How Much Profit?

Most of the time, Mexico's government is content to keep its economy growing faster than the population explosion by a judicious balance of public and private investment. But every now and then the government feels the need to recall its revolutionary beginnings with a move calculated to prove that its heart is still with the laboring masses. One such action was initiated early this year: an amendment to the Mexican constitution that would legally oblige companies to share profits with their employees. With President Adolfo Lopez Mateos pushing hard, the measure sailed through Congress, was then passed out to the country for approval by a majority of Mexico's 29 states. Last week it was back for final congressional action and a presidential signature--and businessmen, both Mexican and foreign, were plainly worried.

Not that they refuse to share the wealth. Profit sharing, supervised by the states, has been part of the Mexican constitution ever since 1917. Moreover, the annual aguinaldos--a bonus of two months' pay at Christmastime--is almost a national tradition. What bothers businessmen about the new provision is the unspecific terms in which it is couched. Before it was introduced, and as it made its rounds, scant effort was made to explain to private interests what the measure would mean in practice.

Potentially, it could bring big trouble. As passed, it establishes a three-legged "national committee" with the job of ruling on how much of a company's profits the stockholders should keep and how much should go to the workers. The committee would be composed of government, management and labor representatives, each with equal representation. But there lies the trouble. Because they regard all labor unions as, in effect, arms of the Mexican government, many businessmen feel that management would be outnumbered 2 to 1. Unwilling to run the risk of antagonizing the Mexican government under such circumstances, local businessmen said nothing publicly. Privately, most agreed with a U.S. industrialist who said that "how dangerous it is depends on how it is managed." At the very least, he added, the new amendment would make foreign companies think twice before investing in Mexico: "If you don't know how much profits are going to be, you're going to hesitate."

Well aware that new foreign investment dropped from $14 million in 1959 to around $5.000,000 last year, Mexico's government hastened to reassure businessmen that while it still intended to take care of the little man, it had no intention of hurting industry. "You will see," said a Mateos aide. "Everything will clear up when the businessmen see that, in practice, nobody is going to get hurt."

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