Fact sheet: labor in Mexico - U.S.-Mexico Binational Commission Meeting: Mexico City, May 8-9, 1994

US Department of State Dispatch, May, 1994

American trade unions, some Members of Congress, and the U.S. public have expressed concern about Mexican labor law and its enforcement. Issues include the right and ability to organize and bargain for wages, to strike, and to work in a healthy and safe environment.

The right of Mexican workers to organize trade unions and to strike for better wages and conditions is provided for in Mexico's constitution and laws. Mexico has a high rate of unionization (30-36%) compared to most industrial democracies (for example, the U.S. rate is about 14%); its public sector is almost totally unionized. Strikes are limited essentially to disputes over union recognition, collective bargaining agreements and their renewal - especially wages and benefits - and the manner in which an employer carries out legally mandated profit-sharing.

As defined by law, a "legal" strike means that all employees, including management, must depart the workplace; only mutually designated security and maintenance personnel may remain; and no hiring or use of substitute workers is allowed. If a strike is declared illegal, strikers have 24 hours to return to work or face dismissal for cause. Unions complain that the labor courts define legal strikes too narrowly, but, in most cases, a strike notice brings about prompt resolution of an industrial dispute.

The major union federations and autonomous national unions form the Labor Congress. Most - but not all - Labor Congress affiliates have links to the ruling political party, the Institutional Revolutionary Party (PRI). With the growth of free market reforms, Labor Congress ties to the PRI are rapidly weakening, because market conditions rather than politics increasingly determine the outcome of labor issues. The Labor Congress is so dominant, however, that leaders of would-be new unions complain that government labor officials, sensitive to the views of pro-PRI big labor, improperly delay new union registrations. The government denies this, and there is no hard evidence of purposely delayed registrations. But delays of several years encourage skepticism.

Mexican workers enjoy workplace health and safety standards comparable to those in the United States (after which most Mexican standards were modeled) and in Japan and Western Europe. Social security is designed to provide a total family health-care system for workers, including day-care for children of working mothers, financed by a 5% payroll tax. Enforcement of safety and health rules is reasonably effective for large companies and maquiladora plants where imported parts are assembled into products for export. It is far less effective, however, for Mexico's many small (6-15 workers) and micro businesses (1-5 workers). Since spring 1991, the U.S. Department of Labor has worked closely with its Mexican counterparts to help ensure that maquiladoras and other companies properly apply Mexican standards.

Mexico's economy recovered from its near collapse of 1981-82, when the country was virtually bankrupt and individual purchasing power dropped about 50%. Average real earnings, adjusted for inflation, rose about 129% from 1987 to 1992, slightly ahead of an average national productivity growth of about 125% over the same period. Only the national minimum wage has failed to keep pace but, as of 1992, more than 85% of Mexican workers earned above the minimum wage. On August 13, 1993, President Salinas announced that increases in the minimum wage will be tied to increases in worker productivity as well as inflation.

Under the North American Free Trade Agreement, implementation of the North American Agreement on Labor Cooperation (NAALC) is on schedule. In January 1994, the labor ministries of Canada, Mexico, and the United States each opened a National Administration Office (NAO).

The U.S. NAO at the Labor Department - following consultations with labor advisers, congressional staff, and employer organizations - established internal guidelines for its own operations. On February 14, it received its first submissions from two U.S. unions (AFL-CIO's Teamsters and unaffiliated electricians), each involving claimed wrongful dismissals by subsidiaries of U.S companies - one in Ciudad Juarez and one in Chihuahua. The U.S. NAO is looking into the possibility of a failure by Mexican labor officials to enforce Mexican labor laws in connection with these cases.

On March 21, U.S. Labor Secretary Robert B. Reich, Mexican Labor Secretary Arsenio Farell Cubillas, and Canadian Human Resources Development Minister Lloyd Axworthy met to inaugurate the Council of the Trinational Commission for Labor Cooperation (CLC). They agreed to set up the Labor Secretariat in Dallas, Texas by summer 1994. They also agreed on a structure and budget for the Secretariat and an agenda of labor cooperation programs in safety and health, worker rights, employment and job training, and productivity - effectively merging and updating the existing U.S.-Mexican and Canadian-Mexican labor cooperation programs.