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Viewing cable 07MEXICO3444, STATE GOVERNMENT AND UNION PROMOTE JOBS IN COAHULA

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Reference ID Created Released Classification Origin
07MEXICO3444 2007-07-02 15:10 2011-08-25 00:00 UNCLASSIFIED Embassy Mexico
VZCZCXRO1186
RR RUEHCD RUEHGD RUEHHM RUEHHO RUEHJO RUEHMC RUEHNG RUEHNL RUEHPOD
RUEHRD RUEHRS RUEHTM
DE RUEHME #3444/01 1831510
ZNR UUUUU ZZH
R 021510Z JUL 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 7798
RUEHC/DEPT OF LABOR WASHDC
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHXI/LABOR COLLECTIVE
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAHLA/DEPT OF HOMELAND SECURITY
RUEATRS/DEPT OF TREASURY WASHDC
RHMFIUU/CDR USSOUTHCOM MIAMI FL
UNCLAS SECTION 01 OF 03 MEXICO 003444 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/AWH, AND ILCSR, WHA/MEX AND PPC, USDOL FOR ILAB 
TREASURY FOR IA 
NSC FOR FISK 
 
E.O. 12958: N/A 
TAGS: ELAB ECON ETRD PGOV PINR SOCI MX
SUBJECT: STATE GOVERNMENT AND UNION PROMOTE JOBS IN COAHULA 
BUT AT WHAT COST? 
 
REF: MEXICO 2285 
 
1.  SUMMARY: The government of the northern Mexican state of 
Coahuila and the national union of the Mexican Workers 
Confederation (CTM) recently took advantage of a newly 
published university study positively highlighting the 
state,s economic growth to sign an agreement promoting job 
growth and competitiveness.  The study, conducted under the 
auspices of the Monterrey Technology Institute (the Mexican 
MIT), measured government efficiency, ease of doing business, 
economic performance and infrastructure.  During the signing 
of the agreement the CTM underscored the union,s commitment 
to working with Mexico,s private sector, both locally and 
nationally, to promote job growth.  The union also suggested 
that its agreement with Coahuila,s government could be a 
model applicable to other parts of Mexico.  For his part the 
Governor of Coahuila announced new investment that he said 
would generate around 3-5,000 new jobs. On the surface, the 
job situation and economic performance of Coahuila appear to 
be quite good.  However, there are some who question the 
cost, in terms of employee rights, fair wages and health 
conditions that Coahuila,s workers are paying for the 
state,s surface prosperity.  END SUMMARY 
 
 
 
UNIVERSITY STUDY GIVES COAHUILA HIGH ECONOMIC MARKS 
--------------------------------------------- ------ 
 
2.  According to study published at the end of May by the 
Graduate School of Public Administration and Public Policy 
(EGAP) of the Monterrey Technology Institute (the Mexican 
MIT), the northern Mexican state of Coahuila has made 
impressive economic gains.  The EGAP study rated Coahuila as 
number five nationally (of thirty-one (states plus the Mexico 
City Federal District) in terms of economic performance. The 
study drew on data from 2006 and January of 2007 and measured 
such factors as government efficiency, ease of doing business 
and infrastructure.  The last time EGAP conducted a similar 
study was in 2003.  At that time Coahuila received a ranking 
which put it in eighth place on a national rating. 
 
3.  The only other Mexican states/areas to place ahead of 
Coahuila, beginning were (in descending order) Nuevo Leon, 
Mexico City, Baja California Sur and Baja California.  If the 
metric of infrastructure was removed, Coahuila moved from 
fifth to third place.  The EGAP study was sited frequently by 
the Coahuila,s Governor, Humberto Moreira Valdes, as 
independent recognition of the state,s overall positive 
economic performance.  Post notes that Governor Moreira, and 
almost all local media coverage of the study, focused on the 
third place ranking (without measuring infrastructure) as 
opposed to the fifth place ranking (which did measure the 
impact of infrastructure). 
 
 
UNION, STATE GOVERNMENT AND PRIVATE SECTOR SIGN JOBS PACT 
--------------------------------------------- ------------ 
 
4.  Thanks to what was undoubtedly good public relations 
planning, the timing of the release of the EGAP study 
coincided with two others high profile local events.  The 
first event was a General Assembly meeting of the Coahuila 
State Counsel of the Mexican Workers Confederation (CTM). 
The CTM is the rough Mexican equivalent of AFL-CIO in the US. 
 The union,s state leader, Tereso Medina Ramirez personally 
invited Mission Mexico,s Labor Counselor to attend the 
General Assembly which would be presided over by the CTM 
national leader, Secretary General, Joaquin Gamboa Pascoe. 
 
5.  The second event, and clearly the more significant from 
the CTM,s perspective, was the signing of an agreement to 
promote jobs, investment and competitiveness.  The agreement, 
which was reportedly negotiated by Tereso Medina of the 
Coahuila CTM, was formally called the &Pact on Employment, 
Salaries, Productivity and Competitiveness8.  The aim of the 
agreement was to formalize a pledge by union, the government 
of Coahuila and the state,s private sector to work together 
to promote employment intensive economic growth. 
 
 
MEXICO 00003444  002 OF 003 
 
 
6.  Speaking on behalf of his administration, Governor 
Moreira promised that Coahuila,s government would do its 
part to generate the types of conditions that would 
facilitate investment. As an example this Governor Moreira 
announced investments that he claimed would generate between 
3-5,000 new jobs.  The investments would come from four 
different companies only one of which, Modelo Breweries, was 
specifically named at the signing event.  In recent years 
Modelo has reportedly invest USD 520 million plants and 
operations in the state and Moreira claimed the brewery now 
planned to increase that investment by another USD 50 
million. 
 
7.  (Comment: Although not specifically mentioned at the 
signing event, Mission Mexico notes that Coahuila has been 
very successful in recent months in attracting new 
investments. So far in 2007 the state has attracted such 
investments as a USD 425 million for a Freightliner truck 
plant which is expected to generate 2700 new jobs and 
Chrysler plans to invest USD 570 million in plant expansion 
beginning in June 2007 which will also generate more news 
jobs. End Comment) 
 
8.  Next came the state chapters of two different private 
sector organizations, COMPARMEX (a AMCHAM type of 
association) and CANACINTRA (a national grouping of 
manufacturers) signed the pact.  These two organizations 
pledged to increase their levels of investment and efficiency 
in order to generate more jobs and raise worker salaries. 
Finally, the CTM undertook to help maintain and increase the 
number of jobs in Coahuila by providing labor stability 
through responsible unionism that worked intelligently to 
maintain a constant dialog with the state,s private sector. 
The Coahuila pact was enthusiastically praised but the CTM,s 
national leader, Secretary General Joaquin Gamboa who 
declared that he would like to see similar agreements 
implemented all over Mexico. 
 
 
JOB GROWTH BUT AT WHAT COST? 
---------------------------- 
 
9.  The EGAP study and the claims of new job grow by Governor 
Moreira seem to indicate that good descriptions of 
Coahuila,s economic performance are well deserved.  However, 
not everyone is in agreement that benefits of the state,s 
economic performance are actually reaching Coahuila,s 
workers.   A knowledgeable American labor observer with long 
experience with both the US and Mexican organized labor 
movements does not deny that Coahuila is generating jobs at a 
noteworthy rate, especially in the area of manufacturing. 
However, this observer claimed that most of these jobs paid 
only the equivalent of between USD 45-65 per week. (Note: The 
legal minimum wage in Mexico is approximately USD 5.00 per 
day.) 
 
10.  While observer noted these wages are significantly 
better than no wages at all, they are not enough to keep 
local residents in Mexico when they have the clear example of 
how much more people are paid for similar jobs in the United 
States.  The migration of workers from Coahuila to the US has 
indeed prompted the migration of workers into thee state of 
Coahuila from other parts of Mexico.  According to our labor 
contact, these newly arriving workers are paid so poorly they 
often live in dilapidated and crowded housing conditions 
which are reportedly creating a serious and grow health 
problem in Coahuila. 
 
11.  These new workers are allegedly not being offered 
permanent jobs but rather temporary employment contracts. 
Under these contracts the workers are not registered under 
Mexico,s social security system which means they are not 
eligible for medical attention under the country,s national 
health care system and they do not accrue retirement 
benefits.  All of this is purportedly taking place with the 
tacit concurrence of the Coahuila CTM which (according to the 
CTM itself) controls 80 percent of all collective bargaining 
contracts in the state. 
 
 
 
MEXICO 00003444  003 OF 003 
 
 
 
COMMENT 
------- 
 
12. The EGAP study, coming as it does from one of Mexico,s 
premier universities, the Monterrey Technology Institute, 
undoubtedly presents an accurate picture of Coahuila,s 
economic performance. Invest and job growth are on the rise 
and the state government has clearly created an environment 
that is conducive to sustained economic growth.  If this were 
the only aspect of the state,s economic performance to be 
considered the CTM,s national leader would be fully 
justified in declaring that he would like to see the Coahuila 
situation repeated throughout Mexico.  Unfortunately, things 
may not be that simple.  The unconfirmed claims of low 
salaries, poor housing conditions and denied worker benefits 
for at lease new workers in Coahuila are not surprising. 
However, given that just one labor union controls such a 
large percentage of all labor contracts in Coahuila, there 
would be very little anyone could do locally if indeed that 
organization decided to tacitly look the other way instead of 
forcefully standing up for the workers. 
 
 
12.  This message was cleared by AmConsul Monterrey. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
Partnership Blog at http://www.intelink.gov/communities/state/nap / 
GARZA