Mexicans Compete With Chinese Wages
- ANTI-CHINA CAMPAIGN HIDES MAQUILADORA WAGE CUTS
By David Bacon
Feb 2, 2003, posted to Portside
GOMEZ PALACIOS, DURANGO (1/27/03) -- For decades, US
workers have been told their wages were too high -- that
higher labor costs would force their employers to move to
Mexico. Now Mexican workers, whose numbers on the border
have mushroomed in the last three decades, are on the
receiving end of the same threat. This time the bogeyman is
Beginning with the Asia Pacific Economic Conference,
hosted by Mexico in Cabo San Lucas in November, a rising
media chorus in both Mexico and the US has argued that
Mexico is losing a low-wage competition with China. Plants
have closed and moved as a result, the argument goes.
"With the advances of the giant Asian power," says
Rolando Gonzalez Barron, national president of the Maquila
Export Industry Association, "all these companies are trying
to compete with China with cheap labor." He advises factory
owners to move to southern Mexico, where wages are much
lower. "The border has no possibility of competing with
There is no doubt about the extent of the sharp
economic crisis now affecting border plants. Gonzalez
announced last April that 300,000 workers had been laid off
on the border in 2001 and the first months of 2002. Marco
Antonio Tomas of Mexico City's Center for Labor Research
(CILAS) puts the current number laid off at 400,000. Until
the crisis hit, the maquiladora industry, almost all in
north Mexico, employed over 1,300,000 workers, according to
Only two actual plant closures have been cited as
evidence, however. One, a factory making computer monitors
for Phillips North America in Juarez, shut over the summer,
costing about 600 jobs. Production moved to Suzhou, China.
Phillips, however, has another twelve border plants, and
increased investment in many of them last year. In another
case, Canon closed an older facility making inkjet printers,
moving production to southeast Asia.
While some media estimates repeat employer
assertions that maquiladora workers earn as much as
$2.00-$2.50 per hour, and compare this to 35¢/hour in China,
the actual average maquiladora wage is generally about $6-8
per day. Meanwhile, a study by the Economics Faculty of
the National Autonomous University in Mexico City says
Mexican wages have lost 81% of their buying power. Twenty
years ago, it says, the minimum wage could pay for 93.5% of
a family's basic necessities, while today it only buys
Another study cosponsored by the Coalition for
Justice in the Maquiladoras and the Interfaith Center for
Corporate Responsibility found that at the minimum wage, it
took a maquiladora worker in Ciudad Juarez almost an hour to
earn enough money to buy a kilo (2.2 pounds) of rice, and a
worker in Tijuana an hour and a half. By comparison, a
dockworker driving a container crane in the Los Angeles
harbor can buy the rice after 3 minutes at work, and even an
undocumented worker at minimum wage in LA only has to labor
12 minutes for it.
Nevertheless, maquiladora workers say they get the
Nelly Benitez, who worked until recently at one of
Sony's three huge plants in Nuevo Laredo, says the company
openly threatened to move to China if workers didn't accept
cuts in wages and benefits. "The company began threatening
to move to China when they began lowering the wages and
benefits in 2001," she recalls. "Weekly salaries were
reduced from about 800 pesos to 600 pesos [for a six-day
week]. We used to get a ride to and from work on company
busses, since almost no one owns a car, and often we get off
work late at night. Now we can only get a ride one way, not
Benitez says that Sony is still bringing new
machines into the plant to make batteries and
microcassettes. But after starting production, the number
of people working each machine is then cut. "For example, if
they start with five, they'll eventually fire three, and the
other two have to continue running it."
Sony has also transformed its workforce. Until the
recession hit, each of its four plants employed about 2,600
people, who were permanent company employees. Now, say
Benitez and Tomas, the number has been reduced to 1500
apiece. The majority are temporary hires, laid off right
before they acquire permanent status under Mexican law, at
the end of 90 days. "They never became permanent
employees," Benitez says, and therefore have no right to
severance pay, housing benefits, or status under labor law.
According to Martha Ojeda, director of the Coalition
for Justice in the Maquiladoras, which encompasses
organizations in the US, Mexico and Canada who assist
maquiladora workers in organizing themselves, the China
threat is being used far beyond the maquiladora industry.
The World Bank and the administration of President Vicente
Fox have proposed modifying Mexican labor law to eliminate
many of its historic protections for workers. "They're
promoting a policy of fear, in which workers are told that
it's better to see five pesos in wages cut to three, than to
lose their jobs entirely," Ojeda explains. "This is
combined now with an effort to change the labor law itself.
If we don't accept their reform, the companies say they'll
take their investment elsewhere."
The reforms under discussion include the kinds of
things happening in the Sony plant. "Companies want the
unlimited ability to hire temporary workers, who never
acquire seniority, benefits or labor rights," Ojeda adds.
"This is what already exists in the maquiladoras. They're
using the maquiladoras as the model for what they want to do
with workers in the rest of the economy."
Rising anti-Chinese hysteria in the maquiladora
industry, however, is obscuring a basic fact. The border
industry has tied the Mexican economy so tightly to the US
market that when consumers in the north stop buying, workers
from Tijuana to Matamoros lose their jobs by the thousands.
When the US economy catches a cold, the saying goes, Mexico
comes down with pneumonia.
While the maquiladora industry would like workers to
look east to China to find the source of their problems, and
enter into a wage-cutting race to the bottom, "where we
really need to look is north," Benitez concludes.
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