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Yanick Noiseux © 2001


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The world's media has hailed Vicente Fox’s victory in the Presidential election in Mexico as a wind of change. Now, one year later, negotiations have once again been interrupted with the EZLN. The fiscal policy’s reform project creates fear among the population and is handled by former president Carlos Salinas de Gortari’s collaborators, which, in turn, was named by Fox’s administration. These facts show nothing to help us think that a real shift in the day-to-day operations of the newly elected PAN administration in fact occurred. To put it bluntly, can we really talk about a serious "change"? Where is the famous el cambio that was demanded hoy, hoy, hoy by the new President in one of his notorious one-liners deployed during his electoral campaign? Enthusiasm is sliding away, slowly mutating into increasing doubt. If there is one portion of the population which is really starting to suspect the new administration, it is without doubt the informal sector’s workers, who seem to be ignored by the Mexican authority’s economic policies. Ignored? Not really, if we consider the fiscal reform project by the Mexican government. In fact, those workers have become the target when it comes to finding new ways of increasing the government’s taxpayer base

This series of articles will try to bring to light the main perspectives concerning informal work in the context of Fox’s election at the top of Mexico’s administration and in the larger framework of a "neoliberal" project that was launched in the early 80s and which is even more vigorous today.

The first article, below, will sketch a portrait of the informal sector’s situation in Mexico. I will emphasise the relationship which exists between the increasing number of informal workers in this country and the development of economic policies over-oriented toward the export industries. We will be able to see, as I have already mentioned, that Fox’s policies are not very different from those of previous administrations. In order to situate readers, I shall also try to build on recent discussions initiated around the Summit of the Americas and on other talks concerning the new agreement on free trade all over the Americas (except Cuba), the now-famous FTAA.

The second article will discuss the fiscal reform project, a proposition that was well entrenched in the PAN’s electoral program, and which the newly-elected government should act on within the next months. This article will expose President Fox’s strategy regarding the so-called informal sector. We will learn, once more, that innovation doesn’t seem to be on the menu.

The last article will concentrate on the highly ethical question of the "disciplining" of the workforce which is brought into light by the repression on street-vending in Mexico. Regarding this question, as in the first article, we will have to "downplay" the importance of the "Fox effect" concerning the appearance and development of this process. This "disciplining" of the workforce is in fact a long-term process and for this reason, it would appear unfair for us to place all of the blame directly on the President. This evolution of the labor market has slowly been constructing itself over the past twenty years now. Nevertheless, we have to admit that the new administration doesn’t seem to go against the wind. This question is critical since crucial aspects are involved. The "permanent authoritative temptation" on labour markets, which is wonderfully described by Yann Moulier Boutang, can lead to very suspicious ways of contracting the workforce. An analogy with the Mexican situation will be attempted in this last article.

ZLEA and the Informal Sector

Vicente Fox Quesada, Mexico’s new strongman, was elected to the top job last December and, since then, has never ceased to reiterate his faith in globalization. In ever-increasing numbers of interviews and conferences, the Mexican President is flirting with international investors and insisting on the excellent investment opportunities which exist in Mexico. He also promotes his new direction team and the increased political stability that comes along with it.

It is clear, in the Mexican case, that this strategy is bending toward the pursuit of economic policies strongly focused on the export sector. In place since the 1980s, this economic development strategy is still very controversial. In terms of export volumes, it is true that the figures are vigorously increasing and the growth is continuous. But the vast majority of those exports are sent to the USA, more often than not, and these are a part of a network of exchanges within the multinational firms which doesn’t generate much economic spillover for Mexico. Even more important is the fact that these exports are mostly coming from the maquiladora’s industry, a source of low paid employment in miserable working conditions, filled for the most part by young women, but where we are increasingly finding men. The average hourly wage in the manufacturing industry is still at around US$1.8, and in the "modern" private sector, the real-wage has declined 4.6% in the last decade. A sign of the times -- more than a hundred thousand jobs have been abolished in the border’s maquiladora industry as a repercussion of the American economy’s stumble, which has been going on since the beginning of the year.

On top of this, a whole section of the Mexican economy is kept at the margin of this globalization, which may be more accurately termed a "continental economic integration", shaped by agreements like NAFTA or the new FTAA: the informal sector of the economy. This segment of the labour market has replaced, in term of job-creation, the so-called modern sector for over more than twenty years. Owing to an International Labour Organisation report, we can state that over 85% of job-creation in Latin America was supported by the informal sector ever since the 1990s. Estimates of the percentage of informal work in the Mexican economy differ depending on the sources but, generally speaking, they all expose an omnipresent position by the informal actors. Statistics from the OECD reveal that 44% of the urban workforce is part of this segment of the economy. In other studies, the percentage climbs up to 61.4%, The ILO is reporting that 57% of the non-agricultural workforce is working in this sector. Hernando De Soto, the controversial writer of The Other Path -- still the current bestseller on the topic -- goes even further and proposes that the informal sector is employing more than 80% of the active workforce. If we look at GDP, OECD analysts estimate that the informal sector’s worth is around one third of the total. Looking at numbers given out by the Mexican government statistics department, the INEGI, the estimation drops to only 12% for obvious political reasons.

On this topic, President Fox seems to have fallen between two stools. On one hand, he promised businessmen that he would crack down on tax evasion in this sector of the Mexican economy, his position being strongly reinforced by the fact that the street-vending associations have a longstanding tradition of being PRI supporters. On the other hand, however, Fox -- always careful about his man-of-the-people appeal -- is also trying to appeal to the poor with an ambitious changaros program.

We have reason to think that these new micro-businesses will contribute to stretch, once more, the numbers regarding informal work in Mexico. It is not something which is intrinsically bad -- average earnings in the informal economy are actually 3.2 times the minimum wage -- but as long as the government maintains economic policies explicitly oriented towards exports, the informal sector’s contribution will remain subordinate.

President Fox’s challenge is enormous in regards to the informal sector in Mexico. It is now considered a fact that the informal sector is here to stay, and its integration within the boundaries of the so-called "formal" economy, which is something that the investigators deemed possible when they first started to study the topic in the early 1970s, will never be a complete success.Vicente Fox obviously understands this reality if we look at his micro-business project. But when we observe what is really going on every day in the Mexican capital’s streets, where intimidation and repression are executed by hundreds of ganaderos on small vendors gathered in public spaces, we are again confused by the president’s rhetoric. This goes, of course, without mention of the impending fiscal reform that will certainly hurt them even more deeply.

Ironically, the expansion of the informality phenomena seems to gain strength at the same time as Mexico is reaching a greater opening towards international markets (with the US market, of course, heading its list) and it becomes more and more possible to suggest that the informal economy permits a greater flexibilisation of the workforce, thereby transferring to the workers the major part of the pressure inherent to macroeconomic adjustment policies. Since the early 1980s, a timeframe that corresponds to the economic strategy realignment from an import-substitution model to a new "liberal" approach centered around the export industry, the informal sector has never stopped growing -- and it has continued to grow during periods of relative economic prosperity, as has been the case since 1996. Since the introduction of NAFTA in 1994, we can observe that the informal sector question has been "shelved" by the authorities. Apparently, this economic sector, by which more than half of the population is employed, is not a priority.

Recently, the Fox administration has announced the amount of the funds made available for the changeros program, so we can now say, without speculation, that the 147 million pesos put on the table will certainly be insufficient to solve the problem. This represents roughly $15 million, or 0.11% of the Mexican government’s budget. It is a relatively small budget if we consider the quantity of workers across the sector or if we compare it to other programs like education, health or even the "modern" industries' subvention programmes.

We have to keep in mind, as Saskia Sassen reminds us, that even if globalization can be pictured by hyper-mobility and perturbations in our relation to space, it sits on concrete geographical ground and this is highly visible through the development of mega-agglomerations like Mexico City. These mega-cities are certainly good portraits of globalization’s new geography where the informal sector plays an essential role to support the city‘s privileged access to the globalized networks of capital spinning around the globe. The informal workers are allowing people to use cheap transportation, meals and lodging and those are "market advantages" when it comes to produce in a global economy. Some day, the Mexican officials will have to come to terms with this fact. For all these reasons, we recommend postponing any further negotiations regarding an enlarged free trade area. Meanwhile, an acceptable deal can be established and integrated in the FTAA agreement’s text regarding some crucial social aspects such as, for example, the labour market’s legislation. The rights of thousands of informal workers needs to be secured and not be forgotten by new free trade agreements. Unfortunately, those workers almost have no-rights whatsoever in this new economy which promotes investments, goods and services, but which completely ignores worker’s rights.

It is now time to look at NAFTA’s effects on labour markets outside the so-called modern sector. Of course, there is the ILO which studies the informal sector very seriously, but we have to admit that the strength of this organization’s recommendations is pretty weak compared to the ones presented by other major actors like the WTO, IMF or the world bank. Furthermore, in relation to the NAFTA question, it is the Mexican government itself which discussed the agreement. But this fact apparently didn’t prevent worker’s rights from being sidelined.

The informal workers represent the majority of the Mexican workforce. Special attention should therefore definitely be given to their case when President Fox sits down at the negotiations table and discusses the conditions in which the processes of globalization will come to be deployed across Mexico.

It was easy to predict that these type of questions would be swept away from discussions at the Summit of the Americas, last April, in Quebec City. Governments from thirty-four countries did talk about investors' rights; they insisted on a petulant "Democracy" clause (which is nothing more than a rhetorical exercise); they agreed on a year -- 2005 -- to launch the FTAA. Once again, they repeated that it’s not this kind of summits’ mission to work on topics such as the ones mentioned above. Once again, few voices were raised to protect workers' rights, and even fewer to defend those of informal workers. We have to realize that the latter are, however, a creation of this globalization/continental economic integration cemented by agreements like NAFTA and the now-coming FTAA and are built by organizations such as the OAS.

Unfortunately, the globalization train will apparently leave the informal workers behind, waiting at the station. Over the years, others will come and continue the fill the streets looking for earnings, for ever-decreasing scraps of the economic pie. It is not a happy prospect.




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