Mexico City: Tensions over sharp differences in pay between Mexican workers and their Canadian and US counterparts surfaced on Sunday as negotiators discussed labour market rules in talks to overhaul the North American Free Trade Agreement.
Canada’s biggest private-sector union said NAFTA should be scrapped if Mexico cannot agree to better labour standards, clashing with Mexican business leaders who argued that workers rights were a matter for each country to resolve internally.
Mexican political and corporate leaders firmly resist demands to bring wages into line with US and Canadian levels, arguing the big cost advantage the country enjoys over richer peers should decrease as economic development advances.
Labour union leaders in the two wealthier nations say laxer labour standards and lower pay in Mexico have swelled corporate profits at the expense of Canadian and US workers, making resolution of the issue a major battleground of the NAFTA talks.
Jerry Dias, national president of Canadian union Unifor, said: “if labour standards aren’t a part of a trade deal, then there shouldn’t be a trade deal,” Dias said.
Worker pay is a sensitive issue in Mexico, a country riven by sharp inequality and which has struggled for years to alleviate poverty, which affects well over 40 percent of the population.
Mexican business leaders argue that integrating Mexico into North American supply chains has made the entire region more competitive. Recent studies have shown, however, that wages in Mexico have experienced significant downward pressure.
Given Mexico’s higher inflation rates, wages in that country are lower now in real terms than when NAFTA took effect, according to a report published last month by credit rating agency Moody’s. From 2001 to 2015, Mexican hourly wages in US dollars grew only 9 percent, less than in the US and far below the 120 percent increase in Brazil, said the Moody’s report. Most formally employed workers earn significantly more, but the statutory minimum wage is a mere 80 pesos a day ($4.49).
Workers in Mexico’s auto industry, the main source of the country’s $64bn goods trade surplus with the US earn far less than their American counterparts. According to the Center for Automotive Research in Ann Arbor, Michigan, Mexican auto workers earn average hourly wages of less than $6 excluding benefits, compared with about $28 in the United States.
Steve Verheul (pictured), Canada’s chief NAFTA negotiator, told reporters his country would defend its interests at the talks, and when asked about the need for tougher labor standards, said: “It’s an important issue.”
