Mexico’s Angst Over NAFTA : Trade: While their government is pushing the accord, workers are torn. Many have lost their jobs in previous attempts to open up markets.

Three years ago, 300 workers at Alfombras y Tapetes Finas divided their time between weaving top-quality rugs and producing high-volume auto carpets for Volkswagen.

But as import tariffs dropped, the company located in this industrial suburb of Mexico City lost the Volkswagen contract to a foreign supplier that could guarantee on-time delivery. Soon afterward, the owners found that their hand-woven carpets could not compete with cheaper Asian imports.

Alfombras y Tapetes Finas closed down this summer, another victim of trade liberalization.

That lesson is not lost on many rank-and-file Mexican workers, who see the proposed North American Free Trade Agreement, which would open Mexican markets to more foreign competition, as the ultimate threat to their jobs.

Mexican workers joke that the Spanish initials for NAFTA--TLC--really stand for Todos a la Calle: everyone out on the street.

That was the cry of teachers recently locked out of the Mexican-North American Cultural Relations Institute after they protested the firing of colleagues. Far from strengthening labor law enforcement as it is supposed to do, NAFTA could erode workers’ rights, the teachers asserted.

Their concerns have not received as much attention as those of U.S. unions opposed to NAFTA because the powerful labor federations here are aligned with the Mexican government in supporting NAFTA.

However, as NAFTA nears a vote in the U.S. Congress and Mexican legislature, fired oil workers and other labor groups are mounting protest marches against the agreement.

Workers freely express their anxieties about NAFTA around lunch counters here and in other communities already hit hard by competition from imports.

Tlanepantla’s factories were built to be close to Mexico City--home to 20 million consumers and the country’s main distribution center. When most plants were built, the nation’s main goal was creating jobs, not competing globally, as it is today.

In the past three years, manufacturing employment has dropped steadily as companies have been forced to cut costs in the face of foreign competition.

Magdalena Hernandez, who has run a snack bar in an industrial park here for seven years, says she notices the difference.

“I used to have lots of customers, but sales are really down, “ said the 33-year-old former factory worker. “There just isn’t any work for people.”

“What can you expect?” added a customer, Maria del Carmen Barbosa. “They pay us so little, and everything is so expensive.”

Barbosa, 37, said she works as a quality control inspector for a tennis shoe manufacturer that has laid off more than half its workers in the past year. “There are no more than 50 of us left,” she added.

Workers worry that NAFTA will mean more layoffs as barriers to trade among the United States, Canada and Mexico are eliminated, including a gradual reduction in remaining tariffs that have in the past limited foreign competition.

Further, workers say they worry that their hard-won labor rights will be sacrificed as companies trying to compete with foreign firms look for ways to cut costs.

Many cash-strapped factories already ignore their legal responsibilities when they hand out pink slips, workers say.

Because Mexico has no unemployment insurance, laid off workers are supposed to receive severance pay of three months’ wages plus 12 days’ pay for every year of seniority. Vacation pay and Christmas bonuses, required by law, are to be included. However, employers often provide less severance pay than the legal minimum.

“This has always gone on, but it is getting worse,” said Berta Lujan, a director of the Authentic Workers Front, known by the initials FAT, one of the largest non-government labor federations with about 25,000 members.

Besides the layoffs, companies throughout the country are taking a hard line in contract negotiations in the name of productivity and competition with imports.

Manufacturing wages have barely kept up with inflation. Just as significant, unions are losing control over some factory work rules--such as moving workers from one job to another--as employers discard union privileges they say limit flexibility.

The trend became clear a year ago when managers at the Volkswagen plant in Puebla, 79 miles southeast of Mexico City, negotiated a more flexible contract with fewer job classifications and work rules.

After the rank and file refused to ratify the contract and called a strike, the company fired all 14,000 plant workers. A federal labor relations board backed the company’s decision. With the board’s approval, Volkswagen rehired most workers under the new contract but refused jobs to about 1,500 strike organizers.

With that precedent, factory after factory has laid off its entire labor force and rehired a portion of the workers, without seniority and with fewer benefits and different work rules.

When workers protest to labor relations boards, the government bodies have been increasingly sympathetic to corporate arguments for cutting back benefits and privileges.

But even more troubling, Lujan said, is that despite pay and work rule concessions from their employees, many Mexican manufacturers simply cannot survive international competition.

“Who is going to be left?” she asked, answering: “Companies associated with U.S. capital. Mexico will be the tail, wagged by the rest of the dog. It is questionable whether the companies that come down are really going to solve the unemployment problems that NAFTA will create. It is a gamble whose outcome is not clear. “

Indeed, foreign corporations have proven a mixed blessing as sources of employment.

Managers of U.S.-owned assembly plants along the border, known as maquiladoras, freely admit that they sign contracts with government-affiliated unions before hiring a single worker. In the plants farthest east, factory jobs are filled from union hiring halls.

“Union contracts are treated like concessions to certain pro-government leaders,” charged Lujan, whose federation has tried unsuccessfully to organize workers in the border plants. “There is not a single maquiladora with an independent union.”

Further, those jobs are far from secure.

U.S. NAFTA critics such as Texas billionaire Ross Perot warn of jobs moving to Mexico, citing the explosive growth of maquiladoras . However, as Mexicans who worked in the plants of defense contractors have learned, their jobs are the first to go when the parent company faces a crunch.

Both Allied-Signal Inc. and Houston-based Daniel Industries Inc. closed their Matamoros factories this year when defense contracts ran out. In each case, the explanation from company spokesmen was the same: As volume dropped, it was cheaper to consolidate production in larger, more versatile U.S. plants.

Nor do workers at Hoesch Suspenciones Automotrices here in Tlanepantla believe that they have benefited from their employer’s participation in the international market.

“I can’t see that being an exporter has made things better,” said Mario Rodriguez, a 24-year-old engineering assistant at the auto parts factory. “It may have made them worse. Sales have dropped. A lot of people have lost their jobs.”

Lujan worries that if NAFTA passes, even more jobs will be lost to import competition and that working conditions for people who are employed will deteriorate.

“Contracts will be all flexibility and no negotiation,” she predicted. “Companies will give whatever wage increases and benefits they want.”

WORKING IN MEXICO

While U.S. labor unions worry about moving to Mexico if the proposed North American Free Trade Agreement is approved, Mexican workers fear that recent trends suggest an insecure future for them as well.

Manufacturing employment is shrinking.

Percent increase/decrease in jobs

1989: 2.4

1993*: -6.2

Increases in the minimum wage have lagged behind the rate of inflation.

Inflation Rate

1993*: 9.5%

Minimum wage increase

1989: 18%

1993*: 9.3%

The purchasing power of the poorest workers--those earning the minimum wage--has shrunk drastically.

Daily minimum wage

Aug. 1, 1993: $4.62

Daily cost of basic goods

Aug. 1, 1993: $9.85

*through June.

Sources: Center for Multidisciplinary Analysis, School of Economics, Mexican National Autonomous University; National Statistics and Geography Institute; Bank of Mexico; Labor Ministry.