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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. 

Nicaragua’s Marxist government gets religion on free trade zones

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

While El Salvador, Honduras and Guatemala struggle to return to their pre-2007 employment levels, Nicaragua has recovered all 17,000 factory jobs it lost in 2008, and added another 20,000 to boot. There are now 161 free-zone companies operating in Nicaragua, exporting $2 billion worth of products and employing nearly 100,000 Nicaraguans — one-sixth of the country’s entire formal-sector workforce.

The average apparel manufacturer makes $1.05 an hour — half of what a factory worker makes in Mexico. Employees like Martha claim they can barely make ends meet in a country where costs are rising faster than wages. But for the country’s uneducated masses, it’s either that or scratching together a living in the informal sector, where 70 percent of the country toils every day.

“Free-zones are a fundamental pillar in the development of the country for generating employment and a productive base that we didn’t have before,” retired Sandinista military General Alvaro Baltodano, head of the government’s National Free-Zone Commission, told GlobalPost. “If we didn’t have these free-zone jobs, there would be more emigration and more disarticulation of families.”

Rethinking ‘savage capitalism’

The Sandinista Front, which battled US-backed counterrevolutionary insurgents during a tumultuous decade in the 1980s, has not always been so generous in its appraisal of the free-zone regime. As a political opposition movement — a role the Sandinistas played aggressively for 16 years after getting voted out of power in 1990 and before returning to office in 2007 — the party criticized the maquiladoras as part of an exploitive “neoliberal economic model” and an example of “savage capitalism,” as President Ortega is wont to say.

But now that the graying revolutionaries have retaken the reins of state, they have had to assume the responsibilities that come with public office.

“Logically, it’s not the same to be in the opposition as it is to be in the government,” Baltodano says. “We have come to the conclusion that the most important thing is employment.”

The Sandinista government’s tripartite agreement, which set a graduated minimum-wage increase averaging 9 percent over three years and includes a variety of other social benefits for workers, has also laid the foundation for initiatives such as the US Department of Labor’s Better Work program, an effort to improve working conditions and compliance with labor regulations.

The program works directly with the big brand names — Gap, Levi’s, Target, Walmart, and JC Penney — to ensure their overseas supply chains are playing by the book.

While Better Work officers say they haven’t found any zero-tolerance issues in Nicaragua, such as child labor or forced labor, the program hasn’t yet established a baseline evaluation for labor conditions here. Still, the fact that the program was invited into the country in the first place is a good indication of the direction in which the Nicaraguan government wants the free-zone sector to grow, says country manager Elena Arengo.

“The government is very interested in this program; the labor piece is very important to them,” she says.

From business owners’ viewpoint, the tripartite agreement has minimized tire-burning labor protests and increased the accuracy of labor-cost projections. That allows factory owners to focus more on production orders and less on negotiating with recalcitrant union bosses shouting hackneyed revolutionary slogans through bullhorns.

The agreement also allows the Sandinistas to feel less guilty about promoting a free-market capitalist model because they can now point to their efforts to “socialize” labor conditions for the good of the working poor. In that sense, the Ortega government claims it has humanized the frigid framework of CAFTA.

The cost of free trade

Union leaders, however, are beginning to grumble that the proletariat got the short end of the stick. They claim the social element that the government so proudly trumpets is in practice being relegated by factory owners who like the wage concessions but are dragging their feet when it comes to implementing their end of the bargain.

Pedro Ortega, secretary general of the Federation of Textile Unions, says his organization filed a formal complaint with the National Free-Zone Commission on May 1, International Labor Day, accusing free-zone factory owners of noncompliance. He claims only 20 of 161 factories are respecting an agreement to help provide subsidized food baskets for workers. 

Other companies, meanwhile, have allegedly denied workers access to health benefits such as free eye surgery from Cuban doctors, because that would mean missing six days of work afterwards.

In some of the smaller free-zones, Ortega says, factory owners claim they don’t recognize the tripartite agreement at all, insisting it applies only to the larger factories that take orders directly from the big brand names.

Josefa Rivera, an outspoken labor organizer with the “Maria Elena Cuadra” women’s movement, says the problem with the tripartite agreement is that it replicates a familiar pattern. She says Nicaragua always tries to fix its problems with new laws, declarations and agreements, without enforcing regulations already in place.

“Nicaragua has lots of pretty laws; they are precious. But in the end it’s us, the workers, who have to follow up and pressure companies to follow them,” Rivera says. A former garment factory worker herself, Rivera argues that poverty and underdevelopment have put the government in the desperate situation of “taking whatever comes along.”

“Women have three options for work in Nicaragua: emigration, prostitution and free-zones,” Rivera says. “The government opens the door to foreign factories because they have nothing else to offer.”

The government disagrees. Gen. Baltodano says the growth and diversification of free-zone investment in Nicaragua demonstrates the government’s commitment. The challenge ahead, he says, is to continue to cage this flighty sector and make it more stable, sustainable and regulated, so it truly becomes a part of the country’s development and poverty-alleviation efforts.

In the meantime, Martha Acuña, the reticent and hardworking factory worker from Masaya, will continue to spend her days sewing pants pockets for gringos, in hopes that someday she’ll have some money to put in her own.

This reporting was supported by a grant from the Pulitzer Center on Crisis Reporting.