Mexican Workers Fight Electricity Deregulation

Our neighbors try to avoid the Californiacrisis

By David Bacon, contributor

In the 1930s and 40s, General Lazaro Cardenas made nationalization ofeconomic resources and land reform symbols of Mexican nationalsovereignty. Independence from the colossus of the North, Cardenassaid, meant prying the hands of US owners from the levers of thecountry’s economic life. In fact, a few decades after the cataclysmicrevolution of 1910-20, public ownership of oil and electricity waswritten into the Constitution.

Nationalist economic development, however, was overthrown whentechnocrats took power in the former ruling Party of theInstitutionalized Revolution (PRI) in the 1970s. Well before passageof the North American Free Trade Agreement, the disparity between USand Mexican wages was growing. Up to the 1970s Mexican salaries were athird of those in the US. They are now less than an eighth, accordingto Mexican economist and former Sen. Rosa Albina Garabito.

In two decades the income of Mexican workers lost 76 percent of itspurchasing power, while the Mexican government ended subsidies on theprices of basic necessities including gasoline, bus fares, tortillasand milk. The government estimates that 40 million people live inpoverty, and 25 million in extreme poverty.

These results are the product of the neoliberal economic “reforms.” Inthe last two decades Mexico has become their proving ground, as theInternational Monetary Fund and World Bank used the leverage offoreign debt to require massive changes in economic prioritiesdesigned to encourage foreign investment. The heart of those changeshas been privatization of Mexican state enterprises. On the auctionblock have been the airlines, ports, railroads, banks, the phonesystem and more.

The organized labor movement had its greatest strength in the statesector. Three-quarters of the work force belonged to unions threedecades ago; today less than 30 percent are union members. Resistanceto privatization has often been fierce. Soldiers had to occupy theport of Veracruz at gunpoint in order to privatize it and fire itswork force. Mexico City’s bus drivers fought the selloff of theRoute-100 company for three years. Wildcat strikes hit the railroadswhen they were sold to Grupo Mexico, and copper miners fought avaliant battle against job reductions when the Cananea mine was boughtby the same owners in the late 1990s.

The labor landscape began to change, however, when former PresidentErnesto Zedillo announced plans to put the electrical system up forsale after his election seven years ago. Current President VicenteFox, a former Coca-Cola executive who became the first candidate todefeat the ruling PRI in seventy years, announced during his campaignthat he would continue the privatization plan. George Bush has giventhose plans further impetus. He seeks to expand NAFTA by subordinatingall Latin American economies to the US in the Free Trade Area of theAmericas. His energy plan also envisions tying Mexican powergeneration to that in the US southwest. In 1998, however, Zedillo’sprivatization scheme was met with a wave of popular resistance, led bythe electrical unions, which argue that the government subsidizeslarge users, even though Mexican power prices are already very low. Inaddition, government budget cuts continue to undermine anymodernization of the facilities.

Last May, the World Bank added to the controversy in a series ofrecommendations it made to the new Fox administration. The bankrecommended rewriting Mexico’s Constitution and Federal Labor Law,eliminating many protections in place since the 1920s. Those includegiving up requirements that companies pay severance pay when they layoff workers, that they negotiate over the closure of factories, thatthey give workers permanent status after 90 days and that they limitpart-time work and abide by the 40-hour week. The bank recommendedother changes which would weaken the ability of unions to representworkers and bargain, including eliminating the historical ban onstrikebreaking. Mexico’s guarantees of job training, health care andhousing, 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 CoordinatingCouncil said the bank wouldn’t dare to make such proposals indeveloped countries. “Why are they then being recommended for theemerging countries?” he asked. But Fox embraced the report, calling itnecessary to “really enter into a process of sustainabledevelopment.”

Rosendo Flores, secretary general of the Mexican Electrical WorkersUnion (SME), says privatization can’t be defeated without seeing itsintegral connection with the rest of the neoliberal economicdevelopment program, and without proposing an alternative. He saysgenuine national economic development requires strong internalmarkets, with well-paid workers capable of consuming the goods theyproduce.

“We have seen the consequences of deregulation in the electricalsector in the state of California which has been detrimental to theinterests of the electrical workers and of the population,” says astatement signed by leaders of both Mexican electrical unions. “InMexico, the people rightly think the electrical industry and thepetroleum industry should be public property and that such publicproperty is the fundamental basis for their nation’s existence and oftheir national sovereignty.”