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Universidad de las Américas-Puebla and

By Mabel A. Andalón L, Luis F. López-calva, Centro De Estudios Económicos and El Colegio De México


The discussion about the relevance of railroads in Mexico goes beyond its economic dimension. Due to historical reasons the debate is typically charged with an enormous amount of ideological and political content. When the privatization decision was made in 1995, under President Zedillo, all these issues were brought into the discussion. The labor union of FNM was an important support of the official party, PRI, and had a good deal of political weight in the public sphere. However, the financial condition of the company, as well as its productivity indicators, were clearly an objective factor in favor of privatization. In order to carry out the privatization process successfully, the labor issue was the main hurdle to jump. Making the company attractive to investors, while respecting all the labor rights of the people and reducing labor redundancy, was the main challenge for the privatization team. When the privatization process started in 1996, FNM had around 43, 000 active workers (more detail on this below). In 1998, 7 % of that labor force (3,000) had opted for retirement, 54 % (23,300) had been re-hired by the new companies, and 39 % (16,700) ended their relation with the company. The characteristics of the severance packages offered to the workers at FNM were similar to those designed in previous privatization processes in Latin America. The packages included: i) Allowing people with at least 25 years in the company to retire (20 years for female workers). This retirement would include all the rights established in the labor contract. The estimated cost of the restructuring process goes to 90% of the total proceeds from the sales of the regional companies, except the company that gives service to the central valley of Mexico

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Year: 2001
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