Textile and apparel workers in Honduras are to receive a near 40% hike in wages over the next five years, after a historic agreement was approved with worker and employer representatives.
The move was announced late last year by the President of the Republic, Juan Orlando Hernández, who said the agreement will generate much-needed confidence and certainty for domestic and foreign investors.
Under the new package, maquila workers will see the minimum wage jump by 38.5% between 2019 and 2023. Specifically, this will be broken down into an 8% rise in 2019, 7.5% each year from 2020 to 2022, and another 8% in 2023.
Mario Canahuati, president of the Honduran Maquila Association (Asociación Hondureña de Maquiladores – AHM), which represents the country’s biggest industrial sector, said the salary package also provides social compensations to improve the welfare of workers.
Industry executives last year told just-style a hike in apparel minimum wages was key to contain rising Honduran migration, as symbolised in the headline-grabbing caravan trudging through Mexico.
According to the re:source by just-style strategic sourcing tool, monthly minimum wages in Honduras stood at US$192 before the rise, although the estimated garment worker wage is somewhat higher at US$344-412 per month.
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Honduras is the largest supplier of apparel to the US market from the CAFTA region, where it enjoys duty free access under the Dominican Republic-Central America Free Trade Agreement. It is also the sixth largest US apparel supplier overall.
However, the country is one of the least developed economically in Latin America, with more than two-thirds of the country’s population living in poverty. While relatively low labour costs and proximity to the US market make Honduras attractive to investors, the country’s investment climate is hampered by high levels of crime, a weak government, and relatively poor infrastructure.
The country is currently working towards the Honduras 2020 plan, which aims to triple apparel exports to $7.4bn and generate 200,000 new textiles jobs to boost the count to 350,000 – all by 2020. In November, just-style was told that so far around $1bn has been raised – about one-third of the $3bn needed to transform the country’s textiles industry.