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May 2000, Volume 7, Number 5

Mexico: NAFTA and Jobs

Mexico is holding elections on July 2, 2000 for the national presidency, the 500-member House of Representatives, the 128-member Senate, two state governorships and the mayor of Mexico City.

The newly formed International Coalition of Mexicans Abroad met with US House Republicans in April 2000 to support legalization for unauthorized Mexicans in the US, arguing that "Alan Greenspan has said these immigrants are necessary to keep the economy flourishing."

NAFTA. Between 1994 and 1999, the shifting of operations from the US to Canada or Mexico caused some US workers to lose their jobs. The US Department of Labor received 230,000 applications for job training assistance for employees displaced as a direct result of NAFTA, including 18,300 in 1999.

At the same time, NAFTA helped to create jobs in Mexico— in some cities, even in traditional emigration areas, employers complain of labor shortages. A combination of lower fertility in the 1980s and faster job growth in the 1990s suggests that there may be a tipping point about 2005, when the number of new jobs created in Mexico matches the number of new labor force entrants. In succeeding years, there should be more jobs than new job seekers, which should put upward pressure on wages in Mexico and allow Mexico to begin to reduce un-and underemployment.

In Jalisco, a west central Mexican state of six million that sends more migrants to the US than any other Mexican state, it is the working-age population that is emigrating. Consequently some villages have become virtual nurseries and nursing homes, dominated by the very young and old, with school children anticipating that they too will obtain most of their lifetime earnings in the US. However, other Jalisco cities have created thriving sewing or electronics assembly operations that are hiring workers, preponderantly young women. They tend to marry later and have fewer children than women without gainful employment. Farmers, especially those with big landholdings, who need seasonal workers for short harvests are having to search further into the highlands to find poor, usually Indian, peasants willing to migrate for seasonal jobs.

Vincente Fox, the presidential candidate of the National Action Party (PAN), said that NAFTA has been good for Mexico because, "It has brought foreign investment [to Mexico], about $10 billion a year, and it has created a lot of jobs. But I feel we must go ahead with a new phase. We must begin to talk to Canada and the United States to include the free flow of people under NAFTA. What is needed--and I know it sounds a bit too strong now--is to have the three countries evolving into a common market, an association that, in the long term, will reduce the brutal wage differential among the three countries. Today, a Mexican worker makes $5 a day, while an American worker makes $60 a day. This difference in wages will always make the border an unstable zone. We have to do what Europe did with Spain, Portugal and Greece. We need to improve our sense of solidarity and friendship to turn the three partners into winners."

Cuauhtemoc Cardenas, candidate of the Revolutionary Democratic Party (PRD), said that when NAFTA was negotiated, "There should have been discussion of compensatory funding as provided by the European Community to its poorer members." Cardenas wants such negotiations now to offset what he says are the negative effects of NAFTA in Mexico.

Joel Millman, "Hot Job Market In Mexico Eases Pressure To Emigrate," Wall Street Journal, April 14, 2000.