Pillar of Mexican Labor Is Cracking

MEXICO CITY — The formation last week of a breakaway coalition of Mexican unions signals the profound changes here assailing organized labor, which up to now has been a monolithic but docile pillar of the nation’s ruling party.

The fissures within the movement are perhaps an inevitable sign of the increasing liberalization of Mexico’s politics and economy after seven decades of dominance by the Institutional Revolutionary Party, or PRI, which next week will officially lose control of the Mexican Congress for the first time since 1929.

The new coalition, a 132-union group tentatively named National Workers Union and led by the dynamic and outspoken head of the telephone workers guild, could increase pressure for higher wages and the possibility of strikes, virtually unheard of by major unions in Mexico.

That in turn could affect Mexican manufacturers and the growing number of U.S. and other foreign companies operating here, which in recent years have enjoyed stable, even declining, labor costs in dollar terms in the aftermath of the 1994 peso devaluation.

The diminution of the power long exerted by the Federation of Mexican Workers, or CTM, has been underway for years. But the death two months ago of the country’s longtime labor boss, 97-year-old Fidel Velazquez, clearly hastened the disintegration of Mexico’s umbrella labor organization.

No radical overnight change is expected from the schism, which occurred on the eve of the nation’s annual Labor Congress here last weekend. The breakaway unions are still outnumbered nearly 4 to 1 by the CTM, which has more than 3 million dues-paying members and claims to represent 5 million workers.

The dissidents admit that Mexico’s labor law must be overhauled for the breakaway unions to have any real effect because it favors the PRI. Unlike that conducted by major U.S. unions, contract bargaining takes place at the local level, where entrenched holdovers of the old system still hold sway, labor academic Raul Trejo of Mexico City said Thursday.

There is strong support for labor law reform among members of Mexico’s Congress of Deputies, which will convene Monday. The PRI lost its long-held majority in July 6 elections.

Jorge Esparza Carlo, a congressman representing a Baja California district who is based in Tijuana, said his National Action Party, or PAN, will include in its upcoming platform a proposal to thoroughly overhaul Mexican labor law.

The reforms would include barring the current practice of forcing some CTM members to vote only for PRI candidates and would give employees, including those at the foreign-owned plants known as maquiladoras, more choice in organizing.

“The old law served only to enrich the union directors and the businesses,” Esparza said Thursday.

The new group, now 800,000 strong, continues to add allies and is gathering momentum. More and more unions are joining the fold. The biggest catch so far: the 400,000-member social security workers union.

On Wednesday, five more unions joined, including the 1,600-member airline pilots guild, whose director, Manuel Gonzalez Flores, told reporters that “new democratic forces” are renewing Mexico’s labor movement.

While it’s too early to predict when and if wage pressure will be felt by manufacturers, Harley Shaiken, a labor economist at UC Berkeley, said unions may soon act much more aggressively on the wage front.

Of immediate concern to President Ernesto Zedillo is whether the unions will sign off on this year’s business-labor compact, the annual agreement brokered by the PRI by which business and labor agree to cap wage and price increases.

The pactos, as the annual accords are called, have kept wage increases far below inflation since the 1994 peso crisis and have been an essential element of Zedillo’s management of Mexico’s economic recovery and efforts to keep inflation under control.

Over time, the pactos have been a big reason for the CTM’s declining strength. Union leaders have signed off on labor contracts that have cost members about 60% of their wages in inflation-adjusted terms since the early 1980s, Shaiken said.

Those concessions have raised labor dissent to new levels.

Many workers have also tired of union leaders, who are commonly perceived as more intent on making their own side business deals and furthering their PRI political careers than on looking after the interests of the rank and file.

“The central purpose of our struggle is to see to it that unions serve workers. That seems obvious, but the problem has been that unions have been serving everyone but the workers,” said Francisco Hernandez Juarez, a telephone workers union chief who is a leader of the new coalition.

Even the PRI admits that the labor situation must change. Juan Millan, the party’s secretary-general, said the control of labor exercised by the PRI must end if economic and social development in Mexico is to continue.

Trejo, who researches labor issues at the National Autonomous University of Mexico City, said even some businesses are clamoring for changes in labor law and leadership because they want a “truly representative” union speaking for workers.

The PRI could always count on the CTM to deliver votes and sign on to the annual labor-business compact and in exchange gave workers relative job security and better benefits.

But the loss in real wages, plus widespread layoffs because of the currency crisis and ongoing privatization, has shaken rank-and-file loyalty. Hernandez said the 100,000-member railroad workers union faces 55,000 layoffs as the state sells off the nation’s largest routes to private firms.

Hernandez warned that Mexico’s booming maquiladoras, the foreign-owned plants situated mostly along the U.S.-Mexico border, could see increased union pressure in coming years to boost wages.

“Lowest wages are not the only determinant of competitiveness, productivity and efficiency,” Hernandez said in an interview.

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