BY DAVID BACON
MEXICO CITY — In the 1930s and '40s, General Lazaro Cardenas made land reform and nationalisation of economic resources symbols of Mexican national sovereignty. Independence from the colossus of the north, Cardenas said, meant prying the hands of US owners from the main levers of the country's economic life.
Just a few decades after the cataclysmic revolution of 1910-20, public ownership of two keys to its economic future — oil and electricity — was written into the constitution.
Nationalist economic development, however, was overthrown as the bedrock of the country's economic strategy when technocrats took power in the former ruling Party of the Institutionalised Revolution (PRI) in the 1970s.
Today, the Mexican economy looks nothing like it did 20 years ago. Well before passage of the North American Free Trade Agreement (NAFTA), the disparity between US and Mexican wages was growing. Up to the 1970s, Mexican salaries were a third of those in the US. They are now less than an eighth, according to Mexican economist and former senator Rosa Albina Garabito. In some industries they've dropped to a 12th or a 15th — even during a period of relative decline in US wages.
In two decades the income of Mexican workers lost 76% of its purchasing power, while the Mexican government ended subsidies on the prices of basic necessities — including petrol, bus fares, tortillas and milk. The government estimates that 40 million people live in poverty and 25 million in extreme poverty.
These results are the product of the imposition of neo-liberal economic reforms. In the last two decades Mexico has become their proving ground, as the International Monetary Fund and the World Bank, through the leverage of foreign debt, required massive changes in economic priorities.
Designed to encourage foreign investment, the heart of those changes has been privatisation of state enterprises, including the airlines, ports, railroads, banks, phone system and whole sections of formerly state-owned industries.
The impact on workers has been devastating. A majority of Mexican industrial workers worked for the government until the 1970s, and the organised labour movement had its greatest strength in the state sector.
While three-quarters of the work force in Mexico belonged to unions three decades ago, less than 30% do so today. In the state-owned oil company, PEMEX, union membership still hovers at 72%. But, during the last decade, when the collateral petrochemical industry was privatised the unionisation rate fell to 7%.
Resistance to privatisation has often been fierce. Soldiers had to occupy the port of Veracruz at gunpoint in order to privatise it and fire its work force. Mexico City's bus drivers fought the sell off of the Route-100 company for three years, including one in which their union leaders were imprisoned. Wildcat strikes hit the railroads when they were sold to Grupo Mexico, and copper miners fought a valiant battle against job reductions when the Cananea mine was bought by the same owners in the late 1990s.
Electricity privatisation
While these resistance efforts were defeated, one of the government's most important privatisation schemes has consistently been held at bay — the sell off of the electrical system.
Mexico's grid for generating and distributing power has two parts. The Power and Light Company handles distribution for Mexico City and central Mexico. Electricity is generated and distributed in the rest of the country by the Federal Electricity Commission (FEC).
Each entity has a separate union. The Mexican Electrical Workers Union (SME) at the Power and Light Company is one of the country's oldest and most democratic labour organisations. At the FEC, the Sole Union for Electrical Workers of the Mexican Republic (SUTERM), led the movement to democratise the country's unions two decades ago. Since then, however, the government has seized control of it.
Seven years ago, former president Ernesto Zedillo announced plans to put the electrical system up for sale. Those plans have outlived his administration. Current President Vicente Fox, a former Coca-Cola executive who became the first candidate to defeat the PRI in 70 years, intends to continue the privatisation plan.
US President George Bush has given those plans further impetus. He seeks to expand NAFTA by subordinating all Latin American economies to the US in the Free Trade Area of the Americas. In a key step, Bush won fast-track negotiating authority from Congress in December.
His energy plan also envisions much more integration, tying Mexican generation to the power grid and market in the US southwest. Integrating the electrical systems of the US and Mexico is not only a technical goal, but a political one, designed to create greater profit-making opportunities for the newly deregulated subsidiaries of US utilities.
The Mexican government argues that it has no money to invest in modernising the apparatus, especially the generation stations, and claims that private owners could provide service at cheaper prices (defying the experience of previous Mexican privatisation schemes).
However, the SME argues that the government subsidises large users, even though Mexican power prices are already very low and government budget cuts continue to undermine any modernisation of equipment or facilities. It also accuses the government of forcing the Power and Light Company to buy power from the FEC, whose prices have increased 298%, while the company's rates to consumers have only gone up by 176%.
Worker resistance
In 1998, Zedillo's privatisation scheme was met with a wave of popular resistance, led by the SME. Under the banner of stopping the sell off of both electricity and oil, more than a million people demonstrated in Mexico City's central plaza on the traditional May Day holiday.
A new union federation, the National Union of Workers, has declared open opposition to the economic reforms.
In 1999, splits began to develop in SUTERM. In May of that year, 3000 of its members defied their national leaders and marched in the capital, openly allying themselves with the SME. Another demonstration in August, 1999, brought out 5000.
Meanwhile, the SME set up the National Front of Resistance Against the Privatisation of the Electrical Industry, and collected over a million signatures on petitions in just three weeks.
Confrontation with Fox was narrowly averted when a new collective bargaining agreement was reached between the SME and the Power and Light Company in March last year. It was widely rumoured that police and soldiers had been prepared to occupy electrical installations in the event of a strike.
However, a bill to modify articles 27 and 28 of the constitution (which mandates public ownership of the power industry) has already been written. In May, the World Bank added to the controversy surrounding Mexico's low-wage development policy in a series of recommendations to the government entitled "An Integral Agenda of Development for the New Era."
The bank recommended re-writing Mexico's constitution and federal labour law. It's recommendations include giving up requirements that companies: pay severance pay; negotiate over the closure of factories; give workers permanent status after 90 days; limit part time work; and abide by the 40-hour week. Other recommendations include eliminating the historical ban on strike-breaking. Mexico's guarantees of job training, health care and housing, paid by employers, would be scrapped as well.
The recommendations were so extreme that even a leading employers' association condemned it. Claudio X. Gonzales, head of the Managerial Coordinating Council, called the report "over the top", noting the bank didn't dare to make such proposals in developed countries. "Why are they then being recommended for the emerging countries?" he asked. But Fox embraced the report, calling it "very much in line with what we have contemplated" and necessary to "really enter into a process of sustainable development".
Among those who disagreed was Jesus Campos Linas, the new head of the labour board. He saw the World Bank proposal as a stalking horse for Mexico's largest employers and their allies among foreign corporations and financial institutions. The proposals in the report were too drastic for the government to make itself, he said, but they provided an extreme pole against which its own neo-liberal proposals might seem more acceptable.
Campos Linas rejected Fox's argument that gutting legal protections would make the economy more competitive, attract greater investment, and create more jobs. "Mexico already has one of the lowest wage levels in the world", he said, "yet there's still this cry for more flexibility. The minimum wage in Mexico City is 40.35 pesos a day — no one can live on this. And now we've lost 400,000 jobs since January alone."
Two separate and very different ideas about economic development and workers' rights have emerged in Mexico. The differences are deep over whose priorities will prevail — those of workers or those of investors with a stake in the free-trade based economy.
According to Harley Shaiken, director of the Center for Latin American Studies at the University of California Berkeley, "the Mexican government has created an investment climate which depends on a vast number of low wage-earners. This climate gets all the government's attention, while the consumer climate — the ability of people to buy what they produce — is sacrificed."
Rosendo Flores, SME secretary general, emphasises that privatisation can't be defeated without seeing its integral connection with the rest of the neo-liberal economic development program, and without proposing an alternative. He believes that genuine national economic development requires strong internal markets, with well-paid workers capable of consuming the goods they produce.
"We have seen the consequences of deregulation in the electrical sector in the state of California which has been detrimental to the interests of the electrical workers and of the population", says a statement signed by leaders of both Mexican electrical unions. "In Mexico, the people rightly think that the electrical industry and the petroleum industry should be public property and that such public property is the fundamental basis for their nation's existence and of their national sovereignty."
From Green Left Weekly, January 16, 2002.
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