Mexico News and Analysis: October 12-18, 2009

1. Electrical workers mount struggle for jobs

1. Electrical workers mount struggle for jobs
The Mexican Electrical Workers Union (SME) began a struggle this week for the very life of their 95-year-old union after President Calderon abolished the state enterprise Central Light and Power (LFC) in a midnight police action last Saturday.  SME, known as perhaps the most combative democratic union in Mexico, has long been a target of Calderon, who eliminated more than 44,000 skilled jobs in closing LFC. 

Blackouts plagued the Mexico City metropolitan area and surrounding states throughout the week as the State-owned Federal Electric Commission (CFE) tried to assume management of LFC’s aging equipment.  Since the mid 1990s, successive administrations refused to invest in LFC’s infrastructure with an eye toward eventual privatization, and much of LFC’s equipment is more than 50 years old.  The SME reported at least 23 contracted workers died during the first week because they were unfamiliar with the often dangerous underground and overhead equipment used by LFC.  Police and the army tried to arrest key SME workers and force them to repair equipment, while other workers were offered as much as 25,000 pesos for their skills.  The SME reported no takers, and one worker commented “here we don’t have any scabs.”   

On Wednesday, colonos from Ocoyoacac in the State of Mexico closed the Mexico City-Toluca freeway for several hours protesting a five day electrical outage in their community.  SME leaders warned of a possible collapse of the electrical system and at least 72 Mexico City neighborhoods complained of extended outages, some lasting two days.

On Thursday, SME convened perhaps the largest demonstration of the decade in Mexico City.  More than 300,000 people crowded downtown streets and the Zocalo, demanding that Calderon rehire SME workers, respect collective contracts and drop plans to abolish LFC.  Immediately after the march, the administration agreed to open a dialogue with SME.  It is unclear if Calderon was impressed with the outpouring of support for SME or is simply biding time, hoping to wear down workers who have not as yet received their paychecks for the first half of October.  Speakers at the march called for a general strike and a payment boycott for electrical bills.

In an effort to break union opposition, officials offered severance pay with as much as an 80% bonus for workers who accept their severance packages within four weeks.  Salaried workers can expect more than $1.4 million pesos while line workers could anticipate about $300,000 pesos (US$22,000).  The administration is also offering free English classes (apparently with the hope that skilled workers will migrate to the US), retraining programs and assistance with small business purchases.  None of these benefits are available to the rest of the 2 million unemployed Mexicans.  Less than 6% of SME members accepted severance packages during the first week.

Calderon sited two reasons for abolishing LFC – the high cost of government subsidies and unjust privileges for unionized workers.  Federal subsidies last year amounted to US$3 billion, or about half the company’s budget – this for a state-owned business that provides energy for more than a quarter of Mexico’s population.  The SME noted that many of the largest consumers of electricity, including hundreds of federal government agencies and politically connected businesses, are exempt from electrical bills.  Among those who don’t pay is Los Pinos, where President Calderon lives.  Due to lack of state investment, LFC generates only about 10% of the energy it distributes, and the company is forced to purchase electricity from the Federal Electric Commission, another state-owned enterprise that serves the rest of Mexico.  In 2008, the CFE sold 46 billion kilowatt-hours to LFC at a cost of between 1.1 and 1.3 pesos per kilowatt-hour – two to three times the rate offered large businesses – for a total cost of over US$4 billion.  If LFC management decided to charge all its customers and could purchase power at the same rates as private businesses, it would almost certainly turn a profit.  Typical electrical workers receive monthly wages of about US$800 plus union benefits – hardly the “privileged workforce” that Calderon sites. 

There are two reasons behind the demise of LFC and SME.  First is a desire on the part of private industry to control more than 1,100 kilometers of fiber-optic lines owned by LFC.  The fiber-optic system provides the basic infrastructure for the much discussed “triple play” – video, data and voice distribution (in addition to electricity) that represents the next generation of digital technology.  By hooking up a simple converter to an electrical outlet, households could potentially receive internet, cable, telephone and electricity through the same infrastructure.  This represents a potential goldmine for private industry, but the necessary infrastructure is currently in the hands of the State.  The SME accuses Calderon of wanting to privatize the “triple play” technology, something that would be very difficult with a highly politicized, activist union defending a federal constitution that makes energy a State monopoly. Among those in line to benefit from “triple play” are the television giants Televisa and TV Azteca.  Both networks have spent countless hours over the past month trying to damage SME and influence public opinion against the electrical workers.  Already a third of the electricity generated in Mexico is in private hands, mostly transnational corporations like Enron, Bechtel, Mitsubishi and others.  Large corporations get around the constitutional restrictions by generating electricity under long term contracts – in effect, a back door privatization.

Second, Calderon wants to disappear the militant SME which led last year’s struggle against privatization of Pemex.  SME workers are among the most politicized and energetic in organized labor, and they enjoy relationships with a broad range of campesino, labor and popular organizations.  Centered in Mexico City, SME has been a thorn in the side of Calderon’s neoliberal plans.

Calderon, apparently afraid of confronting a mobilized union and an angry public, canceled all of his public events for the week and is living in a virtual militarized bunker in Los Pinos.  He may be there for quite a while.  Despite divisions within SME, Thursday’s mega-demonstration promises to be the first in a series of popular actions that may result in a general strike – and much more.  Calderon may be trying to head off popular movements in the mythical year 2010, the Centennial of the Revolution and the bi-Centennial of Independence.  Nearly everyone in Mexico expects “something” dramatic in 2010.  A victory for Calderon and the right wing could deflate popular movements, while a victory for SME could be the spark that sets off widespread popular protests against the neoliberal project.