorry, we are seeing a higher steep of in those positions.
Warren Heaps:
Great. I think we’ve actually addressed all of the questions that were posted in the chat. We still have a little bit of time left if there are other questions that people are wondering about. Justin, anything to add?
Justin Hampton:
No. I just want to reiterate my appreciation for Jaime, for your taking time to do this, and reiterate to the both the Birches Group and sueldos.com offer great options for salary information in the Mexico market. So definitely great sources to take a look at. Jaime, one of the things that I’ve been kind of curious about is what are you seeing in terms of remote work happening in Mexico over the last year? So are you finding that, that’s really kind of increased like we’ve seen in the U.S.? Or are you finding that it’s a little bit different?
Jaime Morfin Stoopen:
I think it’s a little bit different. First of all, infrastructure in the houses are probably not as good as an American city. Just to give you an example, we did a quick study in terms of companies, how a client wants to bring their employees back into the office. And it was interesting to see that in the upper levels, they didn’t want to move there.
Jaime Morfin Stoopen:
And the lower levels, they want to rush into the office. Why? Because the [inaudible 00:43:48] houses, in particular, again for women, was that they need to comply, because when they’re at home, they need to comply with husbands and kids needs and at the same time work in a house that is probably not too big and not probably the best connection. So that’s one you really need to have in mind when defining that kind of strategy.
Jaime Morfin Stoopen:
On the other hand, the upper levels of the structure in a nice house or in a nice environment, a nice country side, even so, they didn’t want to put their office and just rush through the Mexico City traffic, which is great in these days, by the way. I would say that. But particularly in the city, I would say that would happen.
Jaime Morfin Stoopen:
In other areas, for example, in the [ 00:44:45], the Northern Mexico where you see much more manufacturing industries, manufacturing companies. We can also see that there was absolute change in terms of going or not going to the office. They had to go to the plant in order to continue producing what it was needed in that moment. So I guess my answer is it depends on where the sector and where is your location to see what will be the best path to bring people back in.
Jaime Morfin Stoopen:
We are now in Mexico, just to mention, in the third curve of the COVID pandemia. Vaccination is not available. I think we are at around 30 million of 120 population, so we do not better yet in terms of full vaccination of population. So companies are being flexible. That is a good element, I can say. Flexibility really happened, forced, if you want it, by the circumstances, but it did happen, and we see much more flexibility by corporate structures and management position.
Justin Hampton:
And we just have another question from Felipe. He says a lot of companies had a disruption due to the new legislative process for outsourcing personnel back in May. Do you have any trends that you are seeing that you can share with us for how companies are mitigating that disruption?
Jaime Morfin Stoopen:
I mean, as a trend specifically, I think you may give us more time. Just recently, the Senate is giving additional time for companies to comply. The period between the legislation was approved, and it was very mandatory. And when the company need to comply, it was only three months. We ended this period, the companies are not there yet at all. So what is [inaudible 00:46:55] those changes, at least until the end of the year. And what I can tell you and that our clients are not really paying too much attention to us, because they’re basically into that.
Jaime Morfin Stoopen:
That is the main change they’re going to see within the corporate structure and the way they’re hired their opponents. So in, I can focus up through the LIO of HR departments, legal departments, financial departments are really into that thing is very moment. So I, I wouldn’t, I, I don’t want just by some feminine train, where are we seeing, but the absolute bottom.
Warren Heaps:
So there are a couple more questions. Ramesh asked, is profit-sharing means across all industries or only those where there are unions? I believe the answer is all industries, but I want to make sure.
Jaime Morfin Stoopen:
Yes, you’re right, Warren.
Warren Heaps:
I remember that.
Jaime Morfin Stoopen:
All across the board. And remember, like I said, legislation previously was very linked to union’s political participation at those moment. That was a 1960 legislation. And at that moment, the [inaudible 00:48:14] and the corporate structure of the three was highly supported by union. So they had to keep something in return. That was one of those. Profit share was one of those.
Warren Heaps:
Mark asked if you’re seeing more professional services and technology consulting companies expanding into Mexico?
Jaime Morfin Stoopen:
Yes, very much. The availability of very good schools of engineering, not only in private schools but also public school, it is a tendency of young people to go into the IT world constantly, and we have seen at least in the last 10 years. It has increased really the job offer of bilingual personnel in Mexico to do IT and technical, with IT and technical skills. So yes, absolutely, we’ve seen a lot. Probably not in retail, differentiated that. Not in high-end products, such as, I don’t know, for example, high complex product development or software development. But yes, in support levels, we’ve seen that a lot. Call centers in Mexico are booming all across the country, particularly in the regions of Monterrey, Mexico and Guadalajara, mostly in Guadalajara because there are many companies are outsourcing the support services to Mexican companies or Mexican locations for both mostly for Canadian and American customers. We’re seeing that a lot constantly.
Warren Heaps:
And my former colleague Magali asks, on the same note, what about PTU and performance bonus? I’m not sure what PTUs, but maybe you know.
Jaime Morfin Stoopen:
Profit sharing. PTU, it is exactly that. I’m sorry, I didn’t get the question.
Warren Heaps:
I think what she’s asking is, was there a disruption due to the new rules?
Jaime Morfin Stoopen:
Yes.
Warren Heaps:
In the PTU and performance, did I get that right, Magali?
Jaime Morfin Stoopen:
Yes, performance, there’s no legislation that there is not mandatory elements for performance. Bonuses and compensation, that’s still very much within the market request and the company’s strategy. For PTU, yes, what changed is basically, instead of paying 10%, what changes, it was changed for two or three months of additional compensation for employees. In some cases, that also can be linked to performance bonuses, yes. And in that case, you’re right, Magali. In some cases, that can be linked to real performance of the person or the person of the program.
Warren Heaps:
So it no longer has to be calculated on a per capita basis like before?
Jaime Morfin Stoopen:
No, not anymore.
Warren Heaps:
Okay. Yes. So that’s a big change.
Jaime Morfin Stoopen:
It is a huge change, yes, absolutely. Negotiations of, to be honest, I haven’t seen the such a close negotiation between private sector and the public administration, particularly in this particular matter. It really had a huge impact in terms of profit, and organization within the company.
Warren Heaps:
Well, also the banning of insourcing, which was clearly a profit-sharing tax dodge for a lot of companies, so that was probably post-change for employees.
Jaime Morfin Stoopen:
I agree. I agree with you, Warren.
Warren Heaps:
So we’re at 1:56 in New York. And I guess earlier in Seattle, where Justin is and right in the middle where Jaime is. Any last questions before we wrap up? I don’t see any in the chat. Just want to let you know that we plan to continue this series of around once a month. There’s a lot of countries in the world that we haven’t covered yet since we’ve only covered two.
Warren Heaps:
I did note a couple of folks suggesting Argentina as a place to go next, and that could be interesting or perhaps we might take more of a thematic approach and lump Argentina with Venezuela and South Sudan, Ethiopia and a couple of other volatile economic situations, and just talk in general about how to deal with that. That’s a topic that I love to talk about. But we’re also going to try and be representative of all the regions of the world.
Warren Heaps:
So likely, we’ll choose a place in Europe or Africa next. But we will note that Argentina is of interest. And if we can kind of pull together, we’ll do that. And frankly, we really appreciate all of you coming and those of you about 2/3 of the group who stayed on until the last minute.
Warren Heaps:
We will send an e-mail with a link to the recording, and you can also respond to either to me or to Justin to get copies of or access to earlier recordings from our July session last month. And I’ll stick my e-mail address in the chat and Justin want to do the same in case people don’t have it. And on that note, I think we’re done now. I’m going to stop the recording.
Justin Hampton:
All right. Well, yes. Thanks again, everybody, for your time. Thank you again, Jaime. Thank you again, Warren. It’s a great information, great session and look forward to the next one.
Jaime Morfin Stoopen:
Great. Thank you, everybody.
Justin Hampton:
All right. Thank you.
Warren Heaps:
Thanks. Bye bye now.
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