Observation (CEACR) - adopted 2006, published 96th ILC session (2007)

Social Security (Minimum Standards) Convention, 1952 (No. 102) - Mexico (Ratification: 1961)

The Committee notes the particularly detailed information, including statistics, provided by the Government in reply to its previous comments, following the entry into force in 1997 of the new legislation which associates the private sector in the achievement of the objectives pursued by the social security. With reference to its previous comments, the Committee notes the information provided on the application of Article 72, paragraph 1, of the Convention (participation of the persons protected in the management of institutions), and of Articles 65, paragraph 10, and 66, paragraph 8 (adjustment of the amount of benefit), Part XI (Standards to be complied with by periodical payments). The Committee also notes the communication dated 8 March 2005 from the Independent Trade Union of Workers of the National Consumer Protection Office (SITPROFECO), and the Government’s reply dated 11 September 2006 (see point 6 of the observation). The Committee requests the Government to provide information on the following points.

1. Part II (Medical care). In its previous comments, the Committee noted that, in accordance with section 89 of the Social Security Act, the Mexican Social Security Institute (IMSS) may provide the medical care for which it is responsible according to the three following procedures: (i) directly through its own personnel and facilities; (ii) indirectly, by means of agreements with other public or private providers of care; or (iii) indirectly, through the conclusion of agreements with enterprises with their own medical services.

In this respect, the Committee requested the Government to provide copies of agreements for the transfer of responsibility for the provision of care concluded with service providers (care providers in the private sector), as well as copies of reimbursement agreements and agreements for the provision of care concluded with enterprises with their own medical services, or with other institutions referred to in the report. The Government indicates in its report that, in accordance with sections 18 and 21 of the Federal Act on Transparency and Access to Government Public Information, of 11 July 2002, the IMSS is not in a position to provide copies of the agreements that it has concluded, as they contain personal data which are confidential. In this respect, the Government provides models of the agreement used by the IMSS for the provision of medical services. The Committee notes these models. It wishes to draw the Government’s attention to the fact that it is not the intention of the Committee to obtain any personal data. What the Committee wishes to obtain is documentation which enables it to verify, for each of the systems under consideration, the content of the various benefits provided under the system for the reimbursement and the subcontracting of services and that they are compatible with those enumerated in Article 10, paragraph 1, of the Convention. The Committee therefore requests the Government to provide information on the measures adopted to give effect to section 89, second subsection (III), of the Social Security Act, under the terms of which “the persons, enterprises or entities to which this section refers shall be obliged to provide the Institute with any reports and medical or administrative statistics that it may require and comply with the instructions, technical standards, inspections and supervision prescribed by the Institute, under the terms of the rules governing the provision of medical care. It also requests the Government to supply, where appropriate, copies of inspection reports on this subject.

2. Part V (Old-age benefit), Articles 28, 29 and 30 of the Convention. In its previous comments, the Committee noted that, for persons who fulfil the qualifying conditions for an old-age pension as set out in the legislation, the level of the pension is not determined in advance, but depends on the capital accumulated in the individual accounts of workers, and particularly the return obtained on such capital, which has to be entrusted to the management of a retirement fund administration company (AFORE) selected by the worker. However, under the terms of section 170 of the Social Security Act, the State guarantees to workers who fulfil the age conditions and the qualifying periods set out in section 162 of the Social Security Act the provision of a “guaranteed pension”, the amount of which is equivalent to the general minimum wage for the Federal District. In this respect, the Government indicates that the amount of the guaranteed pension is increased annually in the month of February in accordance with the fluctuations observed the previous year in the National Consumer Price Index, with the purpose of maintaining the purchasing power of the pension in accordance with fluctuations in the prices of goods and services. The Committee notes this information. It also notes the detailed statistical data provided in the manner indicated in the report form approved by the Governing Body under Article 66 of the Convention, Titles I and III. The Committee observes that, according to the above information, the amount of the minimum guaranteed pension for 2005 was equivalent to 30.82 per cent of the wage of the ordinary adult male labourer, selected in accordance with the provisions of Article 66 of the Convention. The Committee draws the Government’s attention to the fact that the above percentage – 30.82 per cent – in respect of old-age benefit, is considerably lower than the minimum percentage prescribed by the Convention (40 per cent of the reference wage for a standard beneficiary). The Committee therefore hopes that the Government will adopt the necessary measures to raise the minimum guaranteed amount so that it is equivalent to the minimum percentage prescribed by the Convention.

3. (a) In its previous comments, the Committee requested the Government to indicate the total average percentage of the commissions charged, including the average applied to the capital and the average applied to the wage, in relation to the average wage of a standard man and woman beneficiary. In its report, the Government indicates that the commissions charged on the tripartite contributions for retirement, cessation of work at an advanced age and old age (RCV) are expressed as a percentage of the basic wage used for calculation (SBC), which is the wage on which the contribution is determined, and are equivalent to 6.5 per cent of the worker’s wage. The commission on contributions is not applied to the social contribution paid by the Government, which is equivalent to 2 per cent of the wage of an average worker. The commissions on capital are expressed as a fixed annual percentage and applied to the capital balance administered by the AFORES and invested in specialized retirement fund investment companies (SIEFORES), which excludes the capital in the housing sub-account. To obtain the total percentage of commissions on contributions and on capital in relation to the amount of the wage, it is necessary to project in time the contributions and commissions of the AFORES, based on the real rate of return on the workers’ funds. In May 2006, the equivalent commission on the average contributions to AFORES over 25 years, for an average worker, was 1.38 per cent of the wage. According to the information provided by the Government, the intense competition between AFORES has resulted in a significant fall in the rates of commissions. Between June 2001 and May 2006, there was a fall of 37.3 per cent in the indicator for equivalent commissions on contributions over 25 years. The Committee notes the above information. It requests the Government to provide information, including statistics and, where appropriate, reports of the supervisory bodies, indicating the average percentage which has in practice been used for the payment of commissions, on both contributions and capital, since the entry into force of the Act.

(b) With regard to the question of whether, when determining the level of commissions, consideration was given, in accordance with Article 71, paragraph 1, of the Convention, to their impact on persons of small means, the Committee notes that the new system of pensions has not involved an increase in the contributions paid by workers and employers. With the change of the system and the adoption of the system of individual accounts, a new contribution was established at the charge of the Government, known as the social contribution, which is more favourable to workers with lower wages as it consists of a fixed amount for each day of contributions. At the same time and to reinforce the system’s characteristic of solidarity, the guaranteed pension was established, which offers protection to workers with modest financial means and is paid through general taxation. Furthermore, under the terms of section 37 of the Retirement Systems Savings Act, AFORES may only charge commissions on a percentage of the value of the capital administered and on contributions, or a combination of both. As a result of charging commissions as percentages of wages and capital, and of excluding the social contribution from this charge, workers with modest financial means in practice pay less for the administration of their account than workers with greater means. The same section explicitly provides that AFORES may in no case charge fixed amounts for the administration of accounts, in view of the regressive nature of this type of charge.

(c) In its previous comments, the Committee noted that the basic capital for the provision of invalidity, life and employment injury pensions which is transferred to the insurance company for the provision of a lifetime annuity is calculated in accordance with the mortality tables for invalids by age and by sex. In reply to its previous comments, in which the Committee requested information disaggregated by age and sex on the amount of the commissions charged by AFORES (“programmed retirement”) and insurance companies (lifetime annuities) during the passive period, the Government indicates that, as of the month of May 2006, AFORES had not recorded the payment of any “programmed retirement” benefits, for which reason no commissions had been charged. The Committee notes this information. It requests the Government to provide the information requested in relation to lifetime annuities. With regard to the basic capital transferred to insurance companies, the Government indicates that it includes the savings accumulated by the worker up to the date on which the contingency occurs. The basic capital is composed of resources from the individual account and the amount insured, which is covered by the IMSS with resources from employers’ contributions to the employment risks insurance scheme. The Committee notes this information. Taking into account the fact that, in accordance with the national legislation, the financing of employment risks is at the charge of the employer, the Committee requests the Government to indicate the provision of the national legislation establishing that the savings fund of the worker can be used to contribute to the financing of a benefit.

4. In its previous comments, the Committee drew the Government’s attention to Article 29, paragraph 2(a), of the Convention, which provides that a reduced old-age benefit shall be secured at least to a person protected who has completed, prior to the contingency, a qualifying period of 15 years of contribution or employment. In its report, the Government indicates that, due to the recent change to a fully-funded system, persons who draw pensions under the retirement, cessation at an advanced age and old-age scheme, have not accumulated sufficient resources in their individual accounts to finance the respective pension. Nevertheless, workers who were first insured under the Social Security Act of 12 March 1973, only require 500 weeks of contributions, equivalent to ten years of contributions, to be entitled to this benefit. With regard to workers covered by the new Social Security Act, who fulfil the conditions referred to in Article 29, paragraph 2, of the Convention, the Government indicates that the prospects for the development of the fully funded system in terms of the resources accumulated are still not sufficient to allow the financing of a reduced old-age benefit, in view of the fact that the reform of the pensions system is relatively recent. Nevertheless, there is sufficient time to develop firmer projections of the accumulation of resources under the new system and, where appropriate, to analyse possible supplementary sources of financing for a reduced benefit, and also to propose other solutions. The Committee notes this information. It hopes that the Government will be able to re-examine the situation and indicate the measures adopted or envisaged to secure the provision of a reduced old-age benefit to all persons protected who have completed, prior to the contingency, a qualifying period of 15 years of contribution or employment, in accordance with the provisions of the Convention on this matter.

5. Part XIII (Common provisions). (a) Financing (Article 71). The Committee notes the information on the financing of benefits. It requests the Government to indicate the manner in which effect is given to Article 71, paragraph 2, of the Convention in the case of employment injury benefits, in so far as the capital accumulated in the individual accounts of workers contributes to the financing of such benefits, under the terms of sections 58 and 64 of the Social Security Act. The Government indicates that the capital withdrawn from the individual account for the financing of the pension is commensurate with the percentage of the degree of permanent incapacity. For example, where an insured person is evaluated at 30 per cent incapacity, no more than 30 per cent of the total capital in the account on the date of the commencement of the pension will be withdrawn, and such resources serve to finance the pension, with the difference to reach the basic capital required for the provision of the pension being provided by the IMSS through the amount insured. The Government adds that, in view of the relatively brief period since the reform of the pensions system, the accumulation of capital in workers’ individual accounts is still relatively insignificant for participation in contributing the basic capital, with the result that this type of benefit is covered by the amount insured through employers’ contributions. The Committee requests the Government to indicate the source of the resources under each system considered for each of the Parts of the Convention accepted, with an indication in particular of the rate or the level of the amounts deducted from earnings to finance each system, either through contributions or taxation. As employment injury benefits are covered by a specific branch, please indicate the level of resources allocated for the financing of such benefits.

(b) Administration and control of the social security system (Articles 71, paragraph 3, and 72, paragraph 1). In its previous comments, the Committee emphasized the need to undertake a global actuarial evaluation of the whole social security system. As the Government has not replied to the Committee’s previous comments in this respect, the Committee is bound to emphasize that, to ensure the full application of Article 71, paragraph 3, the above evaluation must cover the various pension schemes, including and recapitulating at a specific evaluation date the fixed and contingent liabilities, as well as all the debts and commitments of the State deriving from the former and the new social security systems, encompassing the responsibilities of the IMSS, the INFONAVIT and the SAR in terms of financing and liabilities and all items of expenditure, including collection, administration, supervision and control. The Committee considers that the viability and sustainability of the system depend on a detailed analysis of the real and foreseeable development of the system as a whole. Indeed, this is of the very essence in an actuarial study. Only a global actuarial evaluation of the system will make it possible to estimate the contingent deficits to be underwritten by the State and to make the corresponding forecasts. It therefore requests the Government to take the necessary measures to give effect to this provision of the Convention and to provide information on the progress achieved in this respect.

6. Communications from representative organizations on the application of the Convention. The Committee notes the communication dated 8 March 2005 from the Independent Trade Union of Workers of the National Consumer Protection Office (SITPROFECO), and the Government’s reply dated 11 September 2006.

The SITPROFECO draws attention to the failure of the IMSS to take legal action to regularize the situation of over 27,000 women workers in the AVON company who were registered with the compulsory social security scheme until the end of 2004, thereby failing to give effect to the Convention. It indicates in this respect that, as from 14 November 2004, the AVON company took unilateral action to disaffiliate 23,627 women workers in the enterprise from the compulsory social security scheme, and exerted pressure for them to give up their employment status, which constitutes a violation of industrial relations.

The Government indicates that the IMSS took legal action to regularize the situation of the women working on commission with the compulsory social security scheme. It refers to Accord No. 278/2004 dated 23 June 2004, adopted by the Technical Council of the IMSS, under the terms of which, in accordance with section 285 of the Federal Labour Act, in conjunction with sections 20 and 21, commercial agents, including agents working on commission under the domination of “representatives”, shall be considered as workers in the enterprises for which they provide their services, where their relationship is of a permanent nature, and are therefore liable to coverage by the compulsory scheme established by section 12(1) of the Social Security Act.

The Government adds that the unilateral action of AVON to disaffiliate a large number of its workers from the compulsory social security scheme, and to exert pressure on them to renounce their employment status, constitute aspects of the employment relationship between the enterprise and its women workers engaged on commission which, in its view, are not related to the Convention. It further considers that in the area that lay within the competence of the IMSS at that time, the women workers, including women workers engaged on commission, were covered by social security in accordance with the Social Security Act, as a result of which there was no violation of the Convention.

The Government further notes that the Mexican legal system has established the necessary legal procedures, which can be used by workers in defence of their interests. It is therefore the responsibility of the representatives working on commission or the commercial agents concerned to pursue their rights under the labour and social security legislation individually or collectively in the respective courts through the corresponding legal action.

The Committee notes the Government’s statement. The Committee considers that, in general, workers should not be compelled to have recourse to the labour inspectorate or the courts to uphold their rights to coverage by the social security and, where appropriate, to receive the corresponding benefits; in the event of the failure of employers to comply with their obligations, it is the responsibility of the State to adopt all the necessary measures to ensure that such benefits are provided in practice, in accordance with Article 71, paragraph 3, and Article 72, paragraph 2, of the Convention. The Committee recalls that, under the terms of these provisions, the State shall accept general responsibility for the due provision of the benefits provided in compliance with the Convention and for the proper administration of the institutions and services concerned in the application of the Convention, and that it accordingly has to adopt, wherever necessary, all the appropriate measures to achieve this objective.

The Committee therefore considers that, in addition to its role in facilitating social dialogue, it is the responsibility of the State, as indicated by the Government, to ensure compliance in practice with the guarantees and rights enjoyed in accordance with the national legislation, namely article 123 of the Political Constitution of the United States of Mexico, the Federal Labour Act and the Social Security Act.

The Committee also expresses concern at the pressure exerted by the AVON company on the women workers to renounce their employment status, thereby depriving them of their entitlement to compulsory coverage by the social security scheme. It considers that the Government should adopt energetic measures to combat contractual agreements which conceal the real legal existence of an employment relationship. It therefore hopes that the Government will provide information on: (a) the inspections carried out by the IMSS to ascertain, in accordance with section 251(XI) of the Social Security Act, the termination of the condition which gave rise to the insurance coverage of the women workers whom the AVON enterprise disaffiliated; (b) the measures adopted by the Social Security Registration and Contribution Directorate to ascertain, in accordance with point 4 of Accord No. 278/2004, whether the women workers dismissed by the AVON company are covered by the exceptions envisaged in section 285 of the Federal Labour Act; (c) the measures adopted, in accordance with point 3 of the Accord, to establish a programme for dissemination and compliance with the terms of the Accord; and (d) the number of inspections undertaken, infringements reported and, where appropriate, penalties applied.

The Committee is addressing a request directly to the Government seeking additional information.

[The Government is asked to reply in detail to the present comments in 2007.]