The IMF regards protection contracts and the impact they have on workers as a violation of the right to freedom of association as enshrined in International Labour Organization Convention 87, since there is no question here of a decision freely made. Although the system of protection contracts has also been criticized by many labour lawyers in Mexico itself, the Mexican government has made no serious attempt to abolish it and to properly implement the principles of ILO Convention 87.

Challenging the status of protection contracts is a controversial issue in Mexico as they are supported by local and federal government authorities and many existing trade union organizations. Of the high number of protection agreements, most involve the three largest Mexican trade union federations. These unions use protection contracts to prevent other unions from forming or negotiating a collective contract, giving complicit support to wide-spread corruption of the official Mexican trade union system.

The IMF has been following the situation in Mexico with concern for some time. In response to continuous complaints from workers, trade unions in the process of formation, existing trade unions and non-governmental and human rights organizations, the IMF decided to lodge a complaint with the ILO Committee on Freedom of Association.

The complaint (ILO Case No. 2694) was lodged by the IMF President in February 2009 and outlines how the labour laws and the way they are interpreted in Mexico are in violation of ILO Convention 87, a convention which all member countries are obliged to respect and one that Mexico has specifically ratified.

The complaint sets out how the system of protection contracts is used in Mexico to deny workers their right to freedom of association and cites several examples, including the situation at Johnson Controls. While the complaint was lodged last year and will take some time to be considered by the ILO Committee on Freedom of Association, the problems continue in Mexico, as can be seen from the case of workers at Johnson Controls in Puebla.

Many workers seek and want change so that all Mexican workers can form genuine trade unions. Just like our colleagues in COT-JC, Carmen and Jorge, who continue to work on their own account, attend training courses and fight for reinstatement to their jobs and a change in the labour situation. It is hoped that more people like Carmen and Jorge will come forward to play their part in building a transparent and democratic trade union movement in Mexico.

Carmen is 49 and was born and lives in Teolocholco, Tlaxcala. She has eight children, five girls and three boys, all teenagers, who either work or study. She has been married 28 years and has a secondary school education. She worked at Johnson Controls in Puebla for 11 years. She was dismissed because she joined an organizing coalition (COT-JC), refused to accept the demands being made on her on the production line, where managers want workers to work three times harder without proper remuneration, and criticized the existing union. When she was dismissed, she could not go to the union for help because the union is a paper union that is backed by the labour authorities. Companies use these unions to ensure cheap labour and no "labour problems". Carmen now survives on what she earns from a few casual jobs and continues to attend training courses on issues such as women’s rights and labour rights. She also works at a small family shop and lives with some support provided by her husband.

Jorge is 33. He also lives in Teolocholco, Tlaxcala. He is married with three boys, all teenagers who are at present studying. Jorge has a secondary school education. He was dismissed by Johnson Controls one and a half years ago for calling on the trade union that claims to represent him to protect the workers from company harassment and arbitrary decisions made by management.

Carmen and Jorge explained that employees sign individual contracts. They are told there is a collective agreement but they are never able to find out anything about it, let alone being able to have an input into negotiations about the terms of the agreement. This union has no articles of association, at least none that its members are aware of, and it never holds general meetings for the workers, although it has held occasional meetings on certain production lines or in certain departments.

The union has a health and safety committee, but this committee never meets. The workers have average pay increases of two per cent per year and, according to Jorge, were given 1,000 pesos (US$82.36) as "profit sharing". Carmen says: "How is it possible when Chicles Adams pays its workers 40,000-60,000 pesos (US$3,290 – US$4,950) for "profit sharing"?" Workers are entitled to six days annual holiday but many never take them because they prefer to work on those days in order to increase their incomes, however little the pay is. They also work on the bank holidays and obligatory rest days (such as national holidays) stipulated by labour laws, for the same reason – to obtain a few more measly pesos. Employees are covered by social security but the dismissed workers are not. The company pays an end of year bonus equivalent to more or less 20 days pay.

There are never any elections to elect union leaders. These leaders just present themselves and tell the workers they are in charge. The union at Johnson Controls is affiliated to the Confederación Regional Obrera Mexicana (CROM). Johnson Controls workers do not know how trade unions are supposed to conduct themselves but they know they want to organize themselves in order to protect themselves from the whims of their employer. That is why they want to join a union of their own choice, the Mexican Miners’ and Metalworkers’ union (SNTMMSRM). However the company has begun to take steps to intimidate workers to stop them from joining the SNTMMSRM.

According to the Centro de Apoyo al Trabajador A.C. (CAT), a labour support centre, workers at the company have been fighting for more than two years and learning about human and labour rights, in order to be able to exercise their right to freedom of association. The workers have formed an organizing coalition at the company (COT-JC). In 2007, some workers participated in the Comisión Revisora del Reparto de Utilidades (Profit Sharing Review Committee) and also demanded a new collective agreement but were dismissed without valid reason in June 2007. The company and the "paper" union in place have continued to harass workers since then and more workers have been dismissed.

CAT has revealed that the company is currently doing well. Production has increased and hours of work have increased to almost two full shifts. Some departments have begun to work on Sundays. The plant is working at 90 per cent of capacity, partly to ensure supply of parts for the new Volkswagen A6 model. The first hundred seats, made from leather, vinyl and cloth, came off the production line on April 16. The production managers, Jorge Sambrano and Ignacio Betz called a meeting with workers to thank them for their efforts and to encourage them to work harder in order to achieve the target of 1,200 units per day by the beginning of January 2011. Current production is 800 seats per day for VW and 200 seats per day for Nissan.

Sergio Beltrán, secretary of the SNTMMSRM, said he was taking the steps necessary for workers at Johnson Controls to join the SNTMMSRM and hoped to be able to talk to company management. He said it was important for the international union federations, including the IMF, to act as mediators and arrange a meeting with the company.

The seriousness of this issue has led to international concern and a number of organizations are working to stop this practice at both the national and international levels. The International Campaign Against Protection Contracts in Mexico was created in March 2007 and its members include Mexican institutions such as the National Autonomous University of Mexico (UNAM) and international trade union organizations like the IMF.

The campaign’s main objectives are to identify, denounce and eradicate protection contracts. The campaign’s basic argument is that such practices lead to the establishment of bogus labour relations, bogus trade union organization and bogus collective agreements, a system in which control is exercised by pseudo-trade union leaders and corrupt employers. Trade union legislation makes this possible and makes illegitimate acts legal.

Protection contracts damage the trade union movement’s credibility and have a negative impact on living conditions. With no real union to represent them, the workers at Johnson Controls have not been able to effectively defend their interests. Johnson Controls in Puebla employed 800 workers two years ago but now employs 600. Half the workforce is now contracted by an outside agency called One DIGIT. Women have to stand all the time while working because there are no chairs on which to rest, and the working day is more than ten hours. One year ago, the company stopped the so-called "lunch box" of food provided when working late and do not allow workers to make telephone calls during working time. One year ago, one vehicle turned over while transporting workers from shift three, including pregnant women. This accident was caused by driver fatigue.

The situation at Johnson Controls is not an isolated case. More than 90 per cent of registered trade union agreements in the country are "protection contracts" signed by "paper" unions, providing protection for the company not the workers.

"Protection contracts" are bogus collective agreements that prevent democratization and collective bargaining. They are signed behind the backs of the workers by employers and intermediaries that are registered by the labour authorities and whose main objective is to prevent the emergence of genuine and representative trade unions. They also keep pay and benefits low, restrict workers’ rights and ensure labour relations that are advantageous to the company.

Characteristics of protection contracts include:

• They are reached between trade unions and employer representatives without being discussed or approved by the majority of workers covered by the same;
• They are reached by illegitimate parties that are not elected democratically by a majority of the workers they claim to represent;
• They are administered and/or revised without reference to a majority of the workers; and
• In some cases, workers are unaware that a "trade union" is representing them.

Although Mexican law allows there to be more than one trade union in a single company, this is rare. The corrupt and anti-democratic system, combined with anti-trade union management policies, make genuine unionization impossible. The system perpetuates itself because trade unions are required to request official recognition from the appropriate Conciliation and Arbitration Board (JCA), which is composed of representatives of the government, employer and the existing "trade unions" that sign protection contracts. Board members have an interest in maintaining the status quo and they create many obstacles to the registration of new independent trade unions. Consequently, in practice it is impossible to replace these "paper" trade unions, even though they do not have the support of the workers they pretend to represent. More serious still, workers who try to set up an independent trade union are often subjected to reprisals, intimidation, threats, violence, dismissal and blacklisting.

When establishing a new enterprise, many companies conclude a protection contract with a "paper" union before the first employee is even hired, effectively preventing employees from choosing the trade union of their preference. In most cases, these "paper" unions belong to a corporate lawyer who has officially registered the union. These "paper" unions are a legal simulation which defraud workers of their rights and represent a real obstacle to freedom of association. The "paper" unions go on to make a profit and earn money from the unprotected workers with companies paying between one to 3.5 per cent of the workers’ salaries to the owners of the "paper" union.

Protection contracts allow companies to take advantage of the absence of genuine trade unions and to exploit workers, violate their rights and maintain political and economic control over the workforce.

Protection contracts in Mexico were not a neoliberal initiative. They are a manifestation of anti-trade union policies that date back to the beginning of the 19th century when the government began to introduce legislation to control the trade union movement. During the 1960s, a few genuine trade unions tried to extend the principles of autonomy, freedom of association and trade union democracy but were constantly prevented from doing so by the labour authorities and legislation. Protection contracts became prevalent with the arrival in recent times of the transnational companies and assembly (maquila) plants in the country.

Text / Valeska Solis & Julio Pomar
Translation / Chris Whitehouse

Carmen Sánchez Juárez and Jorge Isidoro Aguilar Lara are fighting to create an authentic trade union for themselves and their fellow workers at the United States transnational company Johnson Controls. They want a union that genuinely represents them, fights for them and with them, and does not simply pretend to do so, like the "paper" unions that for many years have operated at Johnson Controls and elsewhere in Mexico.

Carmen, Jorge and six of their colleagues were dismissed by Johnson Controls one and a half years ago because they demanded a review of the pay provisions of the collective agreement covering workers at the company. They had also started to get informed about their rights and called on the trade union that claims to represent them to protect them against company harassment and arbitrary management decisions. They discovered that the collective contract was actually a protection contract and the union claiming to represent them was no more than a "paper" union. In response, the company claimed it was no longer able to continue paying these six workers, ignoring the fact that four of the workers concerned are single mothers in urgent need of an income, however low the pay is at Johnson Controls.

Johnson Controls de Puebla is a subsidiary of a U.S. transnational company based in Milwaukee, which owns another 90 companies in the U.S., Mexico and other countries. In Puebla, the company manufactures seats for Volkswagen and this involves cutting and sewing cloth and leather, upholstering, making moulds and assembling polyurethane seat bases.

The company employs about 600 workers in Puebla. Working conditions are poor and shifts are 12 hours long. Workers are contracted to work eight hour shifts but are forced to work longer hours from Monday to Saturday, while the company quibbles about overtime rates. Women receive lower pay than men for the same work. This serious discrimination against women is theoretically prohibited by the Mexican Constitution, the Federal Labour Law and the Anti-Discrimination Law but employers and labour authorities in every single state of the federation conspire to violate these laws, leaving no one to protect the victims of such workplace abuse. The company has a 5,000 peso (US$410) life insurance policy for every worker but contributions to this policy are automatically deducted from wages. In addition, trade union dues are automatically deducted from wages every week – 32 pesos (US$2.60) out of a daily wage of 198 pesos (US$16.25).

INDONESIA: IMF affiliate FSPMI won a major court battle on May 14, which is unprecedented in an industrial dispute, involving PT Kymco Lippo Motor Indonesia, located in Bekasi, Indonesia. The Special Regional Court ruled in favour of the workers by declaring the company bankrupt (insolvent) and ordered that the movable and immovable assets including land and building be auctioned of and the workers paid their due compensation from the proceeds of the sales of these assets.

PT Kymco Lippo Motor Indonesia is a joint-venture between 75 per cent majority shareholder Kwang Yang Motor Company (Taiwan) and 25 per cent shareholder PT Lippo (Indonesia). In October 2008 the company ceased operation and since then more than 300 workers have been locked out and abruptly dismissed from employment. The company’s problem arose due to internal shareholder conflicts that affected the company’s business operation and forced its closure.

The FSPMI, whilst keeping the struggle going on since 2008, also embarked on a series of legal battles. The 300 workers who are members of the FSPMI took turns to keep daily vigils inside the company premises, in order to prevent any possible attempts by the local shareholder or other creditors from removing the movable assets of the company.

Said Iqbal, President of FSPMI, lamented that he has mixed feelings about the victory in the courts. He said that while the FSPMI succeeded in declaring the company insolvent and obtained an order to dispose of the assets of the company, the local share holder might mount an appeal to the higher courts. The FSPMI will fight them at every level, he assured.

Iqbal felt sad that the workers lost their jobs at a time when Indonesia is facing severe unemployment crisis. "Most of these workers have worked loyally in this company for more than ten years and they were dumped like trash," he said in disgust. "However, if the sales of the company’s assets go through, the workers would be compensated for loss of wages and termination benefits," he added. He admired the courage and determination of the workers to carry on with the struggle despite facing severe hardship. "This decision of the court has established the fact that workers are stakeholders in a company and not to be treated as commodities," he stressed.

FSPMI also thanked the IMF for the solidarity support and publicly highlighting the plight of these unfortunate workers.

EUROPE: Over 50 union delegates from the 13 auto-producing nations of Europe called on French transnational automotive components maker Valeo to immediately open negotiations with South Korean union representatives of Valeo workers. The delegates from the major auto-sector unions of Europe adopted a motion at the May 11 – 12, 2010 European Metalworkers’ Federation Automotive Committee meeting in Seville, Spain to support the South Korean union’s call for a negotiated resolution of the disputes in South Korea.

Valeo had notified the Korean Metal Workers’ Union (KMWU) about the closure of the Cheonan plant by telephone call on the day production was to stop and in the absence of prior consultation or information about the plant’s closure. The workers in South Korea have been inside the plant since that day, maintaining the machinery and waiting for management to return. Demonstrating its openness to dialogue, KMWU has sent a delegation of workers to France, including KMWU national vice president for auto sector, to be available for Valeo Group negotiations and is calling on the transnational corporation to respect trade unions and enter dialogue in good faith.

The motion adopted by the major unions of Europe in auto sector sends a clear message that such extreme exclusion of trade unions in important decisions affecting workers lives will not be tolerated. The IMF is working with KMWU and EMF to secure the rights of the workers at Valeo’s Korean operations.

USA: "Rio Tinto tried to attack our contract in 81 areas leaving us union in name only. We stood up and fought. With the support of communities and workers all over the nation and around the world, we were able to fight off all of these attacks and preserve our rights," said International Longshore and Warehouse Union (ILWU) Local 30 member Kevin Martz.

Martz neatly sums up the significance of the struggle that began on January 31 when Rio Tinto locked out the 570 miners at the Boron facility and ended on May 15, 2010 with 75 per cent voting in favor of the tentative agreement concluded at 1 am the day before. 

The new six year agreement:

• maintains protection against dismissal and favouritism regarding promotion, shifts, scheduling, and overtime assignments,
• includes an annual 2.5 per cent wage increases each year of the contract,  
• includes a $5000 bonus,
• prohibits subcontracting unless union members cannot fulfill assignments and sets limits on outside work, and
• resists Rio Tinto’s proposal to eliminate a day of holiday leave per year.

On the other hand, the agreement also requires workers to give one-week advance notice to the company if they are available for overtime work, reduces sick leave from 14 to 10 days per year in the context of the possibility to bank 200 hours sick leave above the 10 days, and maintains existing employees’ retirement pensions but has company-paid 401(k) savings plans for newly-hired workers. 

This new contract beats back the multi-billion dollar mining and processing giant’s nine months of demanding concessions such as: 

• the prerogative to outsource jobs,
• the power to cut anyone’s pay at anytime for any reason,
• to make union membership optional which could lead to discrimination against union members, and
• to lay off anyone at anytime without giving legitimate reason. 

The fight inspired solidarity from around the globe, from picketing at Rio Tinto shareholders meeting by IMF-affiliated UNITE the union members in London to adoption of Rio Tinto European Works Council statement with press conferences by the Rio Tinto EWC officers in Paris and also by Canadian Auto Workers members in Quebec.  On May 17 the 570 Boron workers began receiving their paychecks again, and they report for duty on the May 18 with all scabs being removed from the plant this week. 

GLOBAL: The IMF held the first working group meeting on developing guidelines for trade union networks in transnational corporations (TNCs) in Geneva, Switzerland on May 11 and 12. The decision to establish the working group was taken at the December 2009 IMF Executive Committee. The working group’s initial terms of reference include the following:

1. Guidelines for the constitution of trade union networks, their main tasks, coordination and resources;
2. Role of networks in the improved use of International Framework Agreements (IFA), ILO instruments and OECD Guidelines to enforce fundamental trade union rights and support organizing unorganized plants;
3. Possibilities for pursuing global agreements on areas such as health and safety, training, equality, information, consultation and restructuring processes, based on mandates from affiliates;
4. A guidebook and training material on networking; and
5. Discussion on a number of priority companies in different industry sectors, including supply chains when appropriate.

Participants from Belgium, Brazil, Canada, Czech Republic, Germany, Japan, Norway, Russia, South Africa, United Kingdom, and the U.S. took part in the meeting along with IMF Regional Representatives from India and Latin America. During the meeting Valter Sanchez from CNM-CUT, Brazil was elected as chair person of the working group with the task of leading the working group and also to report on progress to the IMF Executive Committee in June 2010.

The working group welcomed the first draft text provided by the secretariat and saw it as a good starting point for discussions. It was also seen as encouraging that the IMF wanted to develop more seriously its approach to TNC Networks. The working group meeting served to reinforce the many differences amongst IMF affiliates and how it was vitally important to build understanding of how our affiliates have different union systems, cultures and experiences.

Discussion centered on two areas: those specific to the draft text, and those on broader issues. The broader issues included: the need for a further evaluation of existing IMF networks; developing training and education materials; the number of networks the IMF could realistically participate in; seeking recognition from companies; and the need for specific measurable goals.

The next step is for a summary of the outcome of the first meeting along with the new version of the draft guidelines being submitted to the Executive Committee at its next meeting in June. Upon recommendations from the Executive Committee the working group plans to continue its work remotely through electronic exchange, and the final guidelines would be adopted at the Executive Committee in Geneva in December 2010.

TRANS-PACIFIC: Trade union leaders of nations involved in talks to create the latest international trade deal, the Trans-Pacific Partnership Trade Agreement (TPPTA), are calling for the negotiations to be inclusive and open, not conducted behind closed doors with a few corporate players, as too many other deals have been.

In a letter sent on May 10 to the trade ministers of Australia, Brunei, Chile, New Zealand, Peru, Singapore and the United States, union leaders say that workers’ voices must be part of the negotiating process.

The unions are recommending:

• Setting up meetings at the negotiations where representatives of civil society groups can be regularly briefed about the content of the talks.
• Establishing regular channels between governments and groups such as unions and employers so they can be meaningfully involved.
• Making sure TPPTA governments consult with indigenous groups in their country on trade issues that may affect them, as required by International Labor Organization (ILO) Convention 169.
• Creating a joint TPPTA website, where detailed information about the trade negotiations is posted and updated regularly. The site also should allow non-government groups to post their analyses and proposals about the trade deal.

The recommendations were detailed in a letter co-signed by the leaders of national trade union centers in Australia, Chile, New Zealand, Peru, Singapore and the U.S.