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Galloping inflation encourages wage demands. This is true in the West, but also in certain emerging countries such as Mexico where a very demanding trade unionism is in the midst of a renaissance.
The old clientelist unions subservient to power, created to mobilize their troops during the elections are still largely in the majority in Mexico. But they have just suffered a series of historic defeats. In three plants dedicated to the American and Canadian automotive industry, new independent representatives were elected with overwhelming majorities and they are already very active in the field. Mobilized to denounce violations of labor rights and to demand wage increases in a Panasonic factory, at an equipment supplier and at General Motors, the all-powerful American manufacturer, long number one in the United States in terms of production. At the GM plant in Silao, in northern Mexico, Sinttia, the new independent union of the Mexican automobile industry, recently won the elections and its elected representatives are demanding a 19% increase for the 6,000 workers at the plant.
Negotiations have begun and are closely followed by all foreign employees and employers
If the union succeeds, the employees of the other Mexican sites of the American brand could rush into the breach and in turn demand better wages. This showdown could be a game-changer for all companies set up in Mexico to take advantage of low wages. Talks will resume on Thursday. For the moment, General Motors is offering a 3.5% increase. This is half the current inflation in Mexico. The union has set the bar very high first because wages have stagnated for years in this plant. And then because they are inferior to those of other foreign brands. Nissan, Audi and Volkswagen have been forced to raise wages under pressure from independent unions.
What enabled the mobilization of Mexican workers?
A much more favorable legal context, carried by a wind of the best social party from the United States. The elected Democrats and the unions have pressed for the new free trade agreement between the United States, Canada and Mexico, an agreement succeeding NAFTA, to have a social component. Their objective: to protect American blue-collar workers from abusive relocations. Thanks to this new agreement, the US Trade Representative can initiate proceedings against an employer violating labor law on Mexican soil via an accelerated procedure. That’s what he did against General Motors. Before signing this new free trade agreement, Mexico City had to reform its labor law to make secret ballot voting compulsory for union representatives.
If successful, can these wage demands change the global organization of the automotive industry?
An increase of 19% would increase the hourly wage to 135 pesos in the factories of General Motors, or 6.62 dollars while it is higher than 17 dollars in the American factories of the group. Even of this magnitude, there is nothing to question the presence of GM in Mexico. Silao employees are more determined than ever. They gave their representatives a mandate to negotiate until May 31. If that fails, they are ready to go on strike.
►In short
Italy increases the pressure on energy companies with an exceptional tax on profits which goes from 10% to 25%
Already heavily indebted, Rome prefers to avoid resorting to taxes to finance new aid to households for a total amount of 14 billion euros. This tax will bring in 10 billion euros.