Auto Unions Decry Mexico-US Pay Gap, Call on Negotiators to Fix Wages in NAFTA

Mark Browne | August 23, 2017 | 9:14pm EDT
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An auto assembly plant in Toluca, central Mexico. (Screengrab: YouTube)

Mexico City ( – Auto unions in the U.S. and Canada want the current effort to renegotiate NAFTA to address lower wages in Mexico which the unions say rob jobs from their workers while leaving millions of Mexicans in poverty.

“We have a once-in-a-generation chance to fix NAFTA to raise wages and work standards,” Jerry Dias, president of the Canadian autoworker union Unifor, said in a recent statement. “Without strong and enforceable protections, Canada should walk away from the table.”

According to the Canadian union and the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), the average autoworker in Mexico makes $3.95 per hour.

“Mexican wage levels in auto, as elsewhere in manufacturing, have stagnated in real terms in Mexico since NAFTA,” the two unions said in a joint statement.

The U.S. has lost 10 auto assembly plants since NAFTA was signed by the U.S., Mexico and Canada 23 years ago. Canada has lost four.

Mexico, however, has gained eight new plants, according to the two unions.

Higher living standards promised to Mexicans as a result of NAFTA have “proven to be a false hope,” according to Unifor.

“In fact, more Mexicans live in poverty today than before NAFTA. Through this lens, NAFTA has been a failure, and must be fixed,” according to the Canadian union.

Mexico’s federal government raised the official daily minimum wage from US$4.33 to US$4.50 per day on Jan. 1 of this year.

The U.S. minimum hourly wage, unchanged since 2015, is $7.25.

Many workers in Mexico earn more than the country’s minimum wage but many still live “below the poverty line,” according to Hugo Perezcano, a former trade official with the Mexican government and now deputy director at the Centre for International Governance Innovation in Waterloo, Ontario.

He said there is not enough pressure on employers to increase wages, and “Mexico has not been successful in closing the gap between the poor and the rich.”

Perezcano said wages do not respond to trade agreements but instead, partly reflect a country’s economy.

“I don’t see how wages could be subject to the NAFTA negotiations.”

Lower wages in Mexico have led to a “massive deindustrializing of the U.S.,” according to Gerardo Otero, a professor of international studies and sociology at the Simon Fraser University in Vancouver, Canada.

Even before NAFTA was enacted, companies were leaving the U.S. and Canada in search of lower-paid and non-unionized workers, he said.

In Otero’s view, NAFTA was a “very unfair deal for workers throughout North America.”

Almost 50 percent of Mexicans live in poverty and 60-70 percent of the labor force works in the informal economy where incomes are not declared to the government.

Mexico’s government, hoping to attract more foreign direct investment to the country, has been “very repressive of labor’s demand for higher wages.”

A decision by the Mexican government to liberalize agricultural trade with the U.S. led to a huge increase in imports of corn, wheat, rice and sorghum from the U.S.

As a result, two million agricultural workers in Mexico left their jobs and Mexico became the “largest contributor” of international migration between 2000 and 2005, which many heading for the U.S. or Canada.

“I have been putting the blame on Mexican technocrats and politicians because it was within their purview to slowdown the outflow of labor from agriculture,” Otero said. NAFTA’s “original sin” was that it didn’t “liberalize the movement of labor.”

If Mexican workers were allowed to freely enter the U.S. to seek higher paying jobs, there would be more pressure on Mexican employers to raise wages, he argued, since “freedom of movement would have given Mexican workers in Mexico the power to demand higher wages.”

“It would have dramatically increased wages in Mexico and thus the standard of living in Mexico.”

But Steven Camarota, director of research at the Center for Immigration Studies, said allowing unskilled workers freely into the U.S. “is a bad deal for taxpayers” because it increases government spending on education and welfare.

“The key question for us is that trade and immigration are different things,” he said. “We should not include immigration in a NAFTA treaty.”

It is wrong, Camarota said, to use immigration policy as a development tool.

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