Poverty grows under CAFTA in El Salvador

After 6 years of CAFTA, growing poverty in El Salvador – including for Workers Producing for Export to U.S. Companies

Data recently released by the Salvadoran Government points to improvements in several “social indicators,” but to increased poverty levels, including for workers in factories producing for export under the Central America Free Trade Agreement.*

On the positive side, the percentage of homes with electricity has increased from 73 percent to 84 percent between 2000 and 2011.  The percentage of homes with running water also increased, from ** to **.  And illiteracy has decreased from 17.5 percent in 2000 to 12.7 percent in 2011.

But, according to the Salvadoran Government’s Office of Statistics and Census, the number of households living in poverty increased from 34.8 percent to 40.6 percent between 2007 and 2011.

Within the Government’s total poverty figure, extreme poverty increased from 10.8 percent to 12.2 percent of households during the same period.

Extreme poverty is defined as households whose income does not cover the cost of a basic food basket for the average Salvadoran family–$179.42 per month in December 2011, the date of the census, and to date, for a family of ## members.

So maquila workers toiling in factories producing garments and other products for export duty-free to the U.S. under the Central American Free Trade Agreement remain in impoverished—in fact their poverty is increasing. 

A maquila worker working full time (44 hours a week) and earning the legal full-time wage of $187.60 a month just barely make it out of “extreme poverty” into poverty (earning enough to cover the average family’s food costs alone, if they pay for nothing else).

The Salvadoran Government arbitrarily sets the poverty level for a family at $358.84 a month, twice the cost of the average famly’s minimum food needs.

A maquila worker who is her family’s chief earner, working the regular legal 44-hour workweek plus 16 hours of overtime each week remains in poverty,  earning $287.44 a month,  $71.44 short of the poverty line.

To escape poverty she will have to work full time (44 hours a week) plus 110 hours a month of overtime, which will bring her and her family 36 cents above El Salvador’s poverty line.

A family with two adults both working full time in maquila export factories plus two children is just at the poverty line.

According to Alexander Sogovia, assistant to El Salvador’s President Mauricio Funes, increases in the price of food, fuel  and medicine have been a big factor in the increased cost of living that has kept poverty levels high.  From 2000 to 2011, food costs have increased by 55% in urban areas and 66% in rural areas.

According to El Salvador’s Chamber of Industry for Textiles, Sewing and Free Zones, Camtex, as of December 2011, there are approximately 71,417 maquila workers in El Salvador.  ** percent of the clothing they sew is exported to the U.S., including to many well-known U.S. labels like Gap, Fruit of the Loom, Hanesbrands, Wal-Mart, North Face, Adidas, Nike, Reebok, Dallas Cowboys, Aeropostale, Delta, Anvil, Soffie, Nordstrom, Lacoste.

Counted as a block, five Central American countries (Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica) constitute the second largest source of apparel entering to the U.S., surpassed only by China.  According to the U.S. Commerce Department[i] U.S. imports from these countries totalled $7.199 billion in 2011 and $4.737 billion in the first 8 months of 2012, accounting for 9.27 percent and 9.32 percent of U.S. clothing imports, respectively.

Under the Central America Free Trade Agreement, their products also enter the U.S. market duty-free.  In El Salvador (as well as the other Central American countries), companies that assemble clothing for export do not pay property taxes or municipal taxes, nor taxes to import or export their products

Multiple Purpose Survey of Households 2011, General Office of Statistics and Census
(Encuesta de Hogares de Propósitos Múltiples 2011 (EHPM), elaborada por la Dirección General de Estadística y Censos, DIGESTYC)
[ADD LINK]

La Prensa Gráfica, October 9, 2012:http://www.laprensagrafica.com/el-desempleo-en-el-pais-pasa-de-7-1-al-6-6

U.S. Department of Commerce, Office of Textiles and Apparel (OTEXA), Major Shippers Report: Total Apparel Imports by Country 8/2012

http://www.otexa.ita.doc.gov/msr/catV1.htm

Breakthrough at Style Avenue in El Salvador Producing Licensed Collegiate Clothing

After the Institute for Global Labour and Human Rights and the Salvadoran union FEASIES exposed serious worker rights violations at Style Avenue (see "Dressing Babies in Sweatshop Clothes: Dallas Cowboys, Ohio State and a Creepy Business-Style Avenue in El Salvador," October 2011), the collegiate labels producing in the factory committed to an extensive remediation plan to end the violations, improve working conditions and finally bring Style Avenue into compliance with Salvadoran labor law.

College Kids and Outerstuff are fully engaged and committed to quickly implement the agreed upon remediation plan.  (NFL and Dallas Cowboys infant and toddler creepers were also sewn under an illegal subcontract at Style Avenue.)

The Independent Monitoring Group of El Salvador, GMIES, was chosen by the labels to conduct a thorough investigation of factory conditions at Style Avenue.

The GMIES auditors found a history of violations:

• Illegal and excessive mandatory workshifts;
• Sexual harassment by a male supervisor;
• Routine verbal abuse on the part of supervisors;
• Scorching factory temperatures;
• Violation of workers' legal right to organize a union;
• Contaminated and unsafe drinking water;
• Overtime not recorded on the pay stubs (recently corrected);
• Management illegally delays mandatory payments into the Social Security health and pension fund, which seriously jeopardizes the workers' wellbeing;
• Vacation pay is not paid on time;
• Violation of freedom of movement (recently corrected);
• Wages-though technically legal-come nowhere near providing even a minimally decent standard of living.

On December 6, representatives of College Kids, OuterStuff, Standard Group and Style Avenue'sowner joined a meeting with the FEASIES union and their local in the factory, the Institute for Global Labour and Human Rights and GMIES, the independent monitoring group.

At the meeting, the collegiate labels fully committed to immediately support the remediation plan to bring Style Avenue into full compliance with El Salvador's labor laws.  Style Avenue's owner and staff will certainly need continued scrutiny, encouragement and pressure.  For example, days after investigators left the factory, some production lines were kept for mandatory excessive overtime.  Moreover, Style Avenue's owner is delaying the necessary step of terminating the former human resources manager, Wilda Quintanilla, who has consistently violated every labor law in El Salvador.

On December 14, the FEASIES union and their local will meet with Style Avenue's owner for the first negotiation session.

At the meeting, the collegiate labels fully committed to immediately support the remediation plan to bring Style Avenue into full compliance with El Salvador's labor laws.  We would like to note the role of the Worker Rights Consortium (WRC) in bringing the labels to the table and emphasizing the need for a swift and energetic response.

It certainly will not be easy, but if we stick together, with consistent follow-up and continued pressure, the Style Avenue workers may just have a shot at finally winning their legal rights, one step at a time.

It is good to hear something positive these days. 

We will keep you posted, and have a happy holiday!