Unions and pension reforms in Mexico: The impact of democratic governance

Abstract

In the fall of2004, the Mexican Congress promulgated an important piece of legislation, which reformed the pension system of the employees of the Instituto Mexicano del Seguro Social (IMSS). As a result of these changes, from August 2004, new IMSS employees will be enrolled into a mandatory contributive private pension plan. This retirement benefits package is largely based upon the existing pension scheme for private sector workers, which stemmed from an extensive reform crafted in 1995 and which also targeted the IMSS. This legislation is important since it is the first to tackle civil servants, whose benefits have been far more generous than other types of employees. It is noteworthy that, in both cases of IMSS reform, Mexican labour unions were unsuccessful in their efforts to stop or significantly water down these processes of social security reform.