MEXICO CITY -- 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.
“Purchasing power has deteriorated,” said Rafael Camarena, an analyst at Grupo Financiero Santander Mexico SAB. “Low salaries, the result of slow growth, are becoming a limiting factor for the development of the domestic market and therefore for the economy.”
Since 2003, Mexican workers’ earnings in the auto industry have risen an average of 0.3 percent per year more than the inflation rate, according to data compiled by the Labor Ministry. It’s a pattern repeated across the economy.
Andres Escamilla, a janitor at a Mexico City office building, said the 3 percent pay raise he received this year pushed his wage to about $8 a day. Consumer prices are expected to rise 4 percent this year, according to analyst estimates compiled by Bloomberg.
“The last time I can remember going shopping for something other than food or school supplies was four or five years ago when I bought bunk beds,” Escamilla, 52, said as he emptied a sidewalk trash can. “Electronics, computers -- no way.”
The U.S., Mexico’s biggest trading partner, is facing similar challenges, even though its average per capita income is more than three times larger than Mexico’s. Inflation-adjusted compensation per hour rose 0.7 percent over the past five years, the weakest growth for any expansion of comparable length since World War II, according to Bureau of Labor Statistics data compiled by Bloomberg.
In Mexico, average salaries rose 0.6 percent a year after inflation in the decade through 2012, International Labor Organization data show. Wages climbed about twice as fast in Brazil and Colombia, three times faster in Chile and five times more rapidly in Peru.
Labor unions, which are organized at each automaker rather than providing representation across the industry, have failed to boost wages significantly, according to Armando Soto, president of Kaso & Asociados, a Mexico City-based auto industry consulting company.