Development for Whom?

September 25, 2007

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, secretary general of SME, the electrical workers’ union, emphasizes that privatization can’t be defeated without seeing its integral connection with the rest of the neoliberal 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.

According to a study by the Economics Faculty of the National Autonomous University in Mexico City, Mexican wages have lost 81 percent of their buying power during the last two decades of economic reforms. Twenty years ago, the study says, the minimum wage could pay for 93.5 percent of a family’s basic necessities, while today it only buys 19.3 percent. Today, the actual average maquiladora wage is about $6-8 a day. Meanwhile, the Mexican government has ended subsidies on the prices of basic necessities, including gasoline, bus fares, tortillas and milk. The government estimates that 40 million people live in poverty, and 25 million in extreme poverty.

The impact on unions has also been devastating. While three-quarters of the workforce in Mexico belonged to unions three decades ago, less than 30 percent do so today. A majority of Mexican industrial workers worked for the government until the economic transformations started in the 1970s. Mexico’s organized labor movement had its greatest strength in the state sector. In the state-owned oil company, PEMEX, union membership still hovers at 72 percent. But as the collateral petrochemical industry was privatized over the last decade, the unionization rate there fell to 7 percent. Similarly, new private owners reduced the membership of the railway workers union from 90,000 workers to 36,000 in the same period.

David Bacon,, is a West Coast-based writer and photojournalist. His forthcoming book The Children of NAFTA examines the last decade of cross-border organizing. It will be published by University of California Press this fall.

Tags: development, labor rights, economics, unions, neoliberalism

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