Mexico's low wages a sticking point in NAFTA talks, but labour activists say pay is just start of the problem

May 23, 2018 Issues: Trade

Imelda Jimenez spent four years making motorheads at a plant in Monclova, in the northern Mexican state of Coahuila. The salary was 1,300 pesos for a 60-hour work week, she said - the equivalent of about $1.50 an hour.

It was too little to provide for her four children.

"It wasn't enough to do what you had to do. You could eat, or you could send your kids to school," the 40-year-old told The Globe and Mail. "I had to take out payday loans."

Ms. Jimenez had a union, the Confederacion de Trabajadores de Mexico. But the CTM - which is tied to Mexico's governing political party and is often accused of signing sweetheart deals with multinational corporations - did nothing to get her and her co-workers a raise, she said. So they staged a wildcat strike in the spring of 2014, demanding the right to form a more effective union.

After persuading the strikers to come back to work with promises of better treatment, Ms. Jimenez said, the company fired them.

Mexico's low wages have become a key sticking point in the renegotiation of the North American freetrade agreement. The Trump administration in the United States is demanding that auto companies be forced to source 40 per cent of their car parts from factories that pay at least US$15 to US$17 an hour. Mexican negotiators are fighting the proposal, worried it would move jobs out of the country, where auto sector wages average the equivalent of US$4 an hour.

On the ground in Mexico, however, workers and union activists say pay is only part of the problem. They point to a raft of poor working conditions, including companies refusing to allow workers to take their allotted holiday time, 60-hour workweeks, and supervisors who demand sex from female employees in exchange for better treatment.

At the heart of the problem, they say, is Mexico's system of "protection unions" - so-called because, far from representing the interests of workers, these labour organizations are accused of protecting corporations from labour strife by signing agreements that keep wages low and working conditions poor.

These groups - the largest of which are the CTM, the Confederacion Revolucionaria de Obreros y Campesinos (CROC) and the Confederacion Regional Obrera Mexicana (CROM) - are aligned with the Partido Revolucionario Institucional (PRI), which has governed the country for eight of the past nine decades.

In Mexico's industrial system, a corporation will sign a labour deal with CTM, CROC, CROM or another protection union before they open the plant or hire any workers. The advantage for the company is that having a pliant union makes it harder for the workers to join other more independent unions that would fight for better conditions.

"When a company is going to open a factory, it buys a contract.

The union signs the contract without having even met a worker," says Kimberly Nolan Garcia, a labour expert at the Centro de Investigacion y Docencia Economicas university. "When a worker is hired, they're already bound by an agreement they had no input in, which was decided by the owners of the factory."

Josefina Martinez Hernandez, a bespectacled 48-year-old, said she ran up against the CTM juggernaut while organizing the wire harness factory she worked at in Ciudad Acuna, another city in the state of Coahuila.

Ms. Martinez Hernandez accused the company of exploitative working conditions: Supervisors forced employees to request permission to use the washroom and rationed toilet paper to cut costs, she said. And some managers demanded workers on the line have sex with them in exchange for overtime or time off.

"If you want some extra hours to make more money, then they'll say, 'Okay, you have to do something for me.' Even sometimes just to take your vacation ... sleep with them. Especially the young women are subject to this all the time," she said at a meeting with U.S. congressional Democrats on the sidelines of a NAFTA negotiating round in Mexico City in March.

But when Ms. Martinez Hernandez and her colleagues organized a vote to leave the CTM and switch to a different union that would fight these abuses, she said, the company rigged it by bringing in people who didn't work at the plant, including managers, to cast ballots. She and the rest of the union organizers were fired by the company, PKC Group, in December, 2012.

Finland-based PKC did not respond to a request for comment.

Calls to the CTM's Mexico City headquarters were unanswered when The Globe phoned the two numbers listed on the union website.

A spokeswoman for Fiat Chrysler, the parent company of Teksid - which owns the motorhead factory at which Ms. Jimenez worked - described the 2014 strike as an "unauthorized and illegal" job action in response to a dispute over Teksid's calculation of bonus pay; she said the calculation was subsequently upheld by a labour board.

"Teksid respects the rights of its employees and takes its responsibility for ensuring their fair treatment very seriously," Shawn Morgan said in a statement.

Both U.S. congressional Democrats and the Canadian government are pushing for NAFTA provisions that would make it easier for workers to join an independent union outside the control of the protection system.

"If this issue isn't addressed, there will be virtually no support among Democrats for renegotiating NAFTA," said Sander Levin, a Democratic congressman and member of the committee overseeing trade, after meeting with workers in Mexico City in March.

Canadian union leader Jerry Dias, who has been consulting with the Canadian government on NAFTA, said a revamped deal should force labour reforms in Mexico that go beyond the U.S. wage proposal.

"Fifteen dollars an hour is a good start. Is that where I want to be at the end of the day? No," said Mr. Dias, whose union, Unifor, represents Canadian auto workers. "The key issue is the principle of free collective bargaining and the elimination of the yellow unions and the protection agreements that are signed which screw workers in Mexico."

Whether such reforms will make it into a revised NAFTA is an open question: The Trump administration's chief motivation at the bargaining table is to restore factory jobs to the United States.

But many in Mexico say they would be happy to see the American wage demand written into the deal.

Alex Covarrubias, a labour expert at El Colegio de Sonora who has studied pay in the Mexican auto industry, contends that there is room for it to rise.

"In economic terms, there is everything in place for Mexico to raise wages in the auto sector.

Productivity is growing and employment is growing," he said.

"There is not any reason to keep the wages the way that they are."

Isidro Mendez of Los Mineros, the independent mine workers' union, doesn't share the Mexican government's concern that better pay would push industry out of the country.

"It's incredible the Canadian government and the U.S. want the same wages for Mexican workers. We are asking the same thing," he said at a gathering of labour leaders at the offices of the telephone workers' union, on a side street in the shadow of the postmodern office towers of Mexico City's business district. "If we do the same work here in Mexico, we should be paid the same as in Canada and the U.S. They have in an hour what we have in a day."

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GLOBE & MAIL: Mexico's low wages a sticking point in NAFTA talks, but labour activists say pay is just start of the problem