Trade unionism in the textile industries of Brazil and Mexico

Thesis (M.A.)--Boston UniversityLatin America is currently undergoing a tremendous change in the basic pattern of economic development. New investment in heavy industry and increased population are resulting in greater per capita and total consumption. The effect of this changing trend upon one of this area's oldest and most important consumer good industries, the textile industry, has been the subject of one aspect of this paper. The scope of the study has been restricted to the two largest countries in size of population and size of their textile industries. The choice of Brazil and Mexico was determined by similarities in their history of textile industry development, the aggregate size of their populations in relation to Latin America as an entity and the comprehensive volume of labor legislation which each has enacted. The study was undertaken to determine if the superimposing of an advanced code of labor legislation upon the early stages of textile industry development has had a deterrent effect on the growth of the industry. Since population growth has been rapid in both Brazil and Mexico, in recent years, and per capita income has been rising, it would be reasonable to expect the textile segment of the economy to be expanding and modernizing to meet the needs of these growing economies. In evolving this study to determine if the textile industry has in actuality progressed at a pace comparable to that of the balance of the economy and to view the effects of labor unionism, labor legislation and management policies on the development of this industry, the following procedure has been adopted: (1) to briefly review the early growth of the textile industry in Brazil and Mexico, (2) to sketch the background of union development and the early activities leading to labor legislation, (3) to review the body of labor legislation which has developed and show effects of its impact on the economy, and (4) to evaluate the effects of union end management policies on the growth of the textile industry. The first modern textile mills developed in Brazil about 1876 and in Mexico in 1830. There was a rapid growth of mills due to good investment opportunities and new machinery developments. The owners of these mills tended to form paternalistic mill villages, in Brazil. This initial investment was followed by a long period of stagnation due primarily to a limited availability of new capital and a lessened marginal efficiency for further textile machinery investment at that time. The Mexican industry developed rapidly for about fifteen years and then growth stagnated until about 1890 when it enjoyed another spurt of activity. The Mexican mills were primarily foreign owned and operated by Europeans. Labor did not enjoy good treatment in these Mexican mills and it was usually indebted to the mills for food and other necessities secured from mill owned stores. The development of labor unionism in the early years of the twentieth century found interested followers in both Brazil and Nexico. In Brazil, the early unions were primarily mutual benefit societies and continued to be such until about 1928 when a national labor party was founded. The spread of unions espousing communist ideas took place about this time with the result that the government placed restrictions on unions in general and in 1930 prohibited free unions. In contrast to Brazil, Mexican unions were illegal from the outset and it was not until after the revolution in 1910 that they were permitted to organize freely without interference. They were not legal even at this date but the government tolerated them. In 1917, labor, with the tacit approval of the government, was successful in incorporating an advanced body of labor legislation into two articles of the new Constitution. These articles provided the base for a Federal Labor Code in 1931 and a large body of legislation which extended to Mexican labor a program of minimum wages, vacations with pay, dismissal wages, collective bargaining contracts and free unionism. These developed piecemeal into effective instruments in the national economy which have greatly increased security of employment and higher labor costs. A similar development occurred in Brazil with the adoption of the 1937 Constitution and the subsequent consolidation of the Brazilian labor laws in Decree-law No. 5452 of May 1, 1943. These documents assured Brazilian labor of higher wages, dismissal wages, paid holidays, vacations with pay and collective bargaining contracts. However, in Brazil, strikes and lock-outs were declared illegal and the government had to pass on all contracts and union organizations. The result of this legislation has been that the cost of labor to management has risen so that it is no longer feasible to consider increasing the labor factor when increased production and higher quality are required. One of the major problems of the textile unions in both Brazil and Mexico has been the existence of a large supply of excess labor which knows no trade other than textiles. This factor has dominated trade union policy toward management plans for modernizing the textile industry, largely as a result of union opposition to modernization due to a fear of large scale dismissal of labor. A result of this has been that the industry has turned to tariff protection as a means of maintaining a domestic market for their product, regardless of the price or quality of product. The social legislation favoring labor and the tariff protection favoring the mills in each country has developed a situation which is adverse to the best interests of both the Brazilian and Mexican economies. The high production costs and low quality of fabric which have resulted from past policies are detrimental to the living standards of both countries. In addition, they have seriously limited the size of the domestic market for the products of the mills in each country. The paper concludes that in the interest of the overall economy in either country, new thinking is required on the subject of modernization, work loads and administrative practices in the textile industry, if this industry is to meet the increasing demands of these rapidly expanding economies