As many as 5,000 Federal Police in riot gear surrounded the installations of electrical company Luz y Fuerza del Centro during midnight raids in Mexico City, Puebla, Morelos, and Hidalgo October 10 to carry out Calderóns orders.
On October 15 more than 100,000 demonstrators in Mexico City, including unionists, peasants, and students, protested the union-busting move. A second demonstration a week later was much smaller.
In a televised speech Calderón said that Luz y Fuerzas expenses were double its income, requiring a $3.2 billion subsidy last year. A third of the electricity the company distributed, he stated, was lost through stealing, technical failures, corruption, or inefficiencies. The Mexican president blamed the workers, their union, and the union contract for the unsustainable financial situation and for frequent blackouts and poor service.
Calderón denied charges that this was a step to further privatize electrical distribution. Instead, he said, control of Luz y Fuerza facilities would be handed over to another government-owned utility, the Federal Electricity Commission (CFE). He demagogically claimed that money saved by firing the workers would be used to combat poverty and malnutrition.
Electrical workers who voluntarily agree to accept the firings will receive up to 33 months of wages in severance pay, Calderón said, and the 22,000 retirees would still get their pensions.
Under the union contract, workers at Luz y Fuerza also receive subsidies for transportation to school for their children and for libraries and sports and cultural activities for workers and their families, along with discounts on their electric bills.
Luz y Fuerza was formed in 1960 when the Mexican government bought out Canadian-owned Mexican Light & Power Company and other foreign-owned utilities. Eleven years earlier the government had set up CFE. About 40 percent of electric generation is privately owned, including by U.S. companies Enron, Intergen, and GE-Bechtel.
Union criticized government policies
Workers at Luz y Fuerza are organized by the Mexican Electrical Workers Union, which has a history of maintaining some independence from the Mexican government. It has been outspoken in criticizing the governments economic policies, including moves to privatize some state-owned companies.
Supporters of the union say that a large part of the companys deficit is from unpaid bills owed by large corporations and a lack of investment to modernize equipment.
Leaders of the union called on workers to reject the governments severance payments and continue to resist the dissolution of the company.
As part of its carrot and stick approach, the Mexican government said that workers who agree to accept the firings would have first priority on being hired by CFE when there are openings. According to the government, as of October 22 more than 10,000 workers signed the agreement and began to receive their severance checks.
CFE is organized by the Sole Union of Electrical Workers of the Mexican Republic (SUTERM), which is tied to the Institutional Revolutionary Party (PRI), a former ruling party. Like many other unions it has given support to the government and offered labor peace in return for some benefits, many of them similar to those at Luz y Fuerza.
A proposal in the Mexican congress to revoke Calderóns decree was defeated not just by Calderóns National Action Party but also with the majority of votes from the PRI and the abstention of the majority of representatives of the Party of the Democratic Revolution, a major bourgeois opposition party that narrowly lost the presidential election in 2006.
Some big business papers in the United States were ecstatic with Calderóns union-busting decree.
The Los Angles Times complained that the union had considerable say over how Luz y Fuerza was run. Citing a report from the Center of Research for Development, a Mexico City think tank, the Times said that a carpenter at the company made $350 a monthmore than twice the market rate.
A Wall Street Journal column by Mary Anastasia OGrady gloated that the net effect of the move is to dethrone 42,000 members of the Mexican Union of Electricians, which had won benefits over the decades to make Big Three auto workers in Detroit blush.
She compared the action to Ronald Reagans firing of the air traffic controllersonly bigger.
In an article headlined Mexico Knocks a Unions Lights Out, Investors Business Daily said, The union is howling, but the shutdown is one of the best things to happen to Mexico. Adding, Terminating the wasteful utility sends a message to all the unions strangling Mexico that its no longer business as usual.
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