INTERNATIONALLY-RECOGNIZED CORE LABOUR STANDARDS IN MEXICO

REPORT FOR THE WTO GENERAL COUNCIL REVIEW OF THE TRADE POLICIES OF MEXICO

International Confederation of Free Trade Unions
(Geneva, 7-8 October 1997)

Introduction
EXECUTIVE SUMMARY
INTERNATIONALLY-RECOGNIZED CORE LABOUR STANDARDS IN MEXICO
I. Freedom of Association and the Right to Collective Bargaining
II. Discrimination and Equal Remuneration
III. Child Labour
IV. Forced Labour
CONCLUSIONS

Introduction

Earlier this year, the ICFTU published reports on the respect of internationally recognized core labour standards in Fiji, Paraguay, Benin and Chile, on the occasions of the trade policy reviews of those countries by the World Trade Organization (WTO). The ICFTU is preparing this series of reports in accordance with the Ministerial Declaration adopted at the first Ministerial Summit of the World Trade Organization (WTO) (Singapore, 9-13 December 1996), in which the Ministers stated: "We renew our commitment to the observance of internationally recognized core labour standards."

This report considers in turn the situation with regard to respect for each of the core labour standards in Mexico.

EXECUTIVE SUMMARY

Some of the fundamental workers’ rights guaranteed in the Singapore WTO Ministerial Declaration are respected in Mexico but in other areas, Mexico’s law and especially its practice require further government efforts in order to respect the commitments to fundamental workers’ rights it accepted at Singapore. The problem is the contrast between the strong commitments to core labour standards in the constitution and basic legislation of Mexico and the widespread abuses in practice. As Mexico liberalizes its internal market and is increasingly open to international trade and investment, this contrast is becoming all the more apparent. As a consequence the labour situation is going through a period of considerable change at the present time.

Mexico has ratified one of the main ILO Conventions on trade union rights, Convention No. 87, but not the other, Convention No. 98. Although trade union rights and freedom of association are recognized in both the constitution and law, the right to organize and the right to strike are not always respected in practice. These limitations weaken trade union bargaining potential and, particularly in the maquiladoras sector, deprive many workers of the benefits of union membership. This in turn undoubtedly affects Mexico’s position in international trade.

While Mexico has ratified both the main ILO Conventions on discrimination, there is extensive evidence of discrimination against women, including in Mexico’s maquiladoras sector.

Mexico has not ratified the main ILO Convention on child labour and there is evidence that child labour is a problem in the informal sector. However, the government is engaged in efforts to address the situation.

Mexico has ratified both the main ILO Conventions on forced labour. Forced labour is not a generalized problem in Mexico.

INTERNATIONALLY-RECOGNIZED CORE LABOUR STANDARDS IN MEXICO

I. Freedom of Association and the Right to Collective Bargaining

Mexico has ratified one of the main ILO Conventions on trade union rights, Convention No. 87, but not the other, Convention No. 98. Although trade union rights and freedom of association are recognized in both the constitution and law, the right to organize and the right to strike are not always respected in practice. These limitations weaken trade union bargaining potential and, particularly in the maquiladoras sector, deprive many workers of the benefits of union membership. This in turn undoubtedly affects Mexico’s position in international trade.

Mexico ratified ILO Convention No. 87 (1948), the Freedom of Association and Protection of the Right to Organize Convention in 1950. It has not ratified ILO Convention No. 98 (1949), the Right to Organize and Collective Bargaining Convention.

Mexico has a pluralistic trade union situation guaranteed by the 1917 Constitution which provides workers the right to form and join unions of their choice without prior authorization and the right to strike. Collective bargaining is widespread. However, the legal registration of unions in Mexico is impeded by the authorities, specifically by the local Conciliation and Arbitration Boards (CABs) which have sole authority to regulate union elections and handle all phases of labour dispute resolution. Registration by CABs is necessary for trade unions to obtain legal status but these boards act to withhold or delay registration from unions that are hostile to government policy or to vested economic interests, through the improper use of administrative requirements.

Because Mexican labour law makes little provision for the rights of individual union members, workers can be denied access to their own collective agreements and to internal union rules and have few remedies available when internal union procedures are violated in union elections. Where such abuses lead to employer-dominated trade unions, registration requirements and election procedures have been used to prevent workers from forming new unions. Non-registration can subsequently be used as an excuse for prohibiting, or failing to recognise strikes.

Mexican law grants workers the right to strike. But the CABs have the power to declare strikes "legally non-existent" leaving strikers vulnerable to being fired and to suppression of work stoppages by force. Peaceful labour protests are frequently dispersed by the police using force.

Although the law protects workers against anti-union discrimination, these provisions are inadequately enforced and the blacklisting of workers by employers for union activities continues to be reported. Workers fired for union activity are pressured to sign voluntary resignation papers surrendering reinstatement rights. Should they choose not to sign and to seek redress instead, workers face a lengthy and expensive procedure with little confidence in the neutrality of the government. They also risk losing severance pay provided by Mexican law.

While Mexican law does not restrict employees in the private sector from forming more than one union, the law covering public employees provides for trade union monopolies in violation of freedom of association. Other restrictions on freedom of association in the public service include a prohibition on re-election of trade union officers and excessive limitations on the right of public employees to strike. Freedom of association is also restricted by rules regulating the kinds of trade unions that public employees may form. Public sector trade unions are by law forced to belong to the FSTSE confederation which is not allowed to join other trade union organizations. The limitations on the trade union rights of public servants have on several occasions been held by the ILO Committee of Experts on the Application of Conventions and Recommendations to be in violation of the ILO freedom of association conventions. The ILO has in consequence asked the government of Mexico to take the necessary measures to bring Mexican law and practice into line with Convention No. 87.

Over the period since 1985, Mexico has experienced a major shift in the structure of its exports. The share of crude oil and minerals has fallen from 57% to 15% over this time, while the share of manufactures has risen from 38% to 71%. The "maquiladoras" sector for export promotion employed 636,322 workers at the end of 1995, an increase of 9% over the previous year and by comparison to 119,000 workers in 1980. It is one of the largest sources of foreign exchange earnings in Mexico.

The maquiladoras are particularly relevant to the WTO Trade Policy Review since they consist of a special customs regime, amounting to a free trade zone, for companies that assemble components for export. One estimate assessed the share of maquiladoras in Mexico’s electric and electronic equipment sector at 44% in the early 1990s. There were 2,908 maquiladoras at the end of 1995. The majority of workers are young and uneducated women who rarely remain in employment past their mid-20s. Worker turnover is extremely high, at an average annual level of 200 to 300%, meaning that about half the workers have typically been at the job for less than six months. Poor working conditions are commonplace, including handling of chemicals and solvents with no safety equipment. Training on the job is minimal.

Fierce resistance to attempts to organize trade unions by employers, colluding with local officials, remains a major cause for concern at Mexico's maquiladoras plants. While in theory the same union rights exist in maquiladoras as in the rest of Mexico, the rate of unionization is much lower, at between 10 and 20%. Anti-union attitudes on the part of employers and the existence of "company unions" are considered to account for the low rate of unionization. In contrast to other sectors, few maquiladoras have collective bargaining agreements with unions. Few strikes have been attempted; most have been quickly resolved, while others have resulted in the dismissal of strike leaders in cases where the labour courts have declared the strikes illegal.

Wages in maquiladoras are lower than the average level in industry, especially in low technology facilities. Indeed, over the 1980s wages in maquiladoras fell by about 50%, while wages in Asian exporters such as the Republic of Korea underwent a steady rise. By the mid 1980s, maquiladora wages were lower than Korean wages and this Mexican cost advantage continued to widen subsequently. The peso devaluation over 1994-95 further reduced comparative labour costs, by about 50% in dollar times.

Many cases illustrating the above-mentioned obstacles to trade union representation can be found by consulting the last several years’ editions of the ICFTU Annual Survey of Violations of Trade Union Rights. A recent case concerned the attempt by the employees of a computer component factory located in the State of Sonora to form a union. The factory is owned by Maxi Switch S.A., a subsidiary of the Taipei-based Silitek Corporation. In August 1995 the workers employed at this factory began to organize a trade union. The company countered this by the use of threats and intimidation and by dismissing a union activist. In November the workers held an assembly to establish the union, elect officers and complete other procedures required for union recognition. The newly-elected officers then presented the documents required under Federal Labour Law to the Sonora Conciliation and Arbitration Board. Several days later the secretary-general of the union was physically assaulted and intimidated into resigning from the company. Shortly thereafter two more union official were dismissed. All three union officials refused to accept severance pay and filed complaints with the C.A.B. On 23 January 1996 the Sonora C.A.B. issued a decision denying recognition to the union on the grounds that there was an existing collective agreement with another union. The C.A.B. refused to provide the name of the other union, the date that it was recognised, or a copy of the collective agreement that was alleged to exist.

A second case concerned Magneticos de Mexico, a subsidiary of the Japan-based Sony Corporation. Throughout 1996, all the workers dismissed for trying to form a union remained unemployed and it is reported that they were blacklisted from employment in the area. Violations of freedom of association at this factory began in 1994 involved the dismissal of union officials in the registered union followed by the management interference in the election of new officials. A management campaign against union activists including threats, surveillance, demotions and dismissals and two improper refusals by the C.A.B. to permit the registration of a new union.

Mexico further has a large urban informal sector, the extent of which is unclear although some estimates have ranged as high as 40% of the labour force in some cities. Compliance with the law on freedom of association is clearly non-existent for workers in the informal sector. More research would be needed in order to determine the importance of the informal sector and the extent of its linkages with the traded sector.

The North American Free Trade Agreement (NAFTA), which came into force in 1994, provides for a side agreement on certain workers’ rights called the North American Agreement on Labour Co-operation (NAALC). It provides for a commitment to uphold existing labour laws in basic areas of workers’ rights including freedom of association, the right to collective bargaining and the right to strike; prohibition of forced labour; discrimination; protection of migrant workers; health and safety; child protection; and minimum employment standards. In the areas of minimum wages, safety standards and child labour alone, fines of up to $20 million could be levied on countries that allow their companies to gain a competitive advantage by violating labour laws in these areas. Seven submissions have so far been filed for review under the NAALC. However, to date no penalties have been decided upon and the findings of the first four cases at Honeywell, General Electric, Sony and Sprint, largely concerning dismissal of workers as a result of their efforts to organize in unions, did not lead to reinstatement of the workers concerned.

For many decades, the Federal Labour Law of Mexico has provided for tripartite institutions to resolve labour and social security problems, which include responsibility for minimum wages, training and workers’ housing. During the decade up to 1995, the government and the major trade union, employer and rural organizations negotiated a system of annual national pacts which established wage restraints, the Pact for Stability and Economic Growth (PECE). Since then collective bargaining has taken place without government intervention at a national level. Tripartite meetings continue to take place in the context of the "Alliance for Growth".

In conclusion, restrictions on freedom of association and the right to collective bargaining in Mexico undoubtedly weaken trade union bargaining potential and consequently workers’ purchasing power and, particularly in the maquiladoras, have a negative impact on the level of unionization. The failure of C.A.B.s to protect adequately the right to organize, particularly in the maquiladoras sector, appears to be a deliberate strategy to prevent workers in the fast-growing export sector from bargaining for a reasonable share in the benefits of Mexico’s rapid growth in manufacturing exports.

II. Discrimination and Equal Remuneration

While Mexico has ratified both the main ILO Conventions on discrimination, there is extensive evidence of discrimination against women, including in Mexico’s maquiladoras sector.

In 1952, Mexico ratified ILO Convention No. 100 (1951), Equal Remuneration and in 1961, ILO Convention No. 111 (1958), Discrimination (Employment and Occupation).

However, there is extensive evidence of discrimination. There is no provision in the Constitution of Mexico, nor in the law, for the principle of equal remuneration for work that is of equal value but of a different nature. The government of Mexico indicated to the ILO Committee of Experts on the Application of Conventions and Recommendations that it was not necessary to legislate in favour of equal remuneration since there was no problem of inequality. But it is well-documented that women are generally paid less and concentrated in lower paying occupations. In addition, a further reply of the government of Mexico to the ILO indicated that at the higher levels of the public administration, there were almost three times as many men as women.

Discrimination in recruitment does not seem to be addressed in labour law. It is reported that many employers discriminate against pregnant women in order to avoid maternity protection costs. Many employers require women to certify they are not pregnant at the time of hiring while others test applicants for pregnancy. There are further well-documented reports that in order to escape from the cost of the maternity protection provided by the law, employers deliberately expose pregnant women to difficult or hazardous conditions to make them resign. This is particularly evident in the low-wage, low-skill, high-turnover maquiladoras. State labour inspectors and federal health and safety authorities are unable to enforce these provisions, partly because the number of maquiladoras far exceeds the capacities of the labour inspection services.

In response to discrimination against women, the government is engaged in actions to improve the situation within the framework of the National Action Programme for the Integration of Women in Development and the activities of the National Commission for Women.

Indigenous people, who make up about 10% of the population, have experienced further discrimination. Although the law provides some protection for the indigenous, the economic position of members of indigenous groups remains far behind the average standard of living in Mexico.

In summary, there are probable links between international trade and discrimination in Mexico, especially in the maquiladoras sector. Most of the maquiladoras workers are women, who are therefore especially affected by the poor conditions in this sector detailed above. Discrimination against women is partly responsible for their readiness to accept the low wages and poor working conditions in the maquiladoras, while in turn the resultant low labour costs contribute to Mexico’s export position. There is a need for further research to determine the extent of the link between discrimination and the price of exports.

III. Child Labour

Mexico has not ratified the main ILO Convention on child labour and there is evidence that child labour is a problem in the informal sector. However, the government is engaged in efforts to address the situation.

Mexico has not ratified ILO Convention No. 138 (1973), the Minimum Age Convention.

Child labour laws set the minimum age for employment at 14. This is fairly well observed in the formal sector, particularly in large and medium-sized companies. Enforcement is less adequate at the many small companies and in agriculture and is virtually absent in the informal sector. The ILO reports that 18% of children aged 12 to 14 work, often for parents or relatives. Only six out of ten primary school children actually complete school.

The government has been undertaking efforts to address the problem of child labour, in cooperation with UNICEF. The number of years of free, obligatory school education was increased from 6 to 9 in 1992 and parents were made legally liable for their children’s attendance.

In conclusion, the use of child labour is unlikely to be of a scale such as to make a significant contribution to the price of Mexico’s exports. There is evidence that the government of Mexico is undertaking efforts to reduce child labour in the informal sector.

IV. Forced Labour

Mexico has ratified both the main ILO Conventions on forced labour. Forced labour is not a generalized problem in Mexico.

Mexico ratified ILO Convention No. 29 (1930), the Forced Labour Convention in 1934 and ILO Convention No. 105 (1957), the Abolition of Forced Labour Convention, in 1959.

With the exception of some reports of abuses of refugees and illegal immigrants in the state of Chiapas, there have been no reports for many years of forced labour in Mexico.

CONCLUSIONS

The record of Mexico with regard to core labour standards is mixed. Freedom of association is provided for in law but the right to organize and the right to strike are not always respected in practice. Mexico’s law and practice therefore require further government efforts with regard to the exercise of the right to freedom of association in order to respect the commitments to fundamental workers’ rights supported by Mexico in the Singapore WTO Ministerial Declaration. Respect for core labour standards in the maquiladoras sector is a major cause for concern, not least because it appears to be part of a general strategy to prevent workers from bargaining for a fair share of export revenues. Companies in Mexico’s maquiladoras are thus able to gain competitive advantage over firms in other countries that do respect core labour standards.

Mexico still faces serious discrimination against women and needs to step up its actions to comply with the ILO conventions on non-discrimination and promote equality for women. Mexico also has a problem with child labour in the informal sector.

Mexico should therefore provide reports to the WTO and the ILO on its intentions and actions in order to comply with internationally recognized labour standards in the areas of freedom of association, discrimination and child labour and provide a report to the WTO General Council on the occasion of the next trade policy review of Mexico.

Furthermore, Mexico should initiate urgent steps to ratify ILO Conventions 98 and 138.

References

Financial Times, various articles and surveys.

Human Rights Watch, Mexico: No Guarantees - Sex Discrimination in Mexico’s Maquiladora Sector, 1996.

ICFTU, Annual Survey of Violations of Trade Union Rights, various editions including 1997, 1996 and 1995.

ICFTU, Behind the Wire: Anti-Union Repression in the Export Processing Zones, 1996.

ILO, Lists of Ratifications by Convention and by country, 1997.

ILO, Reports of the Committee of Experts on the Application of Conventions and Recommendations, editions from 1990 to 1997.

ILO, Reports of the Committee on Freedom of Association, 1996.

International Metalworkers’ Federation (IMF), North American Integration, 1996.

International Organization for Migration (IOM), Foreign Direct Investment and Migration: the case of Mexican maquiladoras, report by Philip L. Martin, 1992.

National Administrative Office of the North American Agreement on Labor Cooperation, Follow-up Report on NAO Submission #940003, 1996.

National Administrative Office of the North American Agreement on Labor Cooperation, Public Report on NAO Submission #9601, 1997.

OECD Development Centre, The Informal Sector in the 1980s and 1990s, report by Harold Lubell, 1991.

Upham, Martin, Trade Unions of the World, 1994.

US Department of State, Report on Human Rights Practices for 1996, 1997.