September 19, 2008

Chihuahua David vs. Arkansas Goliath

Like other residents of small Mexican towns who subsist on the periphery of industrial centers, Raul Avila Andujo was recruited by the big company to work in the city. In Avila’s instance, this meant going to work for the Chihuahua City branch of Wal-Mart, which offered to transport Avila and his rural neighbors from the village of La Villita to the workplace every day. Working in the store’s produce section, the arrangement worked well for six years, Avila said, until the management informed Avila and co-workers one day that they would have to find their own way to work.

“It was as if we were fired,” Avila said. “There was still work, but we had no way to get there.”

Miffed at the prospect of an extra, substantial expense, Avila went to see a lawyer.

Reviewing his new client’s pay stubs, Chihuahua lawyer Juan Davila noticed something interesting. It seemed Wal-Mart was deducting $40 from Avila’s bi-weekly paycheck in return for coupons that could be redeemed for goods at Wal-Mart or one of the other Mexican businesses owned by the global giant-Sam’s Club, Vips, Bodega Aurrera, and several others. Claiming an irregularity, Davila took Avila’s case to the federal Labor Arbitration and Conciliation Board last year. The federal agency ruled in favor of Wal-Mart, but Avila’s case headed to Mexico’s Supreme Court. On September 4, it was revealed that Avila had beat the big boys.

In its ruling, the country’s high court held that Wal-Mart had engaged in a practice prohibited by Article 123 of the 1917 Mexican Constitution disallowing an employer from directly or indirectly obliging an employee to buy products in certain establishments. In their decision, the Supreme Court justices compared Wal-Mart’s policy with the old company store prevalent during the dictatorship of Porfirio Diaz in the late 1800s and early 1900s.

In a hasty response, Wal-Mart insisted that its paycheck deductions were entirely voluntary and beneficial to its employees, since workers were provided with an electronic card to buy goods at preferential prices at company outlets.

“91.8 percent of the employees have voluntarily opted for this benefit,” Wal-Mart said.

“We are a company committed to the improvement of the quality of life of our employees and Mexican families, as well as with compliance with the laws and decisions of the nation’s courts,” the statement continued, adding that Wal-Mart will “analyze with much interest” the Supreme Court’s ruling and its implications for the employee company’s benefits package.

Nonetheless, the impact of the Avila decision is expected to be very limited-at least for now.

“It only protects the one (Avila) who solicited legal protection,” confirmed an unidentified Supreme Court spokesperson.

Garnering widespread press attention, the Avila decision came at an inopportune moment for Wal-Mart. Busy promoting its image as an ecologically-minded, socially-responsible company, Wal-Mart had staged a flashy celebration in Mexico City the very day the Supreme Court decision was announced.

President Felipe Calderon and other dignitaries showed up for a 50th anniversary celebration of Wal-Mart-owned Aurrera, a department and grocery store which was once entirely Mexican-owned. In a speech, President Calderon fondly recalled sipping coffee at another Wal-Mart-owned business, intellectually hip Vips, and praised the US-based corporation for bringing jobs to his country. He also thanked Wal-Mart for helping victims of natural disasters in Tabasco and Chiapas.

“It makes me happy whenever enterprises the global size of Wal-Mart decide to put down firm roots on Mexican soil,” President Calderon said. “The truth of the matter is that whenever someone believes in Mexico, invests in Mexico and generates jobs in Mexico, it is good for the country.”

Counting more than 100,000 employees, Wal-Mart is Mexico’s largest private employer. In the month of August alone, Wal-Mart announced the opening of seven new stores and centers and the creation of more than 1,600 permanent jobs in Mexico.

Prominent Mexican historian Enrique Krauze also attended the Wal-Mart/Aurrera birthday bash. The firm’s evolution and growth, Krauze said, provided not only a lesson but “joy and inspiration.”

The celebration in the Mexican capital, however, was overshadowed in the print media by the Avila decision, with some stories giving it a David vs. Goliath flavor. And as is increasingly common in Mexico, the news riled up cyberspace. Pros and cons sent e-mails to publications including El Diario de Juarez and La Jornada.

A writer identified as Antonio said he hoped that a “populist decision” would not discourage foreign investment, and that it was unfair to compare the involuntary company stores of the Porfiriato with Wal-Mart, where “quality is notable and the prices are very competitive…”

Taking an opposite track, an unidentified writer blasted Wal-Mart for putting thousands of mom-and-pop stores and small enterprises in Mexico out of business, for exploiting its workers and for not allowing employees to organize.

“(The company) fools people into buying with usurious credit rates and if this isn’t enough, its brand products are manufactured in poor countries where they pay less than a dollar for each item which are then sold for $140. I ask, “Who is standing up for the Mexicans?, wrote the anonymous cyber author.

Striking a more neutral tone, a writer only identified as Paula said Wal-Mart’s paycheck deduction-for-supplies system was also practiced by the large SMart and Soriana store chains.

As for ex-Wal-Mart employee Raul Avila, it is said he could receive $50,000 in compensation from the company. Humberto Flores Hinojoso, president of the Chihuahua City labor board, could not immediately confirm the amount Avila might get.

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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