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Cablegate: Agreement to Improve Labor Environment at State

VZCZCXRO9250
RR RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHMT RUEHNG RUEHNL
RUEHQU RUEHRD RUEHRS RUEHTM RUEHVC
DE RUEHME #2176/01 1981520
ZNR UUUUU ZZH
R 161520Z JUL 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 2578
RUEHC/DEPT OF LABOR WASHINGTON DC
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RHMFIUU/CDR USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC

UNCLAS SECTION 01 OF 04 MEXICO 002176

SIPDIS

DEPT FOR DRL/AWH AND ILSCR AND WHA, DOL FOR ILAB

E.O. 12958: N/A
TAGS: ELAB ECON PGOV PHUM PINR MX
SUBJECT: AGREEMENT TO IMPROVE LABOR ENVIRONMENT AT STATE
LEVEL APPEARS TO ACHIEVE SOLID RESULTS

REF: 07 MEXICO 5936


1. SUMMARY: In October 2007 the local offices of several
national labor confederations and the government of Jalisco
state signed an agreement to reduce the number of threatened
strikes and the resulting extortion of businesses that was
damaging the state,s economic competitiveness (reftel).
Although initially given little prospect for success, the
agreement has exceeded all expectations and improved the
state,s labor climate. Ultimately, the problem of fake or
threatened strikes will require changes in Federal labor law,
but the successes in Jalisco show that it is sometimes
possible to find a local &work-around8 for a national
problem. END SUMMARY.


STATE GOVERNMENT AND UNIONS TAKE ON NATIONAL PROBLEM
--------------------------------------------- --------

2. Last October, the government of Jalisco and the local
offices of several national labor confederations signed an
accord aimed at improving the state,s overall labor climate.
The accord, called &The Agreement for Labor Stability8,
sought to reduce the number of threatened strikes, often
called by bogus or unscrupulous unions for reasons totally
unrelated to workplace issues or any form of contract
negotiations. According to statements by both state
government and union officials, Jalisco was facing a
situation in which the threat of a strike, as opposed to an
actual strike, was harming the business climate and
discouraging investment. Spokesmen for the state,s private
sector claimed that the threat of a strike was increasingly
being used by labor unions to extort money from businesses
that often willingly paid up rather than deal with potential
labor conflicts or legal problems that might disrupt their
operations.

3. The agreement was signed on the state government,s side
by Jalisco,s governor Emilio Gonzalez Marquez and Secretary
of Labor Ernesto Espinosa Guarro. The union signatories
included the state Secretaries General of three of Mexico,s
better known national labor confederations. The most
prominent of these was the CTM (Confederation of Mexican
Workers), Mexico,s largest national labor federation. Next
in importance was the CROC (Revolutionary Confederation of
Workers and Peasants), Mexico,s third largest national labor
federation. (Comment: The CROC is a divided union in Jalisco
and the faction that signed the agreement represents the
smaller and weaker portion of the union). The third
federation was the COR (Revolutionary Workers Confederation),
one of Mexico,s smallest national level labor organizations.

4. In addition to the three first tier national federations
the agreement was also signed by the Secretary General of the
COS (Confederation of Union Organizations). The COS would
best be described as a second tier labor organization but it
has a national presence and, ultimately, it appears to be the
federation that most fully committed itself to working with
the Jalisco labor authorities to implement the agreement. The
head of COS is also currently the leader of the Jalisco
delegation of the Congress of Labor. (Note: The Congress of
Labor is the national umbrella organization for unions and
represents labor interests in dealings with the GOM.) Both
the Jalisco government and the union officials pledged to
take action to reduce the number of strikes or threatened
strikes in the state but this phenomenon is very much a
national problem that initially appeared extremely resistant
to state level action.


THE ROOTS OF THE PROBLEM
------------------------

5. Mexico,s constitution guarantees freedom of association
and the right to strike. The statutes that codify these
rights are contained in Mexico,s &Federal Labor Law.8 In
order to exercise the right to strike, Federal Labor Law
establishes several administrative prerequisites, the two
most important being: (1) that only officially recognized and
properly registered unions can call for a strike and (2)
before a strike can be considered legal a union must receive
prior approval of a strike notice from the appropriate labor
authorities. There are no provisions in Mexican law for

MEXICO 00002176 002 OF 004


state level authorities to suspend these two administrative
requirements although state labor authorities can adapt their
implementation in order to conform to local conditions.

6. In Jalisco, as in most other parts of Mexico, the
unintended consequences of the two above-mentioned
administrative prerequisites are a shockingly large number of
filings for approvals of strike notices. In 2007 Jalisco,s
labor authorities received a total of 16,524 applications for
approvals of strike notices. Of this number only a little
over 4,000 were finally approved and, of those filings
approved, less than 200 ultimately resulted in an actual
strike.

7. Many of the more than 16,000 applications for approval of
strike notices were attributed to unscrupulous or paper
unions which exist because of abuses of the constitutional
guarantee of freedom of association. Under Federal Labor Law
a union can be formed with as few as 20 employees.
Unfortunately, Mexican labor authorities (at both the federal
and state levels) are often lax when it comes to verifying
whether the employees of a particular workplace actually
exist or, if the workers do exist, whether they are aware
that someone filed for legal status as their union
representative. Once a union has been officially recognized,
whether or not there really are any workers in the union, the
documents establishing the union can be used to file an
application for approval of a strike notice.

8. More often than not the simple filing of a request, which
in Jalisco was then certified with a government seal, was
being presented to business owners as proof of an approved
strike notice. Approved strike notices (or a document
showing a filed request) were being presented to business
owners who were then extorted for money to make the problem
go away. The business owner could refuse to pay and risk
what they believed to be a legally authorized strike but the
cost of handing over the pay-off was usually less than the
cost of challenging the legal status of one of these paper
unions and/or the legality of a strike.


THE DETAILS OF THE AGREEMENT
----------------------------

9. In order to combat the growing problem of paper and
unscrupulous labor unions using the threat of a strike to
extort money from businesses the Jalisco agreement committed
the state government and the unions to:

Work together to reduce the number of strikes statewide;

Verify the legal status of any union filing an application
for approval of a strike notice. This would entail close
scrutiny to ensure that recognized unions fully complied with
the administrative requirements of keeping their
registrations up to date;

Deny any application for approval of a strike notice that was
not signed by the union,s Secretary General;

Verify the signature of the union Secretary General on any
application for approval of a strike notice.


DISAGREEMENT ON THE AGREEMENT
-----------------------------

10. According to press reports at the time, the unions which
signed the agreement with the government of Jalisco
represented some 60 percent of all unionized workers in the
state. The other 40 percent of Jalisco,s unionized workers
are represented by the FROC (Federation of Revolutionary
Workers and Campesinos) and the CROM (Revolutionary
Confederation of Mexican Workers). The FROC is the larger
and stronger portion of the CROC in Jalisco and the CROM is
affiliated with Mexico,s fourth largest labor federation.

11. The two labor organizations who pointedly refused to
sign the agreement claimed they did so in order to protect
worker rights. In their view, the agreement both attempts to
supercede the administrative provisions of Federal Labor Law
and to deny workers their constitutionally guaranteed right
to strike. Moreover, spokespersons for these two unions

MEXICO 00002176 003 OF 004


opined, the recently signed agreement was no different from a
similar accord reached several years ago by the previous
state administration. That accord provided excellent photo
opportunities but not much in the way of results, according
to the dissident unions.


THE RULES APPLY TO EVERYONE
---------------------------

12. It may well be that the FROC and the CROM believed that
by not signing the agreement its terms would not apply to
them. If that was the case then they were wrong. During a
recent meeting with Jalisco Secretary of Labor, Ernesto
Espinosa Guarro, Mission Mexico Labor Counselor was told that
in essence the agreement only required full compliance with
mandates that already existed in Federal Labor Law. That
being the case, Espinosa said, his agency immediately set out
to apply the agreement provisions to everyone whether they
signed the agreement or not.


STATE LABOR OFFICE GET REAL RESULTS
-----------------------------------

13. According to Labor Secretary Espinosa, before his agency
could fully apply the terms of the agreement it first had to
get its own house in order. This required a massive effort
to review the Secretariat files to determine which unions had
kept their registrations up to date and which had not. Very
few were in full compliance with relevant federal
requirements but a significant number only needed to do such
simple things as providing updated lists of union officers.
In the process of updating its files Espinosa,s staff
discovered a shockingly large number of irregularities among
the Secretariat inspectors responsible for verifying the
union information on file. Ultimately, the Secretariat was
forced to dismiss for cause 22 of the 36 inspectors on staff.
One of those fired was the head of the union for Labor
Secretariat employees.

14. Once the Labor Secretariat reorganized its files and
began applying the agreement to everyone the results were
immediate and impressive. In 2007, prior to the agreement,
the average number of requests for approvals of strike
notices averaged 1,755 per month. After the agreement that
number dropped to 621 requests for approval per month for the
remainder of 2007. The average number of approval requests
from January to June 2008 is 275 per month. The total number
of requests for approval for that same period is 1,768 which
is almost equal to the average number per month in 2007.
Prior to the agreement the largest number of requests came
from such first tier organization as the CTM, CROC and CROM.
In January 2007 the CTM submitted 627 requests for approval;
a year later that number dropped to just 14! The CROC and the
CROM had similar reductions in their request numbers.


COMMENT
-------

15. Given that prior agreements of the type described above
have produced less than stellar results this newest accord
did not initially appear to offer much hope for any real
change. However, &The Agreement for Labor Stability8 seems
to be doing just what it was meant to do. A fair amount of
the credit for this probably belongs to the new Jalisco
Secretary of Labor but he told Mission Labor Counselor that
the agreement might not have accomplished so much so fast
were it not for such second tier unions as the COS. The COS,
Secretary Espinosa said, listened to him when he told all the
unions that the state had dropped eight places nationally in
relative competitiveness. Working closely with his office
the COS set out to rally support for Espinosa and for the
agreement among other second tier organizations. This set an
example that others soon followed.

16. As previously noted, the roots of the dilemma of threats
being used to extort money from businesses stem from abuses
of Federal Labor Law and ultimately it will require changes
at the federal level to fully address the problem.
Nevertheless, the unions and the state government in Jalisco
are showing that it is possible at times to deal locally with
a national problem. If this type of agreement can be

MEXICO 00002176 004 OF 004


effectively duplicated in other states it could make a real
difference in labor, management, and government relations in
Mexico.

17. This message was cleared with AmConsul Guadalajara.


Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity and the North American
Partnership Blog at http://www.intelink.gov/communities/state/nap /
GARZA

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