MEXICO CITY — The Honduras 2020 Plan to generate 200,000 textile jobs and triple apparel exports to $7.4 billion through a major synthetics push is moving slowly and failing to generate enough jobs to keep migrants from fleeing to the U.S. to escape poverty and violence, observers said.
Their comments came as President Trump on Monday renewed threats to cut off aid to Honduras, Guatemala and El Salvador if they fail to stop a swelling, 7,000-strong migrant caravan that originated in Honduras last week. In a series of tweets, Trump called the growing refugee crisis a national emergency and criticized Mexico for failing to contain the caravan.
Honduras, El Salvador and Guatemala make up the so-called Northern Triangle in Central America — a huge textiles manufacturing region that has been often plagued with violence and insecurity. The countries reportedly received $500 million in development aid from Washington last year as part of the multibillion Alliance for Prosperity Plan to curb migration.
“We are going to close the year with 159,000 jobs, just like last year,” said Freddy Carrasco, who heads the labor syndicate at Honduran textiles maker Tegra. “The 2020 plan is not giving the results we expected. It is not realistic to want to generate 600,000 [the development plan’s total target includes agriculture and tourism] jobs 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 U.S. are set to gain this year, foreign investment remains stalled, according to Carrasco.
“There have been no new company investments this year,” he claimed. “The same companies that have been active here — Gildan, Hanes, Fruit of the Loom and Tegra — are operating just as before.”
Honduran unions are demanding a 24 percent salary hike as part of negotiations to raise minimum wages in the impoverished country, Carrasco revealed. He said unions will begin talks with top maquila employers’ federation Asociación Hondureña de Maquiladores and government officials by the end of this month.
“We are asking for our salaries to match those of nontextile manufacturing sectors such as construction or dairy, which get 9,500 lempiras [$392] instead of our $7,085 [$293] monthly wage,” said Carrasco. “Our wages are not enough to grow financially, to have a house like all people should. Food prices and taxes keep going up.”
If their demands are met, the hike would tip operators’ wages close to their Guatemalan peers and sharply above the $160 earned in lowest-wage hub Nicaragua, according to Carrasco.
An executive at Honduran textiles firm Central America Spinning Works agreed the 2020 scheme is moving slowly and must be broadened to include other regions to fight poverty.
Julio Raudales, president of the Honduras Economists’ College, said the $14 billion development plan to combat emigration and eradicate extreme poverty is failing to lift employment in Honduras, where 50 percent (between the small formal and huge informal economy) of the active population remains jobless, up from 30 to 35 percent eight years ago.
“People are tired,” Raudales said, adding that more than 3,000 Hondurans and Central Americans cross the Mexican border en route to the U.S every day. “It’s not like things are worse or that we are in a war, but people are looking for better alternatives.”
Raudales added corrupt institutions and questionable governance are keeping investors at bay.
“The 2020 plan is an idea born to bring investments to the country, to sell it like an adequate destination, but governance problems and institutional weakness is making many bidders think twice,” she said.
FDI is expected to reach $1 billion this year, down from $1.1 billion in 2017, according to Raudales, who added “that is not enough, especially when compared to [nearby] Costa Rica, which brings $4 billion to $5 billion a year.”
To be fair, Raudales said without the 2020 plan, which was drafted by consultancy McKinsey & Co., investment would have declined more steeply.
He credited textiles mogul Jesus Canahuati, which owns sportswear major Elcatex, for working hard to push companies to bankroll the initiative.
As of mid-2017, the scheme had reportedly raised $1.5 billion of the $3 billion necessary to achieve its textiles’ growth objectives, Joe Cuervo, who led the textiles mission then, told WWD at the time. However, when contacted to provide an update, he said he no longer leads the program and could not comment.
Canahuati also did not return messages seeking comment.