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One Unexpected Effect of Trump’s New NAFTA: More Power for Mexican Union Workers

September 12, 2018, 11:50 AM UTC

Mexico’s incoming President, Andrés Manuel Luís Obrador (AMLO), and his Morena party administration propose to shift some of the power in the country’s labor unions toward the workers and away from labor leadership, in a move to comply with the new trade agreement with the U.S.

The proposed legislation deals with collective bargaining rules and would force unions to show that at least 30% of workers agreed with new contracts in secret votes. The so-called protection agreements currently in place do not require worker approval, allowing union leaders to negotiate private deals with management.

Some nine of out 10 collective contracts in force in Mexico were signed without worker consent, according to the Wall Street Journal. The new legislation would put expiration dates on those agreements unless workers voted to extend them.

“Those contracts are rotten from the outset,” said Luisa María Alcalde, the incoming labor minister and instructor at Ponciano Arriaga Law School in Mexico City. Union leaders, she said, need to be more accountable to workers, so the new legislation will also require secret leadership ballots.

Right now, union leaders do not have to prove that workers have given them the right to negotiate on their behalf.

Mexican labor unions, “in the 1970s became one more gear in the political system, in which the leaders distanced themselves from their communities and cozied up to the Executive, at both the local or federal level, to gain political and economic power,” social scientist Maximiliano García Guzmán of the National Autonomous University of Mexico (UNAM) told La Opinion after AMLO’s election this summer.

AMLO campaigned on a promise to improve workers’ conditions and end ‘caciquismo’ or “boss rule” in Mexico’s unions. Average wages in Mexico were around $15,000 a year in 2017, almost 50% lower than in the next poorest country OECD country, Hungary. That figure does not reflect the country’s extreme inequality, however: the national minimum wage is around $1,150 a year, depending on time off.

And neither figure reflects the huge informal economy in the country, which also exerts downward pressure on salaries.

Such low labor costs fail to bring the benefits of the North American Free Trade Agreement (NAFTA) to the poorest workers in Mexico, and undermine the position of better-paid workers in the U.S. and Canada. Giving NAFTA more explicit influence over wages was part of this summer’s negotiations between the U.S. and Mexico.

The new Mexican administration will take the reins on Dec. 1. It reached an agreement with the U.S. on reforming NAFTA last month, pending negotiations with Canada.