Free trade impact on labor

From NAFTA & Inter-American Trade Monitor, Vol. 2, no. 24
8 September, 1995

In Mexico, industry groups and the government are pressing labor unions to make concessions, including change from a daily to an hourly wage in some industries, hiring more non- union workers, and greater management freedom in hiring and firing part-time workers. Some unions agree that a "new labor culture" is needed, while others say that the phrase is a euphemism for reducing legal protections for workers. An independent union leader in the auto sector, Benedicto Martinez, says business is taking advantage of the situation: "We can fight for better pay or we can fight to maintain jobs." Since the peso was devalued last December, at least one million of Mexico's 35 million jobs have disappeared, and Mexico's economy continues to slow, contracting by 10.5 percent in the second quarter of 1995.

In the United States, skilled workers are watching as their jobs move overseas. "Information age" jobs that require computer skills can be done anywhere that computers, modems, and telephone cables are available, and white-collar jobs are moving to lower-wage sites around the globe. One example: Sea-Land, a division of the CSX Corporation, shut down offices in New Jersey and contracted the computer programming work previously done by approximately 300 U.S. workers in New Jersey to programmers in India and the Phillipines. Experienced programmers in India earn $1,200 to $1,500 monthly, compared to $4,000 and up in the United States.

Blue-collar jobs in the United States remain at risk, both when companies move abroad and when they use the threat of moving to control employees. B.W. Harris Manufacturing Company recently closed a plant in West St. Paul, MN, moving its clothing manufacturing to the Caribbean. Like many other manufacturers, Harris will cut cloth in Florida, ship it to the Caribbean Basin for sewing, and sell the finished clothing in the United States. Caribbean manufacturers benefit from U.S. Caribbean Basin Initiative and Section 807 trade legislation. The number of U.S. textile and apparel industry jobs has declined from more than 1.1 million in 1985 to 969,400 in 1994, according to the U.S. Bureau of Labor Statistics. In contrast, Caribbean Basin countries have increased apparel exports to the United States by more than 25 percent to $2.45 billion during the first quarter of 1995, while Mexican apparel exports rose by 60 percent to $1.35 billion.

Among U.S. workers feeling the pressure of the threat of moving abroad are workers at Leaders Manufacturing Inc. in Willmar, MN, who met this summer to begin organizing a union. One organizer has been fired and some workers report that the company's personnel director showed up at an organizing meeting and threatened to move jobs to Mexico if a union was voted in. Company officials declined to discuss the charges.

Dianne Solis, "Mexico's Economic Crisis Pushes Unions to Consider Concessions," Wall Street Journal, August 25, 1995

"Mexican Recession Worse; Output Off 10% in Quarter," New York Times, August 17, 1995

Keith Bradsher, "Skilled Workers Watch Their Jobs Migrate Overseas," New York Times, August 28, 1995

Tom Fredrickson, "B.W. Harris Shifts Work to Caribbean," City Business, August 31, 1995

Jill Hodges, "Workers at Willmar Manufacturing Company Press On With Their Effort to Organize a Union," Star Tribune, July 15, 1995

Canute James, "Caribbean Sees Jump in Apparel Exports to US," Journal of Commerce, August 31, 1995.