MEXICO CITY — Guatemala’s textiles and apparel industry has rejected U.S. and local trade union claims of significant labor law violations under the Central American Free Trade Agreement, branding them as “unsubstantiated.”

This story first appeared in the December 30, 2010 issue of WWD. Subscribe Today.

The U.S. launched an inquiry against Guatemala last summer for “apparent violations of obligations on labor rights,” adding that it hopes to see the government take “specific and effective action — including, if appropriate, legislative reforms — to improve the systemic failures in enforcement of Guatemalan labor law.”

Based on a 2008 AFL-CIO union investigation, the Obama administration claimed Guatemala is failing to enforce laws to enable workers to unionize, organize and bargain collectively and promote acceptable working conditions. The U.S. also expressed “serious” concern about labor-related violence, which has seen several nontextile union leaders killed in recent years and which is “apparently deteriorating.”

The case saw both countries engage in labor consultations. If Guatemala fails to address the problem, it could be forced to pay $15 million into an annual fund to improve labor standards.

Guatemala is forecast to export $1.5 billion worth of textiles and apparel this year, solidifying its status as the biggest U.S. supplier under the CAFTA bloc comprising Dominican Republic, Honduras, Nicaragua, El Salvador and Costa Rica.

While the U.S. inquiry covers all industries, big violations have taken place in the apparel sector, where working conditions and wages are worse than in other export industries, local union leaders claim.

In April 2008, the AFL-CIO and six Guatemalan worker organizations filed a report alleging that Guatemala’s government violated its CAFTA labor commitments by failing to effectively enforce its labor laws.

Workers from two major apparel manufacturers — Avandia and Fibro — participated in the case. They claimed Avandia had fired the founding members of the Coalition of Avandia Workers union and the founding members of a second syndicate, adding that the state failed to force the employer to reinstate the “unlawfully dismissed workers.” Meanwhile, Fibro reportedly axed 40 workers, 36 of whom were either participating in or supported a union drive, and failed to contribute to their social security fund.

Avandia did not return calls for comment, while Fibro closed in September 2009 amid falling U.S. orders.

AFL-CIO’s global economic policy specialist, Jeff Vogt, told WWD the labor violations remain across all industries but more significantly in the agriculture and apparel sectors. “The employers violate the law and the government does very little to enforce it,” he charged. “They fail to send inspectors and even when they do, the factories don’t let them in. Employers are also allowed to file endless appeals to keep [complaint] cases locked up in court.”

Adolfo Lacs, senior coordinator at Unión Guatemalteca de Trabajadores, went even further, saying much of the U.S. inquiry is linked to the apparel trade. “The maquila sector has just two or three unions with no collective power whatsoever,” he said. “The government doesn’t do anything to force companies to meet local and international laws.”

David Morales of other top union Festras added, “The textiles sector has been vaccinated against syndication. Employers have created a culture of terror against unionization.”

According to Lacs, union-seeking workers are typically threatened with firing or benefit cuts. They also fall victim to intimidation and worker, gang-related violence.

Avandia, SAE-A International and Winners are the only textile firms with independent unions, but Lacs noted their numbers recently have dwindled. He claimed Avandia’s membership has shrunk 40 percent, while SAE-A has five members, down from 60 a year ago.

But Juan Kim, SAE-A general manager, said that’s untrue. He said 44 unionized workers left the T-shirt maker last spring as part of a restructuring that saw 1,300 workers exit the company through a “generous” voluntary departure program. “They decided to take the benefit. We didn’t force them to leave,” he stressed.

SAE-A union has 13 members and it’s growing fast. “We don’t repress this activity and we have the best working conditions in Guatemala,” said Kim. SAE-A subsidiary Winners’ also has a 100-strong syndicate, Kim added.

While some observers say working conditions have improved since Guatemala joined CAFTA, Lacs said “sweatshop” conditions remain, with many people logging 10- or 11-hour days with no overtime, especially in the subcontracted firms.

“Many have to take pills to stay awake, sit on painful stools with no backrests and are hardly allowed to go to the bathroom,” Lacs said. He added some employers pocket workers’ social security payments, preventing them from receiving treatment if they fall ill.

Morales said apparel workers also receive the lowest industry wages — 56 quetzales, or $6.95 at current exchange, a day, compared with an average of 89 quetzales, or $11.09, a day in other key export segments — while 0.01 percent of the sector is unionized compared with as much as 10 percent in other industries. Some observers challenged this, however, saying wages are “well above” the industry average, as they are bonus based.

Guatemala’s government and labor ministry did not respond to requests for comment. However, Carlos Arias, president of top textiles federation Vestex, labeled UGT and Festra’s contentions as “untrue and irresponsible.”

“Inability to unionize? Absolutely untrue,” Arias said. “We have unions in the apparel industry and these are very respected. Any worker-intimidation cases also have not been proven. The cases the unions are talking about are pre-CAFTA.”

Arias noted the apparel sector’s low union rates stem from a long history of union corruption in Guatemala, not from corporate suppression.

“There is a high level of distrust and unpopularity. The low participation has nothing to do with manufacturers repressing such alliances,” he said.

Arias also expressed concern the AFL-CIO failed to properly investigate its claims, which he said could be driven from member-recruitment and publicity efforts.

“We understand they have the right to claim anything, but they have to substantiate it under local law before it can be verified.”

Before CAFTA launched, the AFL-CIO opposed the accord, calling it the “Wal-Mart of trade deals” and arguing it will fail to bring prosperity to Central America while undermining U.S. jobs.

“We believe the U.S. government is reacting without enough information from the AFL-CIO and the other unions,” Arias added. “We hope that under the consultation process the U.S. will carry out its due diligence and see that these claims are unsubstantiated.”

Arias doesn’t expect the investigation will strip Guatemala of its CAFTA duty-free benefits.

However, he conceded Guatemala’s legal system has weaknesses. “We don’t have strong institutions. We wish they were stronger but significant improvements have happened and there is a willingness to continue with them,” said Arias. The courts have been slow to resolve labor disputes due to lack of resources, not willingness, he stressed.

“Broadly speaking, we face this problem and I hope the consultations will yield more expedited action in complaint settlements,” Arias said. “I hope the government takes this seriously.”

Vestex has established a so-called “alternative resolution panel” to more quickly resolve labor complaints and help unburden the courts.

Apparel working conditions have improved significantly since Guatemala joined CAFTA as U.S. buyers demand that maquilas meet certain labor-quality standards before placing orders, Arias said. He added the country has a “code of conduct” of international manufacturing standards enforced by independent monitors to ensure all factories and subcontractors meet global labor requirements.

Still, there is always a bad apple in the barrel. “I cannot guarantee there aren’t isolated labor violations, but the great majority of the industry is compliant,” Arias insisted. “We would not have any work from the international brands if this was not the case. These [labor] claims need to be taken into perspective by sending people to Guatemala to validate what is true and what is not.”

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