The Art of Ripping Off Mexican Electronic Workers

By  |  31 / October / 2011

By Kent Paterson

Wages that have less buying power than in China. “Temporary” work contracts that have become all but institutionalized. Firings to undermine labor organizing. Phantom “unions” that the workers don’t know exist.

These are just a few of the day-to day realities experienced by Mexican electronic workers, according to a new report by the labor advocacy group Center for Labor Reflection and Action (Cereal, by its Spanish initials).

With offices in Mexico City and Guadalajara, the Jesuit-affiliated organization has dedicated years to working with electronic workers in Mexico, advising about 2,000 workers of their rights each year. Cereal’s report is based on worker experiences with foreign-owned manufacturers Nokia, Lenovo, Philips, Blackberry, Dell, Foxconn, Jabil, and Celestica, and the temporary agencies Azanza and Manpower.

The new report documents numerous abuses and illegalities suffered by a workforce that quietly toils away producing the cell-phones, flat screen televisions and computer components that wire and connect the world’s gadget-driven social interactions, business transactions and myriad pleasures. While high-tech companies rake in billions in profits every year, a pittance trickles down to the hands that actually assemble the culturally emblematic commodities of our era.

Illustrating the daily struggles of Mexican electronics workers, Cereal tells the story of “Ana.” A single mom with 12 years of experience in the electronic industry, Ana brings home 825 pesos per week (approximately $64). She is still 288 pesos shy of meeting her family’s basic weekly expenses. To make up the deficit, the 40 year-old mother of two spends her “free time” away from the factory job working part-time for another family.

“I work two days out of the week cleaning a house and make 360 additional pesos. This is what helps me meet my expenses,” Ana said.  “When an emergency comes up, I ask for a loan. I don’t save anything, because I can’t. I don’t go out to the movies, restaurants or places like that because I don’t have the money.”

Ana is far from alone in juggling jobs and household budgets. Based on a survey of non-governmental organizations in other countries, Cereal rated Mexico number fourth among eight nations in wages for electronic industry workers, falling behind Malaysia, Brazil and the United States, in that order. However, that ranking is deceptive, Cereal notes, since the purchasing power of wages actually puts Mexico in second-to-last place on the list and even below China.

Cereal analyzed the difference in the cost of production for a Blackberry smart phone assembled in Guadalajara and sold in the United States for $535. The company’s cost of manufacturing the phone comes out to $183.05, leaving $352 in earnings. But on average, each Mexican worker who assembles 17 phones per day winds up earning only nine pesos per each unit, or less than one dollar, for an item that fetches over a hundred at the retail level.

On Jobs and jobs

Recently, the U.S. press overflowed with stories about the genius of the late Steve Jobs. In the Great Man of History narrative, the laudatory pieces extolled the contribution of Jobs in transforming our economy and society. Yet the stunning successes and wild fortunes of Jobs and other capitalists in the high-tech industry can’t be explained without the ability to off-shore production of their products to low-wage havens like Mexico. After all, even the most brilliant of product ideas ultimately ends up being a fantasy without the hands to manufacture them.

And it goes without saying that once a great concept actually starts rolling off the assembly line, high-tech heroes like Ana are rarely if ever profiled in the media.

“There’s been a deterioration in three areas. Salaries have gone down in real terms,” said Cereal Coordinator Jorge Barrajas. According to the veteran labor activist, the average daily pay of Mexican electronic workers dropped from 120 pesos in 2008 to 116 in 2011. In dollars that translates into a decrease from about $12 per day in 2008 to approximately $9 per day in 2011.

“This in spite of the fact that the cost of living has gone up”, Barrajas said.

The Cereal report provides more details on another trend that has been underway for some time, but is becoming more consolidated as corporations use the Great Recession and its officially declared recovery to restructure their labor forces and squeeze more work for less pay from employees–temporary work contracts.

Long a practice of the high-tech industry, temporary work is now reaching new extremes in Mexico. According to Cereal, some Mexican plants now employ 90 percent of their workers on a temporary basis, usually through sub-contractors. Barrajas calculated that while the breakdown of the electronic industry workforce between permanent and temporary employees was roughly half and half in 2008, now it is 60 percent temporary and 40 percent permanent.

The report cites two cases in northern Mexico where temporary work has become the norm rather than the exception. At a plant in Reynosa, Nokia and Manpower use seven-day work contracts. The report quotes a worker named “Lupe” who has been contracted, laid-off and then re-contracted five times within three years.

Cereal found that 65 percent of the 1,000 workers at a new Lenovo factory in Apodaca, Nuevo Leon, were sub-contracted through three temporary agencies, with some workers receiving five temporary contracts during the course of the year.

Opened in 2009 during the depths of the world economic crisis, the Lenovo factory promised jobs to a needy nation. On a routine basis, Mexican officials heap not only praise on foreign companies like Lenovo for investing in their country, but hand out tax breaks, infrastructure subsidies and other incentives to keep the assembly lines rolling along and churning out product for the global market.

The Cereal report contends that this sytem is taking its toll on workers.  “Inevitably, all (workers) wait in anguish for the day when the company informs them that they have been left without work,” it concludes.

Right to unionize denied

The right to free association and democratic unions is another key issue. Recently, the U.S. Congress and President Barack Obama, after much controversy over the lack of labor rights, approved a free trade deal with Colombia. The economic pact was passed on top of the North American Free Trade Agreement’s utter failure to encourage even the most grudging respect for labor rights in Mexico, despite the existence of a side commission set up to consider worker complaints. The new Cereal report provides more documentation on how labor rights have been sacrificed to global trade and investment–official assurances notwithstanding.

For example, Cereal outlined a 2010 labor conflict at the Guadalajara Jabil factory that produces for Blackberry. Triggered by unequal wage increases, a protest from a group of workers ended in the firing of three of the most outspoken employees. The grievances of the dismissed workers then wound up in the oversaturated Mexican labor law court system.

In a seemingly bizarre but not unusual development in Mexico, it was discovered that a union “existed” at the Jabil plant, but the workers had no knowledge of it. Cereal posed the question: “Can we imagine what would have happened if the Jabil workers had counted on a union that actually represented them?”

Cereal is involved in an ongoing dialogue with high-tech companies represented by the Electronic Industry Citizenship Coalition (EICC), a trade group that ostensibly promotes best labor practices and environmentally friendly production. The discussions have netted gains for workers in individual cases, but the big structural issues of wage levels, free union association, subcontracting and over-reliance on temporary work are unresolved.

Labor counter-reform

This new report comes at a time when the Mexican Congress, goaded by years of employer lobbying, is mulling new labor legislation to re-craft a labor law born from the 1910 Mexican Revolution so it is in-sync with the imperatives of the global economy. The proposal would “flexibilize” current labor regulations.

Cereal offered words of caution about any reform solely aimed at encouraging more foreign investment and job generation.

“It’s important to realize that jobs have to be dignified, and that we should avoid the situations described in this report: salaries that aren’t sufficient to feed people, unstable jobs and a fear of demanding respect for our labor rights.”

Barrajas said he expected the Mexican Congress to take up the controversial reform after the 2012 federal elections. He contended that the electronic industry has been a prime proponent of weakening standards in Mexican labor law. “It is very important for the industry, because it survives on temporary work and not paying severance packages.”

The Mexican labor advocate added that workers confront an array of other problems ranging from sexual harassment to occupational safety and health issues. “There’s been a backward leap in the quality of work,” Barrajas asserted.

In a broad global sense, the Cereal report is yet another testament of the consequences of an increasingly unregulated global economy in which the race to the bottom for measly wages is the end of an illusory rainbow for so many workers.

Kent Paterson is a freelance journalist who covers the southwestern United States, Mexico, and Latin America. He is a regular contributing writer for the Americas Program at www.americas.org

One comment

  1. Great article on an important topic. It’s very hard to locate the the Centre for reflection and action on labour rights’ new report on line. Any clues?

    Thanks

    Toby

    Comment by Toby Miller on November 4, 2011 at 8:06 am

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