Unions in Honduras are set to demand a 24% salary hike as part of negotiations to increase apparel minimum wages as a swelling migrant caravan continues to approach the US, a leading official has told just-style.
“We are asking for our salaries to match those of non-textile manufacturing sectors such as construction or dairy, which get HNL9,500 ($392) instead of our HNL7,085 ($293) monthly wage,” says Freddy Carrasco, head of the labour syndicate at textiles maker Tegra. If met, the hike would lift operators’ wages close to their Guatemalan peers and sharply above the $160 average monthly salary earned in lowest-wage hub Nicaragua, according to Carrasco.
Workers will start negotiating with employers’ federation Asociacion Hondurena de Maquiladores, which represents the country’s biggest industrial sector in the Caribbean city of San Pedro Sulas, and government officials, by the end of October, according to Carrasco.
The move comes as Hondurans continue to leave their country in droves to escape extreme poverty, rising violence and corruption.
This week US President Trump renewed threats to cut aid to Honduras, Guatemala and El Salvador as part of Washington’s multi-billion Alliance for Prosperity programme to curb migration. Last year, the initiative reportedly handed $500m to the three countries, which make up the Northern Triangle, a huge yet impoverished clothing manufacturing region that’s often beset with violence.
On Tuesday (23 October), the caravan had reached southern Mexico and swelled to a reported 7,200. While it originated in the Honduran city of San Pedro Sulas on 13 October, it now includes Hondurans, Guatemalans and Salvadorans.
Honduras 2020 plan challenged
Meanwhile, the Honduras 2020 development plan to generate 200,000 textile jobs (the industry currently employs a total of 600,000) and triple apparel exports to $7.4bn through a major synthetics push is moving slowly and disappointing workers, Carrasco says.
“We are going to close the year with 159,000 jobs, just like last year. The 2020 plan is not giving the results we expected. It is not realistic in a country where insecurity is so high and the judiciary weak. It’s difficult for companies to want to come in.”
Although exports to the key US market are set to rise this year, foreign investment remains stalled.
“There have been no new company investments this year,” Carrasco claims. “We have the same companies active here – Gildan, Hanes, Fruit of the Loom and Tegra – operating just as before.”
“Going very well”
However an industry executive counters that the Honduras 2020 plan is “going very well and we don’t want to pollute it with the caravan.”
He claims Trump is manipulating the crisis to win Republican-party votes in the US November mid-term elections, which could increase rival democratic party control of the White House. Trump has blasted democrats for lax immigration laws and has hinted the migrant group could harbour terrorists.
Economists say Honduras is suffering from corrupt institutions and political instability, keeping foreign investors at bay just as the 2020 programme seeks international funds to meet its goals.
“There are many structural problems in Honduras and a lack of political will to pursue good development programmes and manage the budget appropriately,” says Julio Raudales, president of the College of Economists of Honduras (CEH).
“The 2020 plan is an idea born to bring investments to the country, to sell it like an adequate destination for investment, but governance problems and institutional weakness has made many bidders think twice before investing,” he says.
Honduran legislation needs to be streamlined to cut red tape for new businesses seeking expansion, while corporate tax exemptions must be even for everyone instead of handed out randomly.
“More than new laws, we need clear rules to improve the investment climate,” muses Raudales. “Many times the rules contradict each other and the tax exemptions are discretional.”
Foreign direct investment is expected to reach $1bn this year, down from $1.1bn in 2017, according to the economist, who adds: “That is not enough, especially when compared to [nearby] Costa Rica which brings $4 to $5bn a year.”
Raudales notes, however, that without the 2020 plan, investment would have likely fallen more and credits Canahuati for working hard to woo businesses to back the initiative.