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DE RUEHME #2348/01 2131658
ZNR UUUUU ZZH
R 311658Z JUL 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 2780
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 03 MEXICO 002348 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILSCR, WHA/MEX USDOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON PGOV PINR SOCI MX
SUBJECT: UNION USES FEDERAL FUNDS TO PROMOTE HOME 
IMPROVEMENTS 
 
REF: 07 MEXICO 3444 
 
¶1.  SUMMARY: The Confederation of Mexican Workers (CTM), 
Mexico,s largest labor federation, is expanding an 
initiative it began earlier this year to improve living 
conditions for workers into the northern Mexican state of 
Coahuila.  The initiative being implemented under union 
auspices uses GOM federal funds to make short-term interest 
free loans for the purposes of home improvement.  The loan 
amounts are relatively small, ranging from approximately USD 
500 ) 2,200 and would only be available to workers whose 
effective wage is less than USD 500.00 per month.  Despite 
the modest amounts involved the potential for this expanded 
loan program in a place like Coahuila could be significant 
given that the CTM there has been accused promoting job 
growth at the expense of work rights, wages and health 
conditions (Ref).  One of the broader benefits of this 
program could also be an expanded sense of pride in home 
ownership among workers at the lower end of Mexico,s wage 
scale.  Increasing this sense of pride among low wage workers 
could strengthen their times to Mexico and, to a limited 
degree, reduce one of the push factors the prompt Mexicans to 
migrate to the US.  End Summary. 
 
 
CTM EXPANDS SOCIAL PROGRAM TO COAHUILA 
-------------------------------------- 
 
¶2.  The Confederation of Mexican Workers (CTM), the 
country,s largest single labor federation, has chosen the 
northern Mexican state of Coahuila as the next place to 
expand one of its social programs.  In its heyday, the CTM, 
which is roughly equivalent to the AFL-CIO in the US, often 
attempted to be all things to all people in terms of labor 
related issues.  At one point the CTM even had its own 
nationally chartered bank and its own university.  To some 
extent the federation still conducts a number of social 
programs but its membership, influence and resources declined 
significantly in recent years because of changes in Mexican 
politics and society. 
 
¶3.   The CTM is officially tied to Mexico,s former ruling 
political party, the Institutional Revolutionary Party (PRI). 
The state of Coahuila is currently governed by the PRI and in 
fact has never had a non-PRI Governor.  In the past, at least 
at the national level, these ties to the PRI, previously the 
official government party, helped insure that affiliated 
labor unions received favorable hearings with the Mexican 
government which in turn would intercede on their behalf with 
both public and private employers. Now that the PRI is no 
longer in power its ability to support the CTM has been 
significantly reduced and in many parts of Mexico the 
federation is a shadow of its former self. That said, one of 
the places where the CTM remains a dominant force is in 
Coahuila.   In order to help the union maintain that position 
the federation,s national office chose Coahuila as one of 
five states (the others being Puebla, Sonora, Tamualipas and 
Hidalgo) where it is launching a new housing related social 
program. 
 
 
UNION TO CHANNEL HOME IMPROVEMENT LOANS 
--------------------------------------- 
 
¶4.  Taking advantage of federally provided funds the CTM has 
begun working with a savings and loan type institution to 
provide what could best be described as a type of mini loans. 
 These loans are interest free and can only be used for the 
purposes of home improvement for low income workers. 
Interestingly, in order to qualify for this loan the home in 
question does not need to be in the workers, own name 
although it must ultimately belong to a family member.  In 
theory, under the federal law that authorizes these loans 
they can be made available via a government agency or NGO to 
almost any qualifying Mexican citizen but in practice the CTM 
appears to be the main non-governmental entity facilitating 
the disbursement of these funds.  The CTM has obtained 50 
million pesos (USD 5 million) from the GOM for the specific 
uses of home improvement loans in Coahuila. 
 
¶5.  The loans the CTM is helping to disburse will be in the 
amounts of $5,000 ) 22,000 peso or roughly USD 500.00 ) 
2,200.00.  In order to qualify the loan applicant,s salary 
cannot exceed five times the Mexican daily minimum wage which 
 
MEXICO 00002348  002 OF 003 
 
 
is approximately USD 4.67 and which would amount to just 
under USD 470.00 per month.  The standard practice is to 
approve these loans and disburse the funds within 48 hours 
after receipt of an application with all necessary supporting 
documentation.  Approved applicants receive their money 
directly (via bank deposit or check) and they are free to use 
the funds in any mix of material or labor costs that they see 
fit. 
 
¶6.  As mentioned above, these loans are interest free but 
they must be repaid in full during a period not to exceed 9 
months.  The way repayment is being handled in Coahuila is 
via automatic deductions from the worker,s salary.  The 
Coahuila CTM states that these automatic deductions are 
possible because of the close relationship it has with the 
private companies with whom it has signed collective 
bargaining agreements.  Once the loan is repaid the 
recipients can apply for another for a total of five separate 
loans.  However, to ensure that the loans are being used for 
their intended purpose the CTM (or whatever other entity that 
is handling disbursement) must undertake to conduct on-site 
inspection to verify that the home improvements where 
actually carried out in accordance with the terms of the 
approved loan applications.  The CTM in Coahuila expects that 
is members will be able to start receiving home improvement 
loans prior to the end of August 2008. 
 
 
A WIN FOR THE WORKER AND A BIGGER ONE FOR THE CTM 
--------------------------------------------- ---- 
 
¶7.  The CTM in Coahuila announced the launch of this home 
improvement loan program at its state level offices in the 
capital city of Saltillo before an assembly of union 
delegates (shop stewards).  Mission Mexico,s Labor Counselor 
was present for the announcement which took place on July 23 
and the high level of excitement interest and excitement 
among the delegates was unmistakable.  A CTM official from 
the federation,s national office who was also at the event 
commented on the excitement by explaining to Labor Counselor 
that nearly sixty percent of all CTM union members earn only 
five times the daily minimum wage or less.  Consequently, the 
official said, this type of program would automatically 
include more than half of all CTM union members nationwide. 
 
¶8.  The remarks by this national level union official 
essentially confirmed for Mission Labor Counselor comments 
made previously about the labor situation in Coahuila.  In 
2007, a knowledgeable American labor observer with long 
experience with both the US and Mexican organized labor 
movements noted that while Coahuila has done very well 
generating jobs in recent years most of these jobs pay only 
the equivalent of between USD 45-65 per week (REF).  These 
wages, the American observer stated, were too low to deter 
local residents from leaving Mexico when they have the clear 
example of how much more people are paid for similar 
manufacturing (or unskilled) jobs in the United States. 
However, the American averred, these wages were more than 
enough to prompt the migration of workers into Coahuila from 
other parts of Mexico to backfill jobs being abandoned. 
 
¶9.  Continuing on, the American labor contact stated that the 
wages of these newly arriving workers were so low that they 
often lived in dilapidated and crowded housing conditions 
which were reportedly creating serious and grow health 
problems in Coahuila.  Thus, by launching a social program 
specifically aimed at those most likely to live in poor 
housing one could conclude that the Coahuila CTM was taking 
steps to improve the lot of its members and responding to 
international criticism.  In other words, while the CTM in 
Coahuila was undoubtedly helping the workers it was helping 
itself by beginning to put to rest criticisms that appear to 
have at least some basis in fact. 
 
 
COMMENT 
------- 
 
¶10.  It should be noted that the salary figures mentioned in 
para 8 above by the American and Mexican labor officials 
differ from the official statistics provided by the GOM. 
According to INEGI, the GOM,s National Statistics Institute, 
the average salary of a typical worker in Coahuila is nearly 
USD 90.00 per week.  The higher wages given by GOM figures 
 
MEXICO 00002348  003 OF 003 
 
 
certainly give a better picture of worker salaries in 
Coahuila than those supplied by the union officials but in 
looking at the two sets of numbers one should consider their 
respective sources.  Mexican labor union officials are 
(theoretically) supported by member dues which are collected 
based on a percentage of a worker,s salary.  These officials 
would have no reason to under-report wages since that would 
mean intentionally forgoing potential income.  In is, 
therefore, in their own self interest to know exactly how 
much workers get paid.  The GOM figures are the official 
numbers and INEGI is generally viewed as a reliable 
government agency.  However, it is not too difficult to 
imagine that a GOM agency might be inclined to provide salary 
figures that portray government efforts to create good paying 
jobs and fight poverty in as favorable a light as possible. 
 
¶11.  Finally, with respect to the home improvement loan 
initiative that the CTM is undertaking using GOM federally 
provided funds, there is a chance that this program could 
have some unexpected benefits; especially in a place like 
Coahuila.  It must be noted that this is not the only housing 
related program the GOM is supporting and its other 
initiatives appear to be making a positive difference. 
However, this initiative is the only one being overseen by a 
national labor federation for its lowest income union members 
and if the CTM,s experience in other Mexican states is any 
indication, the initiative will be extremely popular with 
unionized workers.  In fact the CTM was concerned that the 
funds allocated for Coahuila might be insufficient to matter 
pent up demand.  Helping workers improve their housing will 
undoubted increase their pride in home ownership and could 
indirectly increase these individuals, ties to Mexico.  In 
hard dollars and cents (or peso and centavos) terms it would 
certainly be better for the workers if they were paid wages 
high enough to provide them with sufficient disposable income 
to improve their own homes.  However, in the absences of 
something like this happening an interest free loan repaid 
through direct salary deductions is potentially a very 
attractive alternative.  An increase in pride of home 
ownership will most likely also increase these workers ties 
to Mexico.  If that happens they might be less likely to 
abandon Mexico and migrate to the US in search of jobs and 
better living conditions.  Right now this is all very 
speculative but the potential exists and, if nothing else, 
recent experience with the home improvement program shows 
that workers are taking out loans in significant numbers and 
universally using the funds for its intended purpose. 
 
 
¶12.  This message was cleared with 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 / 
WILLIAMS