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From May Day to Labor Day, GlobalPost explores the human cost of what's been called a "race to the bottom." The hyper-accelerated movement of capital, jobs and resources from the world's corporations — manufacturing, agriculture and service — to the lowest bidder. In an era of diminished expectations, broken promises and sleight of hand, these are labor stories of governments, employers, unions and workers. 

Martha Acuna Nicaragua
Martha Acuña at home in Masaya, Nicaragua with her mother and two children. Her husband's death in a motorcycle accident left her as the only wage-earner in the eight-member household. (Tim Rogers/GlobalPost)

Nicaragua’s Marxist government gets religion on free trade zones

Workers support President Ortega's "social programs" but unions warn against selling out.

MASAYA, Nicaragua — Martha Acuña’s day starts several hours before the roosters greet the sun from the swept-dirt yard outside her humble cinderblock home. In the predawn chill, Martha, 32, prepares breakfast for her children and extended family over a wood fire. Then she walks two kilometers to the Masaya Highway, joining dozens of other Nicaraguans waiting to take the hour-long bus ride to factory jobs in Managua’s free-trade zones — where foreign companies take advantage of the country’s cheap labor and generous tax exemptions to produce their goods.

The rest of Martha’s day is spent seated behind a sewing machine in an American-owned garment factory, where she sews the back pockets onto blue jeans for export to the US. By quitting time, she has finished 500 pairs of jeans, meeting her production quota and earning a full day’s pay of $14.34, which comes to around $11 after bus fares and lunch.

Twelve hours after leaving her house in the dimness of dawn, Martha returns home along the same road darkened by dusk. It’s hard to imagine that this is the revolutionary dream that Martha’s family — all loyal Sandinistas — had envisioned for their country and their daughter, but no one’s complaining. In fact, Martha’s family thinks things are improving with Daniel Ortega back in power.

The combination of poverty and years of neglect have made President Ortega’s “social programs,” which consist of modest handouts to poor people who are unused to getting anything from the government, very popular in a country with low expectations and many unmet needs.

“Before they never gave us anything, but this government gave us some zinc to fix our leaky roof and those chickens,” says Martha’s 60-year-old mother, Lydia de Carmen López, pointing to a pair of poultry pecking about the patio. “No government has ever given us anything until now.”

“Women have three options for work in Nicaragua: emigration, prostitution and free-zones.”
~Josefa Rivera, labor organizer

Mrs. López, who suffers from diabetes and arthritis, says she is grateful to the government that her daughter has a job to “pay for the bread of each day.” Since Martha’s husband died in a motorcycle accident, she is now the only wage-earner in her eight-member household.

Martha credits President Ortega for attracting foreign investment and creating free-trade zone jobs in response to the country’s massive unemployment problem. It might not be the socialist promise of the original Sandinista Revolution in the 1980s, but in Nicaragua — the second poorest country in the hemisphere — attracting foreign investment and creating jobs is revolutionary in its own right.

“There has been a lot of work recently; it’s better than it was before. The work conditions are good and the salaries have increased a little,” Martha says in a soft voice, sitting in a plastic chair under an avocado tree outside her home on a recent Sunday. “There is no problem when we take breaks to go to the bathroom or to drink water. No one says anything.”

Nicaragua rising

Martha’s assessment of Nicaragua’s free-zones is shared by labor unions and the government: the situation isn’t ideal, but it’s improving.

The same can be said for Nicaragua. Over the past few years, Nicaragua has quietly become the fastest-growing economy in Central America (excluding Panama) in terms of exports and foreign-direct investment. And it’s happening under the careful watch of the Sandinista government.

Though the first Sandinista leadership captained Nicaragua’s economy to the bottom of the sea in the 1980s, the former Marxists have bucked the odds the second time around. Despite occasional paroxysms of revolutionary rhetoric, the current Ortega administration has managed the economy with the imprimatur of the International Monetary Fund (which has given Nicaragua a $78 million loan) and has stayed within the guidelines of neoliberal decorum.

Since Ortega returned to power in 2007, banking deposits have increased steadily, foreign reserves and exports have doubled, and foreign-direct investment has grown five-fold. No longer are Nicaraguans carrying bags full of cash to market to buy a chicken breast, like they did in 1988 when hyperinflation reached 30,000 percent.

Indeed, Nicaragua is a surprisingly new country under surprisingly old management. It’s now fully inserted in the world of globalization and free-trade agreements — with, of course, all the typical third-world nods to the halcyon days of rural farm life, such as rickety horse-drawn carts carrying firewood through downtown Managua.

When it comes to “modernizing” its traditional agricultural economy, the US-Central America Free Trade Agreement (CAFTA) has played an enormous role in offering jobs that don’t require bringing a machete to work. The country’s free-zone regime, facilitated in part by the generous rules-of-origin provisions granted Nicaragua’s textile sector under CAFTA, grew 35 percent last year.

Nicaragua now produces everything from textiles and garments to sneakers, shrimp, cigars and automobile harnesses — all under the free-zone regime, which provides 100 percent exemptions on most taxes and most import duties as well as unrestricted repatriation of capital.

But Nicaragua’s real benefit in the cutthroat game of global outsourcing is the unique agreement it hatched between the government, factory owners and the labor unions. The “tripartite agreement,” as it is known, is the only of its kind in Central America, making Nicaragua the only country to include labor unions as an equal partner in any sort of dialogue between foreign investors and the government.

As a result, the agreement has provided a foundation for permanent dialogue and industry stability in a sector known for corporate misconduct, government malfeasance and wildcat rabble-rousers.

Formalized in 2009 during the peak of the global economic downturn, it has also given Nicaragua the firm footing it needed to shoulder through the stormy crisis of past years and recover foreign investment quicker than any other country in Central America.