OREANDA-NEWS. Mexico's state-owned Pemex has started talks on a new collective employment contract for 2015-17 with the country's influential oil workers union STPRM.

The negotiations with the union are the first since Mexico enacted a ground-breaking energy reform last year, which is opening the domestic oil and electricity sector to competition.

Pemex management plans to reduce the company's payroll costs and trim staff benefits to remain competitive in the post-reform environment. The firm will work with the STPRM, which is close to the ruling PRI party, to slash operating costs by as much as 10bn pesos (\$650mn) by the end of this year, it says.

Pemex is Mexico's largest employer with a 150,000-strong workforce, but it aims to reduce its headcount following the sharp drop in crude prices since June last year, chief executive Emilio Lozoya said in February. The government postponed its restructuring plans for the firm until after the mid-term elections on 7 June, in which the PRI retained a slim majority in the lower house of congress.

The planned job cuts are part of a government-imposed \$4.1bn reduction in Pemex's initial budget for this year of \$36bn. The firm's costly pension benefits — historically a significant perk — last year forced the government to take on some of Pemex's unfunded liabilities.

But Mexico's energy reforms could help ease the impact of the redundancies if qualified employees move to international companies looking for personnel with experience of the Mexican energy sector.