MEXICO CITY - A proposal to reform Mexico's dysfunctional 1970s-era labor laws, loosen work rules and increase union democracy split Mexican political parties Tuesday, threatening to create the first big political battle for President-elect Enrique Peña Nieto.

Advocates say the reform, which will allow part-time work, hourly wages and outsourcing, will help Mexico create the million new jobs per year it needs for young people and migrants returning from the United States. The bill weakens seniority provisions, and leaves unchanged Mexico's 5 1/2-day workweek.

But critics say that Peña Nieto's Institutional Revolutionary Party, the PRI, has stripped out requirements for external audits of union finances and secret ballots for union elections contained in the original bill submitted by President Felipe Calderón earlier this month.

Peña Nieto, who takes office on Dec. 1, supports labor reform. But his PRI - the largest voting bloc in Congress - counts some of the country's most antiquated, autocratic unions among its strongest supporters, leading to speculation that the old guard had pressured his party to leave out what critics say is the only progressive part of the bill. That would weaken Peña Nieto's claims that his party has left behind the reputation of repression and corruption it built up over 71 years in power, from 1929 to 2000.

"They are leaving out the points they claimed were the most beneficial in terms of democracy and transparency, because it's clear there was an agreement between the PRI and (Calderón's) National Action Party to move forward on what they're really interested in, which is flexibilized work rules," said Manuel Oropeza, leader of the leftist Democratic Revolution Party, the PRD, in Mexico City.

PRD officials have said they will use any means necessary, including marches, to head off passage of the bill. Even Calderón's normally pro-business party wasn't happy with the watered-down language on union democracy.

Mexican unions are, at present, so undemocratic that, when opening new plants, employers will sometimes select a docile union and the first workers will enter with a labor contract already signed behind their backs. Many workers don't even know the name of the union that takes their dues and supposedly represents them.

PRI Congressman Hector Gutierrez said the democracy language had to be changed because the provisions in Calderón's original bill allegedly violated constitutional articles that protect unions against outside interference.

Under Mexico's 1970s-era labor laws, workers earn as little as 60 pesos ($5) per day but still pay dues to pro-company "paper" unions they never see. About one-fifth of salaried workers in Mexico are unionized.