August 4, 2006

New Controversies Erupt over Maquiladora Worker “Shortages”

Like the old days of Ciudad Juarez’s assembly-for-export economic boom, factory owners say they confront a labor shortage. With an estimated 10,000 maquiladora jobs available, mainly in production worker positions, maquiladoras and labor contractors are offering sign-up bonuses, head-hunters’ fees and even temporary boarding in hotels.

Once again, buses are rumbling south to southern Veracruz state to scoop up willing hands for the assembly of global products in the hundreds of mainly foreign-owned factories that drive the local border economy. Other workers have arrived from southern Chiapas and Oaxaca states, bearing instructions from their new employers and hotel hosts not to talk to the press. Promoted by the Chihuahua Economic Development Council, a plan is afoot to construct temporary worker dormitories.

Grappling with a purported worker deficit, representatives of the maquiladora industry are urging the government to further subsidize production costs by getting more involved in the recruitment and housing of workers. Increasingly, industry spokespersons are following up on a statement made last December by Juan Carlos Olivares Ramos, vice president of the Maquiladora Civil Association (AMAC), who said, “It is the responsibility of the state to provide the necessary people to fill vacancies.”

Enjoying a cyclical upswing, the state of the maquiladora industry stands in stark contrast to the situation earlier in the decade when mass lay-offs, production shutdowns and plant relocations hit Ciudad Juarez hard. To be sure, maquiladoras play a pivotal role in the economies of Ciudad Juarez and Chihuahua state. Not only do the mainly foreign-owned plants provide an estimated 240,000 direct jobs in Ciudad Juarez alone, according to the Mexican Social Security Institute (IMSS), but they also generate additional jobs and income for suppliers and local businesses.

Mexico’s National Institute of Statistics, Informatics and Geography (INEGI) reports that Ciudad Juarez’s maquiladora industry had an economic impact of about $4.6 billion dollars in 2005, an amount double the Chihuahua state government’s budget for 2006. Ciudad Juarez generates slightly more than 44 percent of Chihuahua state’s gross product, while nationally, the border city of about 1.3 million people accounts for almost 2 percent of Mexico’s Gross National Product.

Nonetheless, industry appeals for state support are stirring polemics by elected and appointed officials who contend that the maquiladora industry is seeking to benefit from the public dole while owing money to the public till. Helping fuel the criticism is the recent, widespread destruction caused by torrential storms in some of Ciudad Juarez’s poorer neighborhoods. Weather-wrought disaster is exposing the need to pay for major improvements in the city’s infrastructure. About 15,000 homes are located in what are considered high-risk zones, and 43 percent of the city’s streets are still unpaved.

Jorge Alvarez Compean, Ciudad Juarez municipal secretary, recently criticized sectors of the maquiladora industry for legally challenging payment of a public utility tax. “They come to create wealth for their businesses, but they limit themselves to paying the property tax, while their transport trucks destroy the pavement,” Alvarez said.

Andres de Anda Martinez, coordinator of the National Action Party fraction of the Ciudad Juarez City Council, issued a similar criticism. Contending that the maquiladora industry benefits from the “cheap labor” of his city, the city councilman maintained that the maquiladora industry is less willing to participate in solutions to the city’s problems.”

Striking a more conciliatory note, Ciudad Juarez Mayor Hector Murguia Lardizabal called on the federal government to assist with the settlement of new workers.

“We need resources and these are not obtained with declarations,” Mayor Murguia said. “Federalism should strengthen the municipalities not with prayers or good intentions, but with money to resolve the problems.” In an attempt to insulate the maquiladora industry from new policies that could be implemented by the next presidential administration, the federal Economy Ministry is expected to publish a decree soon that will institutionalize tax incentives for the maquiladora industry.

One important, missing element from the growing debate over the maquiladora industry’s reported worker shortage is the question of whether prevailing wages are sufficient to attract and retain new workers. The starting minimum wage for assembly line workers hovers around $4.50 per day, though maquiladora industry representatives argue that health benefits, cafeteria allowances, transportation subsidies and work bonuses push the real daily wage higher.

New evidence strongly suggests that Ciudad Juarez’s labor “shortages” stem not from the unavailability of local workers but from the inability of workers to get ahead on maquiladora wages in a very expensive city. For starters, at least 126,000 people of working age lack formal employment in Ciudad Juarez, according to the IMSS and the Center for Economic and Social Information. In Chihuahua state, at least 394,363 people are in a similar predicament. An additional, potential labor pool exists within the ranks of deportees from the United States, who are now offered maquiladora jobs by the Chihuahua State Employment Service and National Migration Institute.

Despite the labor demand, large numbers of people are opting to work in the informal sector rather than on a factory assembly line. Many formally unemployed people actually earn a living as street vendors, stop light acrobats, fast food stand operators, domestic workers, yard cleaners, and prostitutes. Although they do not receive health or other benefits, workers in the informal sector report earning higher incomes while maintaining a degree of autonomy in their jobs.

Cesar Ayala, a 21-year-old sandwich stand seller, said a steady business provides “money every day.” Ayala said some maquiladora workers are following the fast food vendor’s path, first testing the waters with weekend stands before jumping into the business altogether. “I have friends and neighbors that start out that way and later they leave when they see that they too can make it,” said Ayala.

While no immediate figures were available to compare informal incomes to factory worker incomes in Ciudad Juarez, a recent national study by the Center of Private Sector Economic Studies (CEESP) found that the average monthly income of informal workers was about $650 dollars. Nationally, 28.32 percent of all working age Mexicans labor in the informal sector, according to the CEESP. The research institute estimates that about 12% of Mexico’s Gross National Product is generated in the informal economy.

In an election year, street vending is on the rise. According to Ciudad Juarez municipal records, the number of registered informal vendors increased from 10,000 at the end of 2005 to 11,583 by the middle of 2006. Most of the registered vendors run fast food stands.

Nearly 15,000 Ciudad Juarez residents labor as domestic workers, earning a daily wage that ranges between $18 and $23 dollars, an income that’s far higher than the base wage paid in the maquiladoras. Teresa Luna, the co-operator of the Good Living domestic worker employment agency, estimated that live-in house workers can net about $136 dollars every week.

Francisca Torres, a single mother of a two-year-old child, said she quit her job a few weeks ago in a maquiladora plant where she earned about $40 dollars a week. Torres then went to work in a private home. “I earn in two or three days what I made in the maquiladora in a week,” said Torres, “and I don’t ignore my baby as much.”

According to the INEGI, 96.6 percent of Mexican domestic workers are women, but some men also prefer employment in private homes. Isidro Orozco cleans patios and gardens in the upscale Campestre neighborhood of Ciudad Juarez. Like Torres and other female domestic workers, Orozco discovered that he too could bring home more money by working outside the factory gates. “I earn more here than in the maquiladora or as a laborer in the farm harvest,” Orozco said in a recent interview.

Reprinted from Frontera NorteSur (FNS): on-line, U.S.-Mexico border news Center for Latin American and Border Studies New Mexico State University Las Cruces, New Mexico.

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