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Mexico - Labor
Historically, real wages in Mexico have been subject to tacit understandings among government officials, the private sector, and labor union chiefs. During the 1940s and 1950s, these sectors forged an understanding whereby Central Bank and Treasury Ministry technocrats would control macroeconomic policy, business groups would refrain from open political opposition while gaining political access through officially recognized private-sector associations, and labor leaders would restrict real wage demands in exchange for additional patronage for distribution to workers. After falling sharply during the 1940s, real wages began to recover in the mid-1950s and continued to rise until the late 1970s, when the government responded to growing fiscal pressures by shifting resources away from the peasantry and the public sector. The government used its control of employment opportunities and the labor union movement to hold down wages throughout the 1980s in an effort to reduce inflation.
More than 90 percent of production workers in industrial enterprises employing more than twenty-five workers belong to labor unions. Relatively few craft or professional workers are organized. Because almost half of all Mexican workers were either unemployed or underemployed and therefore not organizable, Mexico ranked in the early 1990s as a country with a highly organized labor force. The plant or workplace union is the basic unit of Mexican labor organization. Local units (secciones ) are federated either into national unions (sindicatos ) or local, regional (intrastate), or state federations. Occasionally these federations join in nationwide confederations. The CTM is the country's largest labor organization. Its secretary general in 1994 was the long-serving Fidel Velásquez. The CTM women's affiliate is the Workers' Federation of Women's Organizations (Federación Obrera de Organizaciones Femininas). Other prominent union federations include the Regional Confederation of Mexican Workers (Confederación Regional de Obreros Mexicanos), the Revolutionary Confederation of Mexican Workers and Peasants (Confederación Revolucionaria de Obreros y Campesinos), the National Federation of Independent Unions (Federacíon Nacional de Sindicatos Independientes), and the Federation of Unions of Workers in the Service of the State (Federación de Sindicatos de Trabajadores al Servicio del Estado). Most of these federations are affiliated with the Congress of Labor (Congreso del Trabajo), which represents 85 percent of all unionized workers.
In 1988 employers and the self-employed constituted 29 percent of the labor force, employees 56 percent, and unpaid family workers 15 percent. Agriculture, forestry, and fishing employed some 24 percent of the economically active population; manufacturing, mining, quarrying, and public utilities employed 22 percent; trade, hotels, and restaurants employed 19 percent; construction employed 5 percent; finance and real estate employed 5 percent; transportation and communications employed 4 percent; and 21 percent were engaged in other service work. About half of all manufacturing workers were employed in small and medium-size enterprises.
Most Mexican labor unions have strong ties to the PRI. In the 1930s and 1940s, organized labor became an integral component of the regime. The official unions facilitated Mexico's dramatic postwar economic growth by accepting labor wage increases that did not exceed productivity gains, thus eliminating a major source of inflation. The unions also discouraged industrial conflict, which helped to foster a receptive climate for foreign investment. Unions close to the PRI--especially the CTM--used both coercion and bribery to restrain wage demands. The absence of meaningful union democracy made it hard for the union rank and file to press independently for wage increases. During the 1970s, an increasing number of militant union movements broke away from the control of traditional union bosses, winning considerable autonomy over hiring and firing decisions, internal labor market operations, line speeds, and other working conditions. The government's efforts during the 1980s to promote greater productivity and efficiency in both the public and private sectors led to the reversal of many of these gains. Industrial reorganizations and downsizing resulted in massive layoffs and numerous labor concessions to management regarding work practices.
Partially to increase Mexico's domestic savings, the government proposed legislation in November 1995 to reform the country's pension system by allowing the creation of individual accounts managed by private financial institutions rather than by the government's Mexican Institute of Social Security (Instituto Mexicano de Seguro Social--IMSS). Until 1992 the IMSS had been solely responsible for managing the pension system.
The maximum legal workweek is forty-eight hours, and the maximum workday is eight hours. Industrial workers generally work the maximum number of hours per week, whereas office workers typically work forty or forty-four hours. The maximum workweek consists of either six eight-hour day shifts, six seven-hour night shifts, or six seven-and-a-half hour mixed shifts. Employers are required to pay double-time for overtime of up to three hours per day, and they cannot require workers to work overtime more than three times in one week. Each employee has the right to one free day per week, five paid holidays every year, and six to eight days of vacation during each full year of employment. Workers also are entitled to a share of their employers' annual profits.
Partly because of high unemployment in the formal labor sector, the number of informal-sector workers swelled during the 1980s and early 1990s (see Income Distribution, ch. 2). These informal workers included some 900,000 street vendors in forty-five cities, with annual sales of about US$13 billion. The growth of the informal sector both reduced the state's tax revenue receipts and encouraged corruption among local officials.
Unemployment rose sharply during the six months following the December 1994 new peso devaluation, then receded somewhat between August and December 1995. Open unemployment (according to the government's narrow definition) dropped from 8 percent to 5 percent during this period, although it subsequently increased to an average of 6 percent during the first quarter of 1996.
President Salinas further weakened the traditional unions during his incumbency. In some cases, he forced unions to negotiate at the plant level rather than nationwide. Shortly after taking office, he weakened the official oil workers' union by having its powerful and corrupt chief, Joaquín Hernández Galicia, arrested on corruption and murder charges. Salinas also undercut the 800,000-member official public schoolteachers' union, the National Union of Education Workers (Sindicato Nacional de Trabajadores de la Educación), by transferring authority over education from the central government to the states. By doing so, he restricted the union's power by forcing it to negotiate separate contracts with each state government. The central government's ongoing privatization program eliminated hundreds of thousands of union jobs, and its 1993 decision to link future wage increases to productivity gains denied the CTM the role of bargaining with the government on wage increases for all workers. Instead, the CTM was limited to advising individual union locals as they negotiated new contracts with plant operators.
Mexico's first comprehensive labor law was promulgated in 1931. The Federal Labor Act of 1970 authorizes the government to regulate all labor contracts and work conditions, including minimum wages, work hours, holidays, paid vacations, employment of women and minors, collective bargaining and strikes, occupational hazards, and profit sharing. The act sets the minimum employment age for children at fourteen years. Children fifteen years old can work but are restricted from certain jobs and have special legal protections and shorter working hours than adults. Medium and large commercial and manufacturing enterprises generally observe child labor laws strictly, although small shops and informal enterprises often do not. Although the law mandates a minimum wage, noncompliance ranges from 30 percent to 50 percent among employers of urban workers and reaches 80 percent in the countryside. Industrial safety laws often are loosely observed in practice, especially in the heavy industry and construction sectors.
Mexico's workforce was estimated in the 1990 census at some 24.3 million. Workers constituted a relatively small share of the total population, in part because of the population's relative youth (38 percent were below the minimum working age of fourteen). Slightly more than half of the working-age population (those aged fifteen to sixty-four) had actually entered the formal labor market. In the early 1990s, an estimated 500,000 people entered the labor force each year, expanding the total workforce by some 3 percent annually.
Although the government increased the minimum wage by 21 percent during 1995, the cost of living rose by more than 50 percent as a result of the currency collapse. In September 1995, the minimum wage was sufficient to cover only 35 percent of workers' basic necessities, compared to 94 percent in December 1987. The government's anti-inflation APRE program called for the minimum wage to increase in line with projected inflation of 21 percent. The government also pledged to boost employment through fiscal incentives to encourage private investment and tax credits for companies that increased their workforce above the average level for the first three quarters of 1995. It also planned to expand public training programs for workers and to maintain its temporary public works programs (such as rural road conservation, which was expected to employ 140,000 people, as well as other temporary work programs that would employ 700,000).
The average real wage in Mexico remained low in 1995, both in historical and international terms (see Income Distribution, ch. 2). The Confederation of Mexican Workers (Confederación de Trabajadores Mexicanos--CTM) noted that the average worker's purchasing power in 1993 was only 65 percent of its 1982 level.
You can read more regarding this subject on the following websites:
Mexico's Labor Force & Rates: Direct & Indirect Labor | NAPS
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