Guest Column
The wages of Calderón: 3.9 percent
- By Kenneth Emmond
- The Herald Mexico/El Universal
January 8, 2007
It´s starting to look as though the leftists´ fears of President Felipe Calderón are becoming reality.
The position of the left, after filtering out the issue of the legitimacy of the July 2 election, was that Calderón was the candidate of the party that represents business interests (the National Action Party, or PAN), and that little would change for poor Mexicans if he were elected.
After the election, a victorious Calderón vowed to work for all Mexicans whether or not they voted for him. That´s not what we´ve seen so far.
First we had the budget, in which a proposed reduction of 25 billion pesos, about $2.3 billion dollars, in education spending was reversed only by the wisdom of Congress, which rejected it.
The logic of cutting funding for one of the most important government departments is elusive, given that Calderón has voiced his understanding of the importance of education in building Mexico´s future.
Contrast that with Brazilian President Luis Ignácio Lula da Silva, who said at his inauguration last week, "Quality education will be the priority of my government."
Even if he wants to do an end run on the powerful national teachers´ union by promoting private schools over public ones, Calderón must spend a bundle recruiting and training corruption-proof inspectors to ensure that those schools don´t degenerate into Dickensian horror shows.
Many existing private schools could do with enhanced inspections, much to the chagrin of parents who struggle to send their children there.
To be sure, there are many excellent private schools. In others, however, short-changing teachers on their salaries, illegally withholding exam results pending dues payments, and parental bribes to enhance student evaluations are, shall we say, not unknown.
Last week we got another taste of the president´s right-wing myopia. On Dec. 29 the National Minimum Wage Commission published the minimum wage increases for 2007 — a paltry 3.9 percent.
That´s barely enough to cover the increased cost of living due to inflation. In two of the three regions into which the country is divided for the purpose of determining minimum wage it´s still below 50 pesos per day — less than five U.S. dollars.
It´s not hard to divine who has the president´s ear these days.
A month before the minimum wage decision was announced, Tomás Natividad, president of the Labor Commission of the Confederation of Business Owners of the Republic (Coparmex), warned that the minimum wage rise should be below four percent.
He said that if it was more than five percent, many businesses would be forced to close.
Apart from the well-known fact that businessmen around the world are notorious for poor-mouthing when faced with possible cost increases, this raises the question of whether a business deserves to survive if it can´t pay its workers a decent living wage.
One of Natividad´s arguments was that the minimum wage is only a yardstick in most cases — that is, a worker might be contracted to earn three or five times the minimum wage, and a hefty rise would be disproportionately onerous.
Another canard is that unions often negotiate increases beyond the minimum wage guidelines — a position that conveniently overlooks the vast number of workers who have no union protection.
Those lines of thinking must have come straight from the Land of Spurious Reasoning.
Coparmex president Ricardo González is more straightforward: he says simply that a rise in minimum wage shouldn´t exceed the inflation rate. One supposes that if inflation increases during the year the workers will just have to grin and bear it. In effect, a business risk has been adroitly shifted from business onto employees.
González is really saying that the only goal should be to keep business costs down, even though it effectively prevents the vast majority of Mexicans from increasing their spending — and stimulating economic growth.
This argument is not new. It has held down wages ever since the 1994-95 peso crisis, when it was true that the majority of businesses were struggling to stay afloat.
That many were able to do so was largely because their labor costs remained disproportionately low. Meanwhile, the purchasing power of the minimum wage was seriously eroded, to the point where it´s well below the level needed to buy the goods necessary for bare survival.
In other words, Mexico´s recovery was in large part achieved on the backs of those least able to negotiate their share of the benefits of their work.
In recent years, profits have returned to most businesses and the economy is growing at a healthy if unspectacular rate of about four percent. Yet the business community continues — successfully — to call for labor to continue to support its growing prosperity.
In his New Year´s message, Calderón urged Mexicans to work passionately for Mexico´s future "so that, together, we can build a better Mexico."
Astute politician that he is, the president must surely realize that Mexicans who can see from the size of their pay packets that there won´t be a better Mexico for them, at least for another year, have little incentive to put much passion into their efforts.
Unless, as the leftists maintain, he´s only talking to some Mexicans.
Kenneth Emmond is a freelance journalist and economist who has lived in Mexico since 1995. You can reach him at kemmond@yahoo.com.
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