Labor Law Reform - A Key Battle for Mexican Unions
by David Bacon
Published by the Americas Program on: May 26, 2011
Editor's Note: This is the second installment of a
series on border solidarity by journalist and
immigration activist David Bacon. This article and
subsequent installments were originally published in
the Institute for Transnational Social Change's report
Building a Culture of Cross-Border Solidarity. To
download a PDF of the entire report, visit the Americas
Changing Mexico's labor law threatens the lives of
millions of workers. It would cement the power of a
group of industrialists who have been on the political
offensive for decades, and who now control Mexico's
presidency and national government. "Labor law reform
will only benefit the country's oligarchs," claims
Andres Manuel Lopez Obrador, who most Mexicans think
won the last presidential election in 2006, as
candidate of the left-wing Party of the Democratic
Revolution. Napoleon Gomez Urrutia, head of the
miner's union who was forced into exile in Canada in
2006, says Mexico's old governing party, the Party of
the Institutionalized Revolution (PRI), which lost
control of the presidency in 2000, "is trying to assure
its return by making this gift to big business, putting
an end to labor rights."
In part, the change is drastic because on paper, at
least, the rights of Mexican workers are extensive,
deriving from the Revolution that ended in 1920. At a
time when workers in the U.S. still had no law that
recognized the legality of unions, Article 123 of the
Mexican Constitution spelled out labor rights. Workers
have the right to jobs and permanent status once
they're hired. If they're laid off, they have the
right to severance pay. They have rights to housing,
health care, and training. In a legal strike, they can
string flags across the doors of a factory or
workplace, and even the owner can't enter until the
dispute is settled. Strikebreaking is prohibited.
A new labor law would change most of that.
Companies would be able to hire workers in a six-month
probationary status, and then fire them at the end
without penalty. Even firing workers with 20 or 30
years on the job would suddenly become much easier and
cheaper, by limiting the penalty for unjust termination
to one year's severance pay. "That's an open
invitation to employers," according to Arturo Alcalde,
Mexico's most respected labor lawyer and past president
of the National Association of Democratic Lawyers.
"The bosses themselves say the PRI reform is the road
to a 'paradise of firings.' It will make it much
cheaper for companies to terminate workers."
The justification, of course, is that by reducing the
number of workers at a worksite, while requiring those
remaining to work harder, productivity increases and
profits go up. For workers, though, a permanent job
and stable income become a dream, while the fear of
firing grows, hours get longer, and work gets faster,
harder and more dangerous.
The PRI labor law reform proposal deepens those
changes. The 40-hour workweek was written into the
Federal Labor Law, which codified the rights in Article
123. That limit would end. Even the current
7-peso/hour minimum wage ($5/day) would be undermined,
as employers would gain the unilateral right to set
wages. The independent review of safe working
conditions would be heavily restricted.
Mexican workers aren't passive and organize work
stoppages and protests much more frequently than do
workers in the U.S. Greater activity by angry workers,
therefore, wouldn't be hard to predict. So the labor
law reform takes this into account as well.
Even in union workplaces with a collective agreement
setting wages and conditions, an employer could force
workers to sign individual agreements with fewer rights
or lower wages. Companies could subcontract work with
no limit, giving employers the ability to find low-cost
contractors with no union to replace unionized,
higher-wage employees. And it would become much more
difficult to go on strike.
THE proposed labor law reform is the fourth in a series
of basic changes in Mexico's economic, legal and
political framework over the last decade. A fiscal
reform began the process of privatizing the country's
pension system, much like the Social Security
privatization plans proposed for the U.S. Teachers
charge that Mexican education reform is intended to
remove their influence over the curriculum, which still
espouses values that would seem very progressive in a
U.S. classroom. In many cases, they say, it will
remove them from their jobs also. Current Mexican
President Felipe Calderon of the National Action Party
(PAN) proposed an energy reform aimed at privatizing
the national oil company, Pemex. Fierce opposition,
however, was able to restrict it to some degree.
All the reforms have been part of a program of economic
liberalization opening Mexico to private, domestic, and
especially foreign capital. Lopez Obrador calls the
labor law reform "part of a series imposed on Mexico
from outside over the last two decades, including the
energy reform, fiscal reform and education reform."
The World Bank pressured Mexico to adopt an earlier
labor law reform after the PRI lost the presidency in
2000, and Calderon's predecessor, Coca-Cola executive
Vicente Fox, won it. The two labor law reform
proposals are very similar. Both reflect the surging
power of corporate employers in Mexico, and the way the
PRI and PAN often trade places, pursuing the same
political and economic agenda.
"At the same time," Lopez Obrador notes, "the fight
against inequality and poverty is not on the national
agenda." Mexican poverty contradicts claims by its
leaders, who insist its economic growth merits a seat
in the "first world." Changing labor law would make
poverty more permanent, however, as well as rendering
unions more impotent to challenge it. Juan Manuel
Sandoval, a leader of the Mexican Action Network
Against Free Trade, predicts, "We will become part of
the first world - the back yard."
In 2010 Mexico had 53 million people living in poverty,
according to the Monterrey Institute of Technology.
The CIA says half the country's population lives in
poverty, and almost 20% in extreme poverty. The
government's unemployment figures are low - 5-6% - but
a huge number of working-age Mexicans are part of the
informal economy, selling articles on the street or
working in jobs where the employer doesn't pay into the
official funds (the basis for counting employed
workers.) Some estimate that there are more workers in
the informal sector than in the formal one.
Even formal jobs don't pay a wage capable of supporting
a family. According to the Bank of Mexico, 95% of the
800,000 jobs created in 2010 paid only $10 a day. Yet
when a maquiladora worker buys a gallon of milk in a
Tijuana or Juarez supermarket, she pays even more than
she would on the U.S. side. Prices are a little lower
further south, but not much. The price of milk used to
be fixed and subsidized, along with tortillas, bus fare
and other basic necessities. Previous waves of
economic reforms decontrolled prices and ended consumer
subsidies, as Mexico was pressured to create more
favorable conditions for private investment.
Investors have done very well. In one of the recent
diplomatic cables published by Wikileaks, the U.S.
government admits "The net wealth of the 10 richest
people in Mexico - a country where more than 40 percent
of the population lives in poverty - represents roughly
10 percent of the country's gross domestic product."
Carlos Slim became the world's richest man when a
previous PRI President, Carlos Salinas de Gortari,
privatized the national telephone company and sold it
to him. Ricardo Salinas Pliego, who owns TV Azteca, is
now worth $8 billion, and Emilio Azcarraga Jean, who
owns Televisa, is worth $2.3 billion. Both helped
current Mexican President Felipe Calderon get elected
German Larrea and his company Grupo Mexico got
concessions to operate some of the world's largest
copper mines. Grupo Mexico was accused of industrial
homicide by miners' union president Gomez Urrutia after
65 people (many of them contract workers) died in an
explosion at the Pasta de Conchos coal mine in February
2006. Since June 2007 the Grupo Mexico copper mine in
Cananea has been on strike. Last year Larrea and the
Mexican government cooperated in using armed force to
open its gates and bring in strikebreakers.
MUCH of the PRI's labor law reform is already the
reality on the ground in Cananea, at other mines, and
among maquiladora workers near the U.S. Mexico border.
For years the rights of workers in northern Mexico,
even the rule of law itself, have been undermined by
the growing power of corporations.
The corporate transformation of the Mexican economy
began long ago, moving the country away from
nationalist ideas about development, which were
dominant from the end of the Mexican Revolution through
the 1970s. Nationalists advocated an economic system
in which oil fields, copper mines, railroads, the
telephone system, great tracts of land, and other key
economic resources would be controlled by Mexicans and
used for their benefit.
Under President Lazaro Cardenas in the late 1930s,
Mexico established a corporatist system in which one
political party, the PRI, controlled the main sectors
of Mexican society - workers, farmers, the military and
the "popular" sector. PRI governments administered a
network of social services, providing healthcare and
housing, at least for people in those organized
sectors. Cardenas also nationalized Mexico's most
important resource - oil - in a popular campaign.
National ownership of oil, and later electrical
generation, was written into the Constitution. Land
redistribution and nationalization had a political as
well as economic purpose - the creation of a section of
workers and farmers who would defend the government and
its political party, into which their unions and
producer organizations were incorporated.
After World War Two, Mexico officially adopted a policy
of industrialization through import substitution.
Factories produced products for the domestic market,
while imports of those products were restricted. The
purpose was to develop a national industrial base,
provide jobs, and increase the domestic market. Large
state-owned enterprises eventually employed hundreds of
thousands of Mexican industrial workers in mines,
mills, transportation and other strategic industries.
Unions had their greatest strength in the public
sector. Foreign investment was limited.
Enrique Davalos, professor and teachers' union activist
at San Diego City College, calls the system
"nationalism in rhetoric, selling out the country in
practice." Under successive PRI administrations a vast
gulf widened between the political and economic elite,
who managed the state's assets and controlled
government policy in their own interest, and workers
and farmers, especially those not in the formal sector.
To protect this elite, the country's political system
became increasingly repressive.
In the 1970s, to finance growth while the price of oil
was high, Mexico opened up its financial system to
foreign capital (mostly from the U.S.), and the
country's foreign debt soared. Managers of state
enterprises, like the oil company, ran private
businesses on the side, along with politically
connected union officials. Rackets and corruption
proliferated while labor and campesino leaders who
challenged the system were imprisoned or worse.
The debt and the hold it gave to foreign financial
interests spelled the end of nationalist development.
Oil prices fell, the U.S. Treasury jacked up interest
rates, and in 1982 the system collapsed when Mexico
could no longer make debt payments. The government
devalued the peso in what is still infamously
remembered as the great "peso shock."
In the Constitution Mexicans still had the right to
housing, healthcare, employment and education, but
millions of people went hungry, had no homes, were sick
and unemployed, and couldn't read. The anger and
cynicism felt by many Mexicans toward their political
system is in great part a product of the contradiction
between the constitutional promises of the revolution a
century ago, plus the nationalist rhetoric that
followed, and the reality of life for most people.
In a desperate attempt to generate jobs and revenue for
debt payments, the government encouraged the growth of
maquiladoras, the foreign-owned factories on the
northern border. By 2005 over 3000 border plants
employed over 2 million workers making products for
shoppers from Los Angeles to New York. In 1992 they
already accounted for over half of Mexican exports, and
in the NAFTA era, became the main sector of the economy
producing employment growth.
Maquiladora development undermined the legal rights of
workers in the border area, and any laws viewed as
discouraging investment. The government had a growing
interest in keeping wages low as an attraction to
foreign corporations, instead of high enough that
people could buy what they were making. The old
official unions, including the Confederation of Mexican
Workers (CTM), controlled restive workers rather than
organizing them to win better conditions.
ONE of the most important methods of control is the
protection contract. Cooperative unions sign
agreements with factory owners, who pay "dues" for
workers who often have no idea that the union and
contract even exist. They find out quickly, however,
when they try to organize any independent effort to
raise wages or improve conditions. The company and
official union claim a contract is already in place.
If workers try to protest, they're forced into a
process before "tripartite" labor boards dominated by
business owners, politicians dependent on them, and the
Labor history in Mexico for decades has been dominated
by valiant battles fought by workers to organize
independent unions and rid themselves of protection
contracts. Thousands have been fired, and some even
killed. Despite defeats, organizations like the
Coalition for Justice in the Maquiladoras (CJM), the
Border Committee of Women Workers (CFO), Enlace, and
the Workers Support Committee (CAT), have helped
workers challenge this system. Some of these battles,
fought together with independent unions like the
Authentic Labor Front (FAT), have won union contracts,
slowly building an independent and progressive sector
of Mexican labor.
The FAT and the National Union of Workers, to which it
belongs, have made their own proposals for labor law
reform. They've suggested making all contracts public
to let workers know what union they belong to, and to
shine a light on the corruption of the present system.
They see the tripartite labor boards as so compromised
that they'd do away with them, while removing some of
the government controls used to punish independent
The PRI proposal would not make protection contracts
public or limit them, nor would it change the labor
boards or enhance union rights. Instead, it takes
direct aim at those independent unions, some of which
have been organized in fierce fights against shutdowns
and privatization, like the recent one at the
government-owned Mexicana Airline. New private
businesses don't want to see these unions spread,
organizing their workers. A new private airline,
Volaris, for instance, recently started service to the
U.S. Now that the government has forced Mexicana into
bankruptcy and laid off its workers, Volaris hopes to
take over the old airline's routes, and perhaps even
its assets. What it doesn't want is the Mexicana
The PRI labor law reform would restrict unions to the
one company or enterprise where they began.
Industrial, or even craft, unions, representing workers
at many employers, would become impossible to organize.
New private businesses, like Volaris, would face no
challenge by a union seeking to set a base wage for a
particular industry. Unions would have much greater
difficulty in organizing solidarity among workers, in
any effort like the ones that led to the large
industrial unions in the U.S. and Mexico.
Progressive unions in Mexico today are fighting for
their survival. The state institutions that enforce
Mexican labor law are already heavily stacked against
them. PRI's reforms would turn the struggle for
survival into a desperate labor war.
David Bacon is a California writer and photojournalist.
His latest book is Illegal People: How Globalization
Creates Migration and Criminalizes Immigrants.
The Institute for Transnational Social Change (ITSC) is
a hub for cross-border collaboration among key
worker-led organizations (independent unions, worker
centers, NGOs, and academics) in Mexico and the United
States. The institute seeks to address the needs of a
low-wage workforce that is often hard-to-reach -
migrant workers, women in the garment industry, farm
workers, miners, and other workers in industries
dominated by highly mobile transnational corporations -
and to increase opportunities for cross-border
collaboration. The present report is part of a series
of publications sponsored by ITSC. For more
information about the ITSC, contact Gaspar
Rivera-Salgado at UCLA, [log in to unmask]
To read the previous installment, The Hidden History of
Mexico/U.S. Labor Solidarity, visit the Americas
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