Mexican Workers Fight Electricity Deregulation

Our neighbors try to avoid the California crisis

By David Bacon, contributor

In the 1930s and 40s, General Lazaro Cardenas made nationalization of economic resources and land reform symbols of Mexican national sovereignty. Independence from the colossus of the North, Cardenas said, meant prying the hands of US owners from the levers of the country�s economic life. In fact, a few decades after the cataclysmic revolution of 1910-20, public ownership of oil and electricity was written into the Constitution.

Nationalist economic development, however, was overthrown when technocrats took power in the former ruling Party of the Institutionalized Revolution (PRI) in the 1970s. Well before passage of the North American Free Trade Agreement, 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 Sen. Rosa Albina Garabito.

In two decades the income of Mexican workers lost 76 percent of its purchasing power, while the Mexican government 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.

These results are the product of the neoliberal economic �reforms.� In the last two decades Mexico has become their proving ground, as the International Monetary Fund and World Bank used the leverage of foreign debt to require massive changes in economic priorities designed to encourage foreign investment. The heart of those changes has been privatization of Mexican state enterprises. On the auction block have been the airlines, ports, railroads, banks, the phone system and more.

The organized labor movement had its greatest strength in the state sector. Three-quarters of the work force belonged to unions three decades ago; today less than 30 percent are union members. Resistance to privatization has often been fierce. Soldiers had to occupy the port of Veracruz at gunpoint in order to privatize it and fire its work force. Mexico City�s bus drivers fought the selloff of the Route-100 company for three years. 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.

The labor landscape began to change, however, when former President Ernesto Zedillo announced plans to put the electrical system up for sale after his election seven years ago. Current President Vicente Fox, a former Coca-Cola executive who became the first candidate to defeat the ruling PRI in seventy years, announced during his campaign that he would continue the privatization plan. 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. His energy plan also envisions tying Mexican power generation to that in the US southwest. In 1998, however, Zedillo�s privatization scheme was met with a wave of popular resistance, led by the electrical unions, which argue that the government subsidizes large users, even though Mexican power prices are already very low. In addition, government budget cuts continue to undermine any modernization of the facilities.

Last May, the World Bank added to the controversy in a series of recommendations it made to the new Fox administration. The bank recommended rewriting Mexico�s Constitution and Federal Labor Law, eliminating many protections in place since the 1920s. Those include giving up requirements that companies pay severance pay when they lay off workers, that they negotiate over the closure of factories, that they give workers permanent status after 90 days and that they limit part-time work and abide by the 40-hour week. The bank recommended other changes which would weaken the ability of unions to represent workers and bargain, including eliminating the historical ban on strikebreaking. 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. The head of the Managerial Coordinating Council said the bank wouldn�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 necessary to �really enter into a process of sustainable development.�

Rosendo Flores, secretary general of the Mexican Electrical Workers Union (SME), says 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 says 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 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.�