Mexico after NAFTA

George Snedeker snedeker at
Sun May 6 10:37:18 MDT 2001

I agree that the general conditions of the working class has gotten worse.
however, I am sure Julio can come up with statistics of his own that show
that the Mexican working, or some fraction of it has benefited from MAFTA. I
do agree with Louis that NAFTA did not push the envelop of human progress
forward. isn't this the old stage theory? I know, greater suffering will
push the working class onward.sure, tell me another one...
----- Original Message -----
From: Louis Proyect <lnp3 at>
To: <marxism at>
Sent: Sunday, May 06, 2001 11:48 AM
Subject: Mexico after NAFTA

> The impact of NAFTA on wages and incomes in Mexico
> by Carlos Salas, La Red de Investigadores y Sindicalistas Para Estudios
> Laborales (RISEL)
> Mexico is much changed in the seven years since NAFTA was implemented in
> 1994. Although Mexico now has a large trade surplus with the U.S., Mexico
> has also developed a large and growing overall trade deficit with the rest
> of the world. In fact, Mexico's net imports from the rest of the world now
> substantially exceed its net exports to the United States. Official
> unemployment levels in Mexico are lower now than before NAFTA, but this
> decline in the official rate simply reflects the absence of unemployment
> insurance in Mexico. In fact, underemployment and work in low-pay,
> low-productivity jobs (e.g., unpaid work in family enterprises) actually
> has grown rapidly since the early 1990s. Furthermore, the normal process
> rural-to-urban migration that is typical of developing economies has
> reversed since the adoption of NAFTA. The rural share of the population
> increased slightly between 1991 and 1997, as living and WORKING CONDITIONS
> Between 1991 and 1998, the share of workers in salaried jobs with benefits
> FELL SHARPLY in Mexico. The compensation of the remaining self-employed
> workers, who include unpaid family workers as well as small business
> owners, was well above those of the salaried sector in 1991. By 1998, the
> incomes of salaried workers had fallen 25%, while those of the
> self-employed had declined 40%. At that point, the average income of the
> self-employed was substantially lower than that of the salaried labor
> force. This reflects the growth of low-income employment such as street
> vending and unpaid family work (for example, in shops and restaurants).
> After seven years, NAFTA has not delivered the promised benefits to
> in Mexico, and few if any of the agreement's stated goals has been
> Manufacturing exports, as officially reported, have improved rapidly since
> NAFTA took effect. From 1995 to 1999, these exports grew at an annual rate
> of 16%, due almost exclusively to "value added" exports in Maquiladora
> production. The total value of these exports increased 19.7% annually, as
> the average value added of products exported from Mexico decreased
> (relative to their overall value). However, maquiladora exports contain a
> substantial share of imported components from the U.S. and other
> reducing the net benefits of these exports to the Mexican economy and its
> development. Thus, the export growth and the foreign trade performance of
> the Mexican economy LOOK BETTER ON PAPER than in reality. But even these
> benefits disappear when total imports are considered. Total manufacturing
> imports from the U.S. and the rest of the world grew 18.5% per year
> 1995 and 1999, a fact that explains Mexico's rapidly growing overall
> foreign trade deficit in this period. In the long run, this process of
> economic growth with expanding foreign trade deficits could lead to
> major currency crisis similar to the one that occurred in 1994.
> Traditional manufacturing activities show the SHARPEST RELATIVE REDUCTIONS
> in the shares of salaried workers, with the modern manufacturing,
> construction, trade, and communications industries being the next largest
> losers of salaried jobs. These changes are partially explained by the
> effects of the 1995 crisis upon traditional types of production in
> manufacturing and other industries, but they also reflect long-term
> segmentation trends in labor markets.
> The growing share of self-employed workers means that people moved to
> DETERIORATING LABOR OCCUPATIONS. Wages decreased by 27% between 1991 and
> 1998, while overall hourly income from labor decreased 40%. Thus, labor
> income for the self-employed was cut in half in this period.
> Average SELF-EMPLOYMENT INCOMES FELL from 17% above salaried worker
> in 1991 to 19% below in 1998. In real terms, the relative well-being of
> self-employed did not decrease as much as suggested by income comparisons,
> but this is far from reassuring. Reductions in real wages do not entirely
> explain the deterioration of labor conditions. During the same period, the
> share of salaried workers receiving fringe benefits also fell
> systematically. . .
> Most directly employed workers have seen a STEADY EROSION of their wages
> the 1990s. In the last decade, the minimum wage in Mexico lost almost 50%
> of its purchasing power. The minimum wage is set each year through a
> process that includes consultations between official unions, employers,
> the federal government. Currently the minimum wage is just a reference
> point for the wage bargaining process of wage and salary workers, and
> are usually set above this level in negotiated contracts.
> Labor income in industries whose wage bargaining processes are under
> federal supervision (the so-called salarios contractuales or contractual
> wages) LOST ALMOST MORE THAN 21% of their purchasing power between 1993
> (the year before NAFTA took effect) and 1999. Manufacturing wages also
> declined by almost 21% in this period, and the purchasing power of the
> minimum wage fell 17.9% through 1999. The decline in real wages since
> took effect helps explain the decline in labor incomes.
> Full report at:
> Louis Proyect
> Marxism mailing list:

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