U.S. Congress and AMLO may finally force Labor Reform in Mexico

Friday April 26th (BLOOMBERG).- Mrs. Martínez earns $79 for a six-day week working in the produce section of a Walmart in Mexico City. A labor union bargained with the retail giant to get her that salary, but she’s never met a representative. She didn’t want to be named for fear of reprisals, but she says she hasn’t even heard of the union.

“Bargaining” is a stretch to describe what the union actually did, which is more like rubber-stamping. The collective contract that covers Martínez’s store allows starting salaries around the minimum wage, which has fallen so far behind inflation that few in the capital actually work for it. Walmart Inc. pays dues on workers’ behalf.

That’s not how unions are meant to work. But in Mexico they do, and not by accident. Low pay has been central to the country’s economic strategy in the quarter-century since Nafta began, boosting its appeal as a cheap base for exports to the giant consumer market up north. Many businesses that took advantage of cheap Mexican labor were American, turning the wage gap into a bone of contention between the two countries. The United States-Mexico-Canada Agreement, negotiated last year to replace Nafta, has more worker protections. But U.S. lawmakers—particularly House Democrats—insist on proof that Mexico is finally serious about boosting wages and threaten to block ratification of the deal until they get it.

Mexico’s new labor-friendly president, Andrés Manuel López Obrador, says he wants an economy that’s more driven by domestic demand anyway, which puts the unions in a political vise.


Crumbs From the Table

Share of value created by corporations*

Data: OECD

*Figures are five-year averages for the period ended in 2013


U.S. efforts to ensure that more worker protections make it into the new deal have focused primarily on companies that sell goods to the U.S., including automakers, which have also been targeted by the Trump administration for suppressing wages. But American labor groups, who have been working with Democrats on details of the new trade accord, say the problem is wider. Nonexporters such as Wal-Mart de México, the nation’s biggest private employer, are a key part of it.

Walmart is among the companies that have announced a wage increase since AMLO took office. In March it promised a 5.5 percent hike in average nationwide pay. Walmart says it also offers most employees productivity bonuses and is working to adjust collective bargaining contracts to comply with the new labor law being passed.

Low pay has been a crucial part of Mexico’s economic model. It’s been reinforced by unions, which offer up their members for low wages and no benefits.

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