Antecedentes a nivel regional

The Mexican telecommunications industry started to gain importance after the Second World War, when public companies increased their presence in a wider range of economic activities. “Public enterprises played a crucial role in Mexico’s post war economic success, providing financing, infrastructure, and cheap inputs for the private sector, which prospered under state tutelage. Public firms have also had important social and political functions” (Teichman, 1995:46-47)

In the Telecommunication industry, the TELMEX Company (Teléfonos de México) has remained the largest and most wide-spread telecommunication company in Mexico until today. TELMEX was set up in 1947 as a private enterprise, involving two companies’ concessions: Teléfonos Ericcson, S.A. and Compañia Telefonica y Telegrafica Mexicana, S.A. (CTTM). Eventually, TELMEX became the most important telecomm enterprise in Mexico, controlling 95 percent of all line services. On August 1st 1950 the National Telecommunications Union of Ericsson and the National Union of Workers of the CTTM Company joined to found the STRM (Telephone Union of the Mexican Republic)31.

31_{A previous historical background shows that “during the 1920s, the first telephone workers}

from the Ericsson Company joined the SME [Mexican Electricity Union (Sindicato Mexicano de Electricistas, SME)] for a short time” (S58). Later, in the 1950s the STRM and the SME signed an alliance of union solidarity and mutual help.

The State’s participation in telecommunications started in 1963. Nine years later the state obtained 51 percent of the enterprise’s social capital and 49% remained with private owners. Under new regulations the Mexican government gave the TELMEX Company the control of the telecom industry. “In 1976, the Ministry of Communications and Transport (Secretaría de Comunicaciones y Transportes,_SCT) extended TELMEX´s monopoly over basic telephone services for 30 years (until 1996), with the possibility of renewal for an additional 20 years. The SCT was responsible for regulating the telecommunication sector, while the Budget and Programming Ministry supervised TELMEX´s annual budget. Rates for services were jointly decided by the Public Credit and Finance Ministry and the SCT in accordance with the Law on the General Channels of Communication of 1939” (Botelho,_1997:73).

Nevertheless, the coverage of the telecommunication industry in Mexico was not particularly developed by the early 1980s, as the Mexican Government moved towards liberalisation of the economy. On the one hand “the sector experienced a high average growth rate of 12 percent until the early 1980s. On the other hand, after the 1982 economic crisis, growth slowed to an average of 6 percent per annum until 1988. Only 16 percent of Mexican households had a telephone in 1984. By the end of the decade the telecommunications system was plagued by poor basic service, high long-distance rates, uneven quality, continued disruptions and rampant corruption” (Botelho,_1997:73).

In 1985, after the Mexico City earthquake had destroyed most of the capital’s telecommunications infrastructure, the government initiated privatisation policies in relation to TELMEX. One switchboard worker recalled that

[The authorities] reduced investments, as today they are doing with the CFE and LyFC Company. [The administration also made] the argument that private initiative must be in charge of the telecommunications [industry] instead of the government (ST27)

Following this strategy, and in advance of any administration-union agreement to privatise TELMEX, the government promoted a campaign against the TELMEX Company, criticising it as an inefficient state-owned company linked to an unproductive union and unproductive telecommunications workers. A former member of the union’s national committee recognised that there were features of the union’s activity that could readily be pictured in these terms,

The government initiated a public attack on the telecomm union as a corrupt and inefficient organisation. [In fact], the union central management repressed the dissidents but overlooked abuses and faults committed by many people [workers]. [As an example] if you as a leader protect the indefensible, such as the lazy, drunk, foolish, etc, as a leader you have a solid social base that is very supportive and loyal to you, because they are people that would lose a lot if their leader did not protect them because they are deficient workers (S27)

Here, as in the electricity industry, it is evident that inefficient behaviour has been seen in terms of corruption and this has been used as a label to disqualify the union from intervening in the public sphere. However, it is also evident that the government’s use of this language against the unions and workers, intended to further the process of privatisation, also gained some resonance in the views of union officers and workers themselves, as they used a similar vocabulary to evaluate their own behaviour at work. This suggests that older union practices were vulnerable to attack in these terms, especially when they involved the clientalist defence of privileges to cultivate sectional support.

So the government developed its strategy of privatisation in a similar way to that of LyFC discussed earlier, using a campaign against the inefficiency of the state-owned company and demands for the union to bring about a more “efficient and competitive” company.

The privatisation of TELMEX

President Salinas announced the privatisation of TELMEX in September 1989. At that time, TELMEX was the third largest company in México and the second largest telecommunications company in Latin America after one in Brazil (This was TELEBRAS, the largest provider in South America). The government offered incentives to the new owners, to allow them to recover investments in a short time period. Despite the critiques of the union and workforce, the involvement of the union at TELMEX was supported by the

government. They gave the union the opportunity to participate in the process of privatisation with consultation over the process of personnel relocation, the staff training programme and the evaluation of technological change. In 1989, the Convenio de Concertación (consultation agreement) was signed and this established the basis for industrial relations during and after privatisation, especially the pledge to keep avoiding all compulsory redundancy.

This pledge was an important reason for the high price paid for the company by the international consortium CARSO. The consortium –made up of CARSO Group, France Telecomm and South Western Bell– paid US$ 1.76 billion for 20.4 percent of TELMEX favoured stock. This transaction affected 65,000 employees across a range of occupations; it included the branches of several subsidiaries, and represented the most important privatisation of a service sector enterprise in Mexico. The different parts of the consortium played distinctive roles, so that “in the privatised TELMEX the Mexican CARSO group is responsible for human resources and labour relations. Its foreign partners in the consortium, South Western Bell and France Telecom/FCR, are responsible for commercial affairs, marketing, mobile phones, directories, and network modernisation, including long-distance and international circuits” (Botelho,_1997:80).

The Mexican government prepared TELMEX for privatisation while preserving regulatory scope to (i) promote technological research, modernisation and the extension of the system; (ii) improve customer services; (iii) assure majority

control by Mexican nationals; and (iv) guarantee labour rights and participation in the enterprise. At the same time it established and developed communication with the STRM union during the privatisation process. This contrasts with the more common pattern of authoritarian industrial relations in Mexico, where public sector workers and unions have experienced massive lay offs, a drastic reduction in real wages and a deterioration in their labour conditions. Thus the privatisation of the telecommunications sector has been unique and remarkable, specifically in terms of the relationship between the TELMEX administration and the telecomm union during the entire process. Labour issues have received some explicit attention from the government and this has preserved the union’s and workers’ rights to protect their employment and avoid buyers laying off workers.

A CARSO manager confirmed that the government involved the union in the privatisation process.

TELMEX was privatised following a previous agreement between the government and the [STRM] union. Before the private telecommunications companies participated [in the purchase], the government and the union had agreed to privatise TELMEX with some concessions. There were two very important concessions: the first was the participation of the union in the Mexican and International Stock Exchange. The second was a purchasing compromise in order to avoid

massively laying off workers. It was a request without precedent. All the [other] telecommunications companies have made employees redundant before and after privatisation as a strategy to stabilise finances (T10)

At the same time management believed that privatisation opened up opportunities for change under the banner of ‘modernisation’ across the areas of technology, administration and employment relations. Thus the same executive highlighted,

The privatisation strategy had three main aspects: a) a technological modernisation scheme; b) administrative and financial modernisation and c) the less studied human modernisation. The question of obsolete technology is often heard of (in TELMEX), but this was no more serious than the human obsolescence (T10)

Thus human resources were an important issue during the privatisation and modernisation process, but the implications of human resources management have remained unsettled and subject to negotiation. On the one hand the agreement between the government and the union placed some constraints on the action of the management, especially in regard to job losses. On the other hand it provided the basis for management to seek reforms to work and employment relations, in part through involvement and negotiations with the unions.

One important component of the bargain between the government and the union was the financing of employee share ownership. In the privatisation package, the Mexican government offered stock options as part of a new incentive to increase productivity to shape a new company identity among workers. This arrangement has been summarised in the following terms:

The Government guaranteed a low-interest loan to the telephone worker’s union to acquire 4.4 percent of TELMEX’s public shares. […] The union did not acquire a seat on the company board, but it was agreed that workers would be allowed to continue purchasing shares, and when they reached 10 percent of all shares they would be entitled to a seat. However, the union leadership’s goal of participating on TELMEX’s board seemed difficult to achieve. Control of 10 percent of the company has remained elusive, as many workers cash in their shares and others choose to exert direct control over their shares rather than hand them over to the union’s share fund management (Hoeven,_1997:14-15).

As this suggests, workers were allowed to return shares, and just after privatisation was completed on 20th December 1990 many workers as individuals cashed in their TELMEX shares. One young worker and STRM representative in the customer service department, whose family had done this, avowed that for most workers financial participation in the company after privatisation was seen in terms of “…resources to be used for more urgent necessities rather than long term projects” (ST31).

During the economic restructuring, and against this background, the TELMEX union developed a strategy to negotiate the best position for the union in its partnership with managers, to introduce new technology and change the organisation of work and labour relations. One female worker who was a in the union during that process emphasized,

We participated together [in the union], we studied how the new technology has been introduced in other similar cases in Canada and Europe (ST30)

The union scheme adopted was the result of active leader participation with groups of union dissidents and workers to develop specific proposals for the process of modernisation. In this way the union was involved in the overall process of modernisation initiated by management, which, as other studies have documented, embraced the TELMEX total quality system, the training programme, new forms of work organisation, labour conditions, and the productivity programme as a whole (Dubb,_1996).

The Union project during privatisation

In 1993, after the privatisation of TELMEX Company, Hernandez Juarez (the current leader of the telecomm union) said in his book that modernisation should be a continuous process, where privatisation orients modernisation to a long term social process where workers participate actively in company projects. Likewise, according to this view, the government has to oversee

everything that is happening in ex-public enterprises after privatisation. Based on the STRM experience, Hernandez Juarez gives the state an active function rather than merely one as a guarantor of laws and decrees during and after privatisation. This means that privatisation constitutes a part of the government restructuring process where the public role is conceptualised as a major interaction between government and society. Here the private is related more closely to the public sphere. Private enterprises acquire more social responsibilities and new forms of compromise. In this context, “the government, to achieve economic, political and social development, necessarily has to promote a new labour policy, new more productive models in a more democratic context” (Hernandez,_1994:99).

The STRM commitment to a strategy of modernisation was a direct consequence of labour representation with a productive focus in the telecommunication sector after 1976. From that time the participation of the STRM workers had become centred on an analysis and discussion of telecommunication technological innovation tendencies and labour relation models. Over time the union built up a strong position, throughout keeping the union and workers informed about company issues to protect their organisation and interests. Workers from all political positions in the union joined together to study different international experiences of the modernisation of telecommunications, looking at the cases of different companies such as France Telecomm, British Telecom and Spanish Telecom (ST29). Actually, the union

had already started developing its own project from 1975, founded on its labour relations and democratic practices, so that this predated the official modernisation discourse of the Salinas regime (Hernandez,_1994).

Thus, the STRM had fought for the modernisation of TELMEX since the 1980s and from this vantage point, as a member of the STRM union staff argued, “the privatisation [of TELMEX] was not an objective in itself; it was the way to accomplish the modernisation of the company” (ST26). In the 1980s, this process was understood by the union as a technological change which included a productive transformation as well as labour and administrative reform. At that time, modernisation and restructuring was understood as a process with direct implications for the telecommunication service and its capacity to benefit society (ST28).

Collective Contracts

On the basis of the strategy outlined above, the union and workers actively participated in internal debates and policy making during the modernisation of the company, particularly in the workplace. Before the Collective Contract negotiations of April 1989, in advance of the TELMEX privatisation, the STRM had won a specific place in the modernisation project. “The old clause 193 of the Collective Contract of the telecomm union was the most complete in Mexican unionism about modernisation and bilateralism”(Garza, 1990:126). However clause 193 was completely modified

in the April 1989 collective negotiations, changing the most important aspects outlined here

Against this background a former member of the Central Union Committee nevertheless stressed that,

The union project coincided with the enterprise’s policies. This was the strongest union moment, because the union had a solid project, and the productivity programme was based on an interesting customer service proposal. We talked about productivity and quality of service in a series of exploratory texts to adapt this new programme to company requirements. Over this aspect, the union had a strong position in its collective negotiations [with the company] (ST30)

Union participation was very strong in 1990 during the organisation of the Commission on Quality and Productivity that was included in clause 194 of their Collective Labour Contract. This Commission set out the agreement that allows the union to participate in the training programmes, in the redefinition of indicators to measure productivity and bonuses to workers, and to create new work profiles. Analysis teams with mixed union and management representation were created to design projects to meet productive targets and evaluate and propose changes in the productivity plans (Garza,1998). The union also participated in National Commissions on new technology, training,

productivity, health and labour security, all related to the modernisation and productivity policies.

As suggested earlier, however, this participation was no longer underpinned by some of the guarantees embodied in earlier contracts. Thus one woman who participated in the Joint Commission on Technology during the company restructuring highlights that

[before] the company was sold, came the final negotiation [April 1989] with the administration and important clauses [in the collective contract] were eliminated, particularly the clause [193] related to training on technological changes, the union influence on decisions in the workplace, health and labour security and the new theories of risk at work (ST29)

Nevertheless some in the union placed a positive interpretation on these developments. Thus a member of the union staff wrote in a document:

It is evident that the union lost influence. However, since the flexible relations started, the union should have the opportunity to participate in all aspects of modernisation. […] The important thing is not that the workers are just present in a company in the modernisation process, but the real aim is the participation of workers as they carry out this process (Lejarza,_1990:134)

After these Collective Contract modifications, the company decided on the new projects aimed at modernising the organisation and introducing new technology, but the union won the right to be informed about any changes.

Thus a crucial feature of the privatisation process for workers was that the TELMEX Collective Labour Contract was opened up to change. On the one hand this left a foundation for union and worker involvement in the workplace, but on the other hand this bilateral collaboration undermined workers’ established collective rights. This was evident in one comment by a female worker who lived through this period in the company, as she stressed that

The privatisation started undermining the Collective Labour Contract in essential aspects such as [through the specification of] restrictions to bilateralism and union participation in future enterprise projects. In 1988 the union and the company created productivity clause number 193 in the Collective Labour Contract. This clause said that all enterprise projects have to be discussed with the union. [However] today, the key aspect which is poorly understood in the contract is the requirement that the company will inform the Commission of New Technology about aspects that will affect workers. If [the company policies] do not [appear to] affect workers, supposedly the administration does not have to inform them. But whether these [company policies]

affect us or not, the company always informs us later [rather than sooner] (ST27)

This statement is one indication of disagreements between the management and the union over the scope and limits of the role of the union and the workers in management’s programme of productivity oriented modernisation, an issue that will be developed further in the next chapter on class and occupation.

Enterprise policies: TELMEX and its policies to modernise the company

As we have seen, since 1990 the TELMEX Company has been controlled by the CARSO Group, with the participation of Carso Global Telecom, France Telecom and Southwestern Bell. This Group includes another twenty-one secondary companies. From 1996 TELMEX has opened up the local and long distance telecommunications service to international competition. Thus, after TELMEX was privatised in 1990, on January 1st1997 Avantel (MCI), Iusacel, Mercatel, Alestra (AT&T), Miditel, Investcom, Bestel, Telnor and Telinor started competing with TELMEX for the long distance