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Counterproductive Tactics

Andres Manuel Lopez Obrador should concede defeat, while unions in Chile and Mexico should stop striking.


August 21, 2006 - What does a losing presidential candidate in Mexico have in common with striking workers in Mexico and Chile? They are producing results far more damaging than their original grievances.

Let’s start with Andres Manuel Lopez Obrador, the former mayor of Mexico City who lost the July 2 presidential election in Mexico. While his loss was narrow, it nevertheless was a loss, according to official results. Lopez Obrador (or AMLO as he is popularly called by friends and foes) claims the election was marred by fraud, yet international observers say this was the cleanest elections in Mexican history. While AMLO’s party, PRD, beforehand had praised the election authorities, they now claim that they are tainted and biased in favor of the government candidate, Felipe Calderon. 

BUT THE WORST, of course, is not AMLO’s complaints. It’s the fact that he is now organizing massive street protests and blockades demanding nothing short of the election results being overturned in his favor. Which begs the question:  What evidence does he have that he, rather than Calderon, won the election? None, of course.

Yet, he is now paralyzing much of the Mexican capital with his daily protests, which even leading allies have denounced. In the end, the message AMLO is sending is this: ”I will respect democracy as long as I get my way.” Hardly the stuff of statesmen or what Mexico needs.

It is now time for AMLO to concede his loss and move on.

THEN THERE ARE the striking workers at Volkswagen's plant in Puebla in Mexico. They are now going on strike because nine days of negotiations for a salary increase failed to produce their goal. Volkswagen had offered a four percent increase, which exceeds Mexican inflation and the average for the auto industry. The strike will cause major losses for Volkswagen and jeopordize future investments and jobs in Mexico.

The union tactics are not new, of course. As far back as five years ago, the VW union workers at Puebla held a 19-day strike after rejecting a pay increase of 7 percent. That compared with the 6 percent inflation rate of Mexico. In the end, Volkswagen agreed to a pay raise of 14.7 percent. The additional cost meant unecessary losses for VW and came at the cost of planned investments.

EVEN MORE SURPRISING is the strike at the Escondida copper mine in Chile, the world's largest. The union demanded a salary hike of 13 percentage points above Chilean inflation and a bonus of more than $30,000 per worker. Australia-based BHP Billiton, which runs the mine, had originally offered a salary increase of 3 percentage points above inflation and a bonus that was a little over half of what the union demanded. It is worth noting that Chile's inflation this year is expected to reach 3.8 percent, one of the region's lower rates and almost half the regional average.

But the union rejected the offer and sent more than 2,000 workers on a 12-day strike, which reduced production by 40 percent and caused millions of dollars in losses. Even a new offer of bonuses ranging from $23,000 to $32,000 and salary increases of 4 percent was rejected yesterday, in the latest vote by union members.

After the union illegally blocked off the road to the mine, BHP decided to close it outright. The Chilean union has thus caused enormous damage just because it refused to accept an offer that most Latin American workers can only dream of.

The strikes in Mexico and Chile show just how outdated and wrong the strategies of unions are. Instead of looking out for the real interests of their members, union leaders are playing hardball with strategies that jeopordize not only their members'  wealth, but also future jobs. 

The Latin American unions need to stop using strikes as an automatic response each time their goals are not met.  If not, they will surely drive away much-needed foreign investment in the region, to the detriment of salaries and employment.

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