Guatemala has denied U.S. claims that it employs minors and promotes forced labor in its apparel industry.

Separately, the Central American nation is failing to meet a U.S. Trade Representative and AFL-CIO enforcement plan to improve its labor standards as part of a 2011 inquiry highlighting poor conditions, said the AFL-CIO’s local director Stephen Wishart.

His comments came after Guatemala enacted its new Employment Conservation Law in February which Economy Minister Ruben Morales said will improve labor compliance and boost foreign investment by extending maquila tax breaks for 10 years. The action comes as other Central American countries are jockeying for more U.S. sourcing business.

“Forced labor was eradicated 10 years ago and the garment industry does not employ minors,” said Karin de Leon, executive director of the Central American – Dominican Republic Apparel and Textile Council. “If they [any factory] are found doing this, they will lose their production orders.”

Her comments follow the U.S. State Department’s “2016 Trafficking in Persons Report” in late June citing Guatemala, Vietnam, Jordan, Russia and Chile for failing to tackle forced labor and human trafficking.

Executives at leading apparel trade lobby Vestex said the report focused on Guatemala’s agriculture sector and was vague and subject to different interpretations regarding the apparel industry. They emphasized all for-export garment factories meet its code of conduct and fair labor standards guidelines on top of any U.S. and international-brand requirements.

Ronaldo Figueroa, who leads Vestex’s labor chapter, said the Central American country’s 178 apparel factories, 54 textile mills and 150 accessory producers shipping $1.6 billion worth of goods to the U.S. meet the International Labor Organization’s standards and don’t employ minors.

But he conceded that child labor may be present in the informal market, which accounts for 85 percent of Guatemala’s economy, though combating that trade is the government’s job.

Figueroa said Guatemala’s New Employment statute also introduces tougher occupational health and safety regulations to raise them to ILO levels.

“The goal is to have zero accidents in our plants” and prevent ailments from factory pollution and overheating, Figueroa noted, adding that 147 garment factories are adapting to the new provisions, though they will take some time to implement. He said 80 percent of Guatemalan maquilas fail to meet ILO’s highest occupational health standards.

“There are many Guatemalan plants with similar risks as Bangladesh,” Figueroa conceded, adding that the social responsibility measures should also help the state win new sourcing business. But “we are modernizing our legislation” to stand apart from Bangladesh and other countries with worse labor profiles, he added.

Despite the actions, Wishart insisted forced labor still haunts the clothing industry — though he noted he hasn’t heard of any child labor claims.

“Oftentimes, workers are forced to continue working after they finish their eight hours to meet their production quotas and are only paid wages for eight hours,” said Wishart, adding that Guatemala is failing to meet the USTR’s 18-point enforcement stemming from a 2008 AFL-CIO and six Guatemalan trades unions’ suit claiming the government failed to comply with the Dominican Republic-Central American Free Trade Agreement’s labor chapter allowing workers the right to free association, decent wages and protection from employer violence and intimidation.

Guatemala is meeting some of the plan’s requirements — notably that it hires more labor inspectors and that it creates a special garment unit to ensure firms meet labor court orders but inspections remain weak while the enforcement unit is understaffed, Wishart claimed.

“We have seen no significant improvement,” he said. “There are still many outstanding court orders” to enforce workers’ suits.

Crucially, manufacturers continue to shutter plants without paying workers’ severance or back wages. Maquila owners frequently deduct social security payments but don’t pay their contributions, robbing millions from operators while the social security administration fails to address any abuse claims, Wishart said.

The independent panel overseeing the case will likely give Guatemala an extension and new recommendations to meet the enforcement plan when it rules on the matter in September. Meeting the plan is key to helping Guatemala avoid a $15 million fine and keep investment from fleeing the country.

Figueroa countered progress has been made, with the Labor Ministry recently increasing the number of inspectors to 270 from 180 and stepping up inspections as part of the special unit. He added maquilas are now inspected five times a year while the labor court is improving and hastening enforcement as much as 50 percent, compared to a few years ago.

Meanwhile, Morales said the government will raise the Technical Training and Productivity Institute’s budget by 20 percent annually to introduce new training programs for workers in the textiles industry. By 2017, he plans to expand state budgets to help Guatemalan firms participate in more international trade fairs and build small-and-midsize development clusters.
Figueroa said the private sector invests $92 million in worker training and related activities annually while INTECAP’s contributions have lagged in recent years.