VZCZCXRO6379
PP RUEHCD RUEHGD RUEHHM RUEHHO RUEHJO RUEHMC RUEHNG RUEHNL RUEHRD
RUEHRS RUEHTM
DE RUEHME #0694/01 0441655
ZNR UUUUU ZZH
P 131655Z FEB 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 5312
RUEATRS/DEPT OF TREASURY WASHDC
RUEHC/DEPT OF LABOR WASHDC
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHXI/LABOR COLLECTIVE

UNCLAS SECTION 01 OF 03 MEXICO 000694 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILSCR, WHA/MEX AND PPC, USDOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON PGOV PINR SOCI MX
SUBJECT: LABOR UNIONS LOBBY FOR EMERGENCY INCREASE IN THE 
MINIMUM WAGE 
 
REF: (A) 06 MEXICO 7042 (B) MEXICO 0508 (C) 06 MEXICO 
     6969 
 
¶1.  SUMMARY: On December 20, 2006, Mexico,s National 
Commission on Minimum Wages (CNSM), an agency within the 
GOM,s Labor Secretariat, announced a wage increase of 3.9 
percent for 2007.  This wage increase was hailed by Mexico,s 
private sector but only reluctantly accepted by the 
country,s organized labor movement which had sought an 
increase of between 6-10 percent.  Recent sharp increases in 
the cost of staple food items prompted Mexico,s organized 
labor movement to lobby for an emergency increase in the 
minimum wage.  Thus far the Mexican government has avoided 
specifically responding to labor,s request for an emergency 
wage increase, but two of the country,s three largest 
political parties have more or less endorsed the idea. 
Mexico,s private sector expressed sympathy for workers 
dealing with the consequences of the cost increases in staple 
foods but also cautioned against the negative inflationary 
upshot at this time of raising salaries beyond the 3.9 
percent announced by the CNSM. Observers seeking a middle 
ground have floated the idea of a wage increase tied to 
increases in productivity.  END SUMMARY. 
 
 
-------------------------------------- 
The GOM Sets the Minimum Wage for 2007 
-------------------------------------- 
 
¶2.  On December 20, 2006, Mexico,s Comision Nacional de 
Salarios Minimos ) CNSM (National Commission on Minimum 
Wages) announced an agreement on setting the country,s 2007 
minimum wage (REF A).  Effective January 1, 2007, Mexico,s 
national minimum wage  increased 3.9 percent.  The agreement 
on the minimum wage increase was negotiated by the CNSM which 
is an agency under the auspices of the GOM,s Labor 
Secretariat.  The Commission is composed of representatives 
 
SIPDIS 
from the GOM, the private sector and organized labor unions. 
 
¶3.   The negotiated agreement was immediately hailed by 
Mexico,s private sector as an action that would bolster 
confidence in the markets and hold the line against 
inflation.  Organized labor representatives called the 2007 
negotiated wage &ridiculous8 but reluctantly agreed to 
accept it as a vote of confidence in President Calderon,s 
new government. Now however, within weeks of the 
implementation of the new minimum wage, sharply unexpected 
raises in the prices of several basic food items have 
prompted Mexico,s organized labor movement to agitate for an 
emergency  increase in the minimum wage over and above the 
3.9 percent  increase announced by the CNSM. 
 
 
Mega-march To Protest Price Increase and Demand Higher 
Salaries 
 
 
¶4.  The most visible sign to date of organized labor,s 
unhappiness over the increases in staple food items was their 
participation in a large protest march that took place on 
January 31 (REF B).  The march participants were ultimately 
petitioning the government for redress to a long list of 
concerns but the main items motivating the protesters were 
increases in basic food items and a demand for a an emergency 
salary increase.  In response to the protest Mexican 
President Felipe Calderon issued a press statement saying he 
shared the protesters concerns and would do all he could to 
improve living standards, lower poverty and create jobs.  He 
did not, however, give any indication on what his 
administration,s position was on the question of an 
emergency wage increase. 
 
--------------------------------------------- ----- 
Emergency Wage Increase Sought Almost From Day One 
--------------------------------------------- ----- 
 
 
¶5.  The January 31 protest march was neither the first nor 
the only action organized labor has taken to underscore it 
demands for an emergency increase in the minimum wage. 
Prominent labor leaders began to speak only?? and 
aggressively about the need for an emergency salary increase 
as early as January 15, in other words, less than three weeks 
after the new minimum wage announced by the CNSM was formally 
implemented.  The Mexican Workers Confederation (CTM), 
perhaps the largest confederation of labor unions in Mexico, 
was one of the first labor organizations to speak out in 
 
MEXICO 00000694  002 OF 003 
 
 
favor of an emergency wage increase.  CTM Secretary General, 
Joaquin Gamboa Pascoe, devoted the majority of his first 
press conference of the year to underscoring the need for an 
emergency salary increase.  Gamboa Pascoe blamed the failure 
of the GOM,s labor and agricultural policies for the rise in 
the prices of staple food and the inability of workers to 
make ends meet with currently low wages.  During his press 
conference Gamboa Pascoe also announced that the CTM had 
advised all of it affiliated unions to seek to negotiate a 
higher wage settlement than the 3.9 minimum increase 
authorized by the CNSM 
 
¶6.  At roughly the same time that the CTM announced its 
intention to seek an emergency increase in the minimum wage 
other unions began to do likewise.  Two labor associations in 
particular, the National Union of Workers (UNT) and the 
Federation of (Federal) Civil Service Unions (FSTSE), 
effectively joined the CTM in publicly stating their desire 
for an emergency wage increase.  For the most part, like the 
CTM, the FSTSE indicated that it was urging its member unions 
to seek an emergency wage increase through the process of 
negotiation.  The UNT, however, made clear that while it was 
prepared to negotiate an emergency wage increase with the 
private sector it was preparing for more aggressive ways to 
press its demands such as protest marches (like the one it 
took the lead in organizing on January 31) and ultimately 
strikes.  The National Union of Workers believes the 
emergency wage increase should raise salaries approximately 
10 percent across the board. 
 
 
Opposition Parties Support Demands for Emergency Wage Increase 
 
 
¶7.  Two of Mexico,s three largest political parties, both of 
which are in opposition to President Calderon,s ruling 
National Action Party (PAN), have come out in favor of an 
emergency wage increase.  The positions taken by these two 
parties, the Party of the Democratic Revolution (PRD) and the 
Institutional Revolutionary Party (PRI), respectively the 
second and third largest parties in the national legislature, 
on the question of an emergency wage increase are very much 
consistent with their current overall political leanings. 
 
¶8.  The PRD, the self-declared party of the left, believes 
that the government should immediately raise wages in order 
to help Mexican workers recover the purchasing power they 
lost during the previous six years under a PAN government.  A 
PRD spokesperson claimed that over the past six years the 
minimum wage last 19 percent of its purchasing power.  In 
addition Ricardo Monreal, a prominent PRD Senator asserted, 
that nearly 16 million Mexicans live on less than 3,000.00 
pesos a month (approximately USD 278.00) which means they 
earn just under three times the minimum wage. These figures, 
the senator declared, showed that the GOM and the private 
sector were not being honest in their assertions that no one 
in Mexico really worked for the minimum wage and therefore 
drastic actions to raise that wage were unjustified. 
 
¶9.  For its part the PRI, which is currently positioning 
itself as more of a center-left party, is more open to 
negotiation with both the government and the private sector. 
The PRI,s initial public statements on the question of an 
emergency wage increase were ones of staunch solidarity with 
demands made by Mexico,s organized labor movement.  However, 
when asked to elaborate, Emilio Gamboa Patron, the PRI leader 
of Mexico,s Chamber of Deputies (roughly equivalent to the 
US House Minority Leader) stated that his party would stand 
with the workers if national inflation figures for January 
justified extraordinary remedial actions to compensate for 
recent rise in the price of staple food items. (Note: The 
inflation rate fell from 4.0 percent in the 12 months through 
January, down from 4.1 percent at the end of December ) 
matching economist estimates.  Core inflation, which includes 
tortillas but excludes fresh food and energy, accelerated to 
3.9 percent in January from 3.6 percent the previous month.) 
Post notes that neither Gamboa Patron nor any PRI 
spokesperson have yet to comment on the January inflation 
figures. 
 
 
 
--------------------------------------------- ------------- 
UNAM Claims Productivity Justifies Emergency Wage Increase 
--------------------------------------------- ------------- 
 
¶10.  Many interested observers have focus on a report 
 
MEXICO 00000694  003 OF 003 
 
 
recently issued by UNAM (Mexico,s National University) as a 
possible middle road between the positions taken by Mexico,s 
organized labor movement and it private sector.  According to 
Huberto Juarez Nunez, an economist and labor specialist at 
the UNAM, the high productivity of workers at the majority of 
Mexican businesses is more than enough to facilitate an 
emergency wage increase without creating destabilizing 
inflationary pressures.  In making this claim Juarez Nunez 
indicated he was comparing the hourly costs in US dollars of 
workers in Mexico when measured against those same hourly 
costs of laborers in more developed countries. Using that 
standard, the labor specialist asserted, workers salaries in 
Mexico account for only around 3-5 percent of the total cost 
of production. 
 
¶11.  By most indications many participants in the debate over 
an emergency wage increase seem aware of the UNAM report 
about productivity justifying higher salaries.  It is not 
clear, however, to what degree the unions, political parties, 
private sector or Mexican government accepts the conclusions 
of the report. 
 
------- 
Comment 
------- 
 
¶11.  The question of an emergency increase in the minimum is 
currently bubbling beneath the surface of many labor related 
conversations in Mexico.  The January 31 march protesting 
increases in the prices of staple foods and demanding 
compensatory wage increases was, thus far, the most public 
manifestation of this ongoing national conversation.  At this 
point none of the participants in the debate over an 
emergency wage increase seem to be in agreement on any of the 
elements (i.e. the real impact of more expensive staple 
foods, the need for an emergency wage increase, the methods 
to be used in pressing for a wage increase, or the ability of 
productivity gains to negate the possible inflationary 
affects of an emergency wage increase) that will determine 
whether an emergency wage increase is ultimately authorized. 
Given this disagreement, the debate over an emergency wage 
increase is likely to go on for some time. 
 
 
 
 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
GARZA