Car Industry in Mexico Booms, But Wages Don't Brendan Case and Nacha Cattan - Bloomberg News
go to original November 28, 2014

Mexico’s booming automobile industry is generating more export dollars than oil, building more cars than Brazil and giving a job to Esmeralda Velazquez. What it isn’t doing is raising her living standards.

The 37-year-old machine operator at an auto suspension plant earns $295 per month — not enough to afford a telephone service or separate beds for her two daughters, let alone a computer or car. Pay raises have barely kept pace with inflation since she began working in the industry 15 years ago, she said.

“When I see a nice car pass by I think, ‘I made that suspension but I’ll never be able to own one,’” Velazquez said from her rented cinder block home in the city of Queretaro, about 130 miles northwest of Mexico City.

Productivity has risen twice as fast as wages since 2005 in Mexico, Bank of America Corp. calculates, helping the country attract investment and become the second-largest auto supplier to the U.S. and the world’s biggest flat-screen TV exporter. The flip side is there’s not much left over for workers, capping retail sales and keeping economic growth in the past 10 years at less than half the pace of regional peers such as Chile, Peru and Argentina.

While Mexican exports have risen an average 7.1 percent a year since 2001 on the competitiveness of local industry, domestic retail sales gained 2 percent through the end of last year. That compares with 5 percent in Chile, 5.1 percent in Brazil and 5.6 percent in Colombia.

Read the rest at The Detroit News

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