September 06, 2007

MEXICAN LABOR UNIONS UNDER FIRE AS POTENTIAL ECONOMIC CRISIS BREWS

The growing unrest of exploited workers is adding to the crush of desperate Mexicans struggling to get across the border to America, say the authors of a recent scholarly article examining the pressures facing Mexican labor unions from the 1980s until today. "The State of the Unions in Mexico" was researched and written by Dr. Charles R. Greer and Dr. Gregory K. Stephens, both management professors at the Neeley School of Business at TCU, and Dr. Charles D. Stevens of North Dakota State University.

The situation is disquieting not just for Mexicans but also for American companies, workers and unions, in part because Mexico provides a lower-wage environment for manufacturing jobs, potentially dampening the bargaining power of U.S. unions. Additionally, Mexico is the world's twelfth-largest economy and the second-largest trading partner of the U.S.

"It's a vicious race to the bottom for Mexican wages," says Dr. Greer. "While jobs had been going from America to Mexico to take advantage of lower costs, with increased market globalization jobs are now going from Mexico to Asia, where wages are even lower."

Many of the thousands of foreign-owned multinational corporations (maquiladoras) in Mexico, which employ millions of young Mexican laborers in unskilled manufacturing jobs, can move elsewhere easily. Maquiladoras are located in all 31 Mexican states but have the greatest concentration along the border.

"At the sign of the slightest difference in wages, maquiladoras can close up shop, relocate to another country, and be back in business within weeks," says Dr. Greer. "If they can find lower wages in Asia, they don't hesitate to move out of Mexico."

This pressures Mexico to constrain the activities and influence of unions in an attempt to keep millions of jobs and billions in foreign investment dollars from decamping to Asia. Falling by the wayside are health and safety protections, child-labor restrictions and anti-discrimination regulations.

As part of this push, the Mexican government has established a fiercely pro-business economic development policy, particularly regarding foreign-owned companies, that strongly discourages unionization.

"Mexico is viewing this action as the best of bad alternatives. They never wanted to implement this kind of policy as a long-term strategy, but they would have been worse off otherwise," Dr. Greer says. "The maquiladoras are feeding a lot of people."

Other factors contributing to the brewing economic crisis include the end in 2000 of the 70-year regime of the Institutional Revolutionary Party as the ruling political party. That dealt a major blow to the large party-aligned unions accounting for the majority of union membership in Mexico. Another problem is the growing numbers of maquiladoras, which often sign agreements with unions that exist only on paper, sometimes called ghost unions, that are typically exploitative of workers and block legitimate unionization. Still others include the steeply increasing foreign ownership of businesses in Mexico and a wide scale exodus of jobs from the traditional union stronghold of Mexico City toward the thousands of maquiladoras in the border region.

In the face of all this, most unions have become more conciliatory toward company demands.

"The Mexican government distanced itself from the labor movement and marginalized unions to promote economic development, undermining the ability of unions to influence wages and working conditions," Dr. Greer says.

This void, however, is providing the impetus for reforms in the corrupt unions previously aligned with the Institutional Revolutionary Party, and the formation of new, autonomous unions not affiliated with political parties and having the goal of promoting and protecting workers' rights.

"Independent unions are becoming a viable part of the labor movement in Mexico," says Dr. Greer.

Greer and his co-authors authors predict that independent unions will continue to increase in numbers and strength. Whether the movement will have a lasting, significant effect on Mexico's economy remains to be seen. Challenges facing the movement include government opposition, the risk of job losses, the proliferation of company-oriented unions, and the contempt of many Mexican workers for unions based on past widespread corruption.

Nonetheless, wages and rights can be diminished only so far before worker unrest gets really ugly, say the authors. In fact, grassroots demands for labor reform are becoming louder and more insistent, as evidenced by sickouts, protests, marches, sabotage, strikes and incidents of violence.

"Mexico has tremendous wealth and natural resources, but how long can the country maintain stability while its workers are pushed deeper into poverty?" asks Dr. Greer. "We would like to see Mexico develop a strong industrial relations system with protections for rights, minimum standards for working conditions, and unions that are truly representative of employees' interests."


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