STATE GOVERNMENT AND UNION PROMOTE JOBS IN COAHULA

UNCLAS SECTION 01 OF 03 MEXICO 003443

SIPDIS

SIPDIS

DEPT FOR DRL/AWH, AND ILCSR, WHA/MEX AND PPC, USDOL FOR ILAB
TREASURY FOR IA
NSC FOR FISK

E.O. 12958: N/A
TAGS: ELAB ECON ETRD PGOV PINR SOCI MX
SUBJECT: STATE GOVERNMENT AND UNION PROMOTE JOBS IN COAHULA
BUT AT WHAT COST?

REF: MEXICO 2285


1. SUMMARY: The government of the northern Mexican state of
Coahuila and the national union of the Mexican Workers
Confederation (CTM) recently took advantage of a newly
published university study positively highlighting the
state,s economic growth to sign an agreement promoting job
growth and competitiveness. The study, conducted under the
auspices of the Monterrey Technology Institute (the Mexican
MIT),measured government efficiency, ease of doing business,
economic performance and infrastructure. During the signing
of the agreement the CTM underscored the union,s commitment
to working with Mexico,s private sector, both locally and
nationally, to promote job growth. The union also suggested
that its agreement with Coahuila,s government could be a
model applicable to other parts of Mexico. For his part the
Governor of Coahuila announced new investment that he said
would generate around 3-5,000 new jobs. On the surface, the
job situation and economic performance of Coahuila appear to
be quite good. However, there are some who question the
cost, in terms of employee rights, fair wages and health
conditions that Coahuila,s workers are paying for the
state,s surface prosperity. END SUMMARY



UNIVERSITY STUDY GIVES COAHUILA HIGH ECONOMIC MARKS
-------------- --------------


2. According to study published at the end of May by the
Graduate School of Public Administration and Public Policy
(EGAP) of the Monterrey Technology Institute (the Mexican
MIT),the northern Mexican state of Coahuila has made
impressive economic gains. The EGAP study rated Coahuila as
number five nationally (of thirty-one (states plus the Mexico
City Federal District) in terms of economic performance. The
study drew on data from 2006 and January of 2007 and measured
such factors as government efficiency, ease of doing business
and infrastructure. The last time EGAP conducted a similar
study was in 2003. At that time Coahuila received a ranking
which put it in eighth place on a national rating.


3. The only other Mexican states/areas to place ahead of
Coahuila, beginning were (in descending order) Nuevo Leon,
Mexico City, Baja California Sur and Baja California. If the
metric of infrastructure was removed, Coahuila moved from
fifth to third place. The EGAP study was sited frequently by
the Coahuila,s Governor, Humberto Moreira Valdes, as
independent recognition of the state,s overall positive
economic performance. Post notes that Governor Moreira, and
almost all local media coverage of the study, focused on the
third place ranking (without measuring infrastructure) as
opposed to the fifth place ranking (which did measure the
impact of infrastructure).


UNION, STATE GOVERNMENT AND PRIVATE SECTOR SIGN JOBS PACT
-------------- --------------


4. Thanks to what was undoubtedly good public relations
planning, the timing of the release of the EGAP study
coincided with two others high profile local events. The
first event was a General Assembly meeting of the Coahuila
State Counsel of the Mexican Workers Confederation (CTM).
The CTM is the rough Mexican equivalent of AFL-CIO in the US.
The union,s state leader, Tereso Medina Ramirez personally
invited Mission Mexico,s Labor Counselor to attend the
General Assembly which would be presided over by the CTM
national leader, Secretary General, Joaquin Gamboa Pascoe.


5. The second event, and clearly the more significant from
the CTM,s perspective, was the signing of an agreement to
promote jobs, investment and competitiveness. The agreement,
which was reportedly negotiated by Tereso Medina of the
Coahuila CTM, was formally called the &Pact on Employment,
Salaries, Productivity and Competitiveness8. The aim of the
agreement was to formalize a pledge by union, the government
of Coahuila and the state,s private sector to work together
to promote employment intensive economic growth.


MEXICO 00003443 002 OF 003



6. Speaking on behalf of his administration, Governor
Moreira promised that Coahuila,s government would do its
part to generate the types of conditions that would
facilitate investment. As an example this Governor Moreira
announced investments that he claimed would generate between
3-5,000 new jobs. The investments would come from four
different companies only one of which, Modelo Breweries, was
specifically named at the signing event. In recent years
Modelo has reportedly invest USD 520 million plants and
operations in the state and Moreira claimed the brewery now
planned to increase that investment by another USD 50
million.


7. (Comment: Although not specifically mentioned at the
signing event, Mission Mexico notes that Coahuila has been
very successful in recent months in attracting new
investments. So far in 2007 the state has attracted such
investments as a USD 425 million for a Freightliner truck
plant which is expected to generate 2700 new jobs and
Chrysler plans to invest USD 570 million in plant expansion
beginning in June 2007 which will also generate more news
jobs. End Comment)


8. Next came the state chapters of two different private
sector organizations, COMPARMEX (a AMCHAM type of
association) and CANACINTRA (a national grouping of
manufacturers) signed the pact. These two organizations
pledged to increase their levels of investment and efficiency
in order to generate more jobs and raise worker salaries.
Finally, the CTM undertook to help maintain and increase the
number of jobs in Coahuila by providing labor stability
through responsible unionism that worked intelligently to
maintain a constant dialog with the state,s private sector.
The Coahuila pact was enthusiastically praised but the CTM,s
national leader, Secretary General Joaquin Gamboa who
declared that he would like to see similar agreements
implemented all over Mexico.


JOB GROWTH BUT AT WHAT COST?
--------------


9. The EGAP study and the claims of new job grow by Governor
Moreira seem to indicate that good descriptions of
Coahuila,s economic performance are well deserved. However,
not everyone is in agreement that benefits of the state,s
economic performance are actually reaching Coahuila,s
workers. A knowledgeable American labor observer with long
experience with both the US and Mexican organized labor
movements does not deny that Coahuila is generating jobs at a
noteworthy rate, especially in the area of manufacturing.
However, this observer claimed that most of these jobs paid
only the equivalent of between USD 45-65 per week. (Note: The
legal minimum wage in Mexico is approximately USD 5.00 per
day.)


10. While observer noted these wages are significantly
better than no wages at all, they are not enough to keep
local residents in Mexico when they have the clear example of
how much more people are paid for similar jobs in the United
States. The migration of workers from Coahuila to the US has
indeed prompted the migration of workers into thee state of
Coahuila from other parts of Mexico. According to our labor
contact, these newly arriving workers are paid so poorly they
often live in dilapidated and crowded housing conditions
which are reportedly creating a serious and grow health
problem in Coahuila.


11. These new workers are allegedly not being offered
permanent jobs but rather temporary employment contracts.
Under these contracts the workers are not registered under
Mexico,s social security system which means they are not
eligible for medical attention under the country,s national
health care system and they do not accrue retirement
benefits. All of this is purportedly taking place with the
tacit concurrence of the Coahuila CTM which (according to the
CTM itself) controls 80 percent of all collective bargaining
contracts in the state.



MEXICO 00003443 003 OF 003



COMMENT
--------------


12. The EGAP study, coming as it does from one of Mexico,s
premier universities, the Monterrey Technology Institute,
undoubtedly presents an accurate picture of Coahuila,s
economic performance. Invest and job growth are on the rise
and the state government has clearly created an environment
that is conducive to sustained economic growth. If this were
the only aspect of the state,s economic performance to be
considered the CTM,s national leader would be fully
justified in declaring that he would like to see the Coahuila
situation repeated throughout Mexico. Unfortunately, things
may not be that simple. The unconfirmed claims of low
salaries, poor housing conditions and denied worker benefits
for at lease new workers in Coahuila are not surprising.
However, given that just one labor union controls such a
large percentage of all labor contracts in Coahuila, there
would be very little anyone could do locally if indeed that
organization decided to tacitly look the other way instead of
forcefully standing up for the workers.



12. This message was cleared by AmConsul Monterrey.


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