MEXICO CITY – Central America’s labor woes are deepening, encouraging countries to pursue reforms to hasten court decisions and improve standards, according to experts.
Their views come as Guatemala continues to bicker with the U.S. over alleged failures to improve labor enforcement as a seven-year dispute moves to the next phase in an arbitration process.
Meanwhile, other cases are emerging in Honduras and the Dominican Republic, according Stephen Wishart, regional head of U.S. labor federation AFL-CIO.
“There is another complaint in Honduras,” he said. Like Guatemala, it stems from a lack of freedom of association or collective bargaining in the flagship textile and apparel sector. “The U.S. has just issued its report and given Honduras one year to develop a work plan and remedy the situation.”
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The Honduran ordeal involves several dozen companies including Hanes and Gildan, which own manufacturing operations in the nation. Wishart claimed Hanes has illegally fired workers seeking to unionize (though it has rehired some) while Gildan continues to use so-called pactos colectivos (collective agreements) that allow unionizing but are led by management.
Gildan and Hanes did not return calls seeking comment.
The Dominican Republic is also under scrutiny with textile workers at Joane Dominicana flagging similar abuses, according to Geoff Herzog of the AFL-CIO’s Santo Domingo affiliate.
Wishart noted Costa Rican labor unions are voicing abuse concerns that could prompt the union to offer its support and eventually pursue a claim.
According to Wishart, all Central American countries except Nicaragua and El Salvador are facing labor violations linked to workers’ inability to form unions, poor working conditions and low wages. He emphasized the court system is notoriously slow and corrupt with disputes taking years to be solved, if at all. Employers take advantage of lax regulations to “blatantly violate the law,” he claimed.
Most cases are in the textile industry but also involve staff at ports shipping goods north of the border and those in the agriculture sector, according to Wishart.
Aware of the problems, Honduras and El Salvador are moving to amend so-called procedural labor codes to speed up court decisions.
Next month, Honduras is expected to table a bill to fast-track court decisions by a third, according to Fernando Garcia, an International Labor Organization director in the region.
The move appears timed with the U.S.’s Guatemala complaint, which could trigger a $15 million fine if the country does not overhaul its labor regime. Like Guatemala, Honduras could also lose export benefits under the CAFTA-DR free-trade deal with the U.S., just as it is battling with cutthroat competition from Vietnam.
In El Salvador, a similar reform is poised to win approval later this year, Garcia said, adding that the bill would force companies to provide oral (instead of written) defenses in court hearings to more rapidly settle suits. Courts will also be able to set deadlines for companies to pay sanctions and will have specialized – instead of general – judges to handle labor suits.
According to Garcia, Costa Rica and the Dominican Republic are mulling similar reforms that could be enacted in the medium term.
Furthermore, Guatemala, El Salvador and Honduras are working to pass legislation requiring maquilas to guarantee worker salaries if they go bankrupt, Garcia said. They are also looking to force firms to establish special funds to handle such payments.
Garcia said enforcement of other laws – such as those involving minimum salary or social security contributions – has improved. However, he noted overtime, vacation or other compensation, in addition to informal payment continue to fuel complaints.
Asked what’s the most lawful regime, he said Costa Rica leads the pack, followed by Panama, Dominican Republic and the other five CAFTA-DR members.