MEXICO CITY – Central America’s apparel workers are looking to establish a roughly $20 million fund to help compensate factory operators who lost their jobs during Covid-19, local union sources have revealed.
“We are initiating a regional campaign to establish a dialogue mechanism with the brands that produce in Central America to assume their social and humanitarian responsibility with workers who lost their jobs,” Miguel Ruiz, president of the Coordinadora Regional de Sindicatos de Maquila, told Sourcing Journal. “We want to create a fund with 2 percent of the profits brands have from their exports.”
He noted unions are still calculating the amount they will seek and that the fund’s size could be revised higher or lower. Based on $6.8 billion in U.S. shipments last year and brands’ 10 to 15 percent profit margin, the fund could top $20 million, said Alejandro Ceballos, president of Guatemala’s apparel trade lobby Vestex. He noted, however, that he would not be surprised if it ranged from $20 million to $50 million.
That’s a far cry from the $1.7 billion the Coordinadora and its other campaign partners, the AFL–CIO, the Maquila Solidarity Network and human rights group Workers’ Right Consortium, initially told reporters they were contemplating to compensate thousands of operators given the axe when plants halted production in March.
That sum included back wages and future compensation, should a more severe recession ensue. But the current amount “has been adjusted to a new reality,” said Ruiz, adding: “Back then, many factories were closed and there was much more anxiety about the potential losses the pandemic could bring.”
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Brands and manufacturers such as Gildan, Tegra, Fruit of the Loom, Nike and Adidas (to mention just a few manufacturing in the CAFTA-DR trading bloc), have a “shared responsibility” with the roughly 200,000 Central American workers who lost their jobs, most of whom have not yet been properly compensated, Ruiz insisted.
In Honduras, for example, he claimed most operators have not been paid for the time they were off during months of closures.
“In Honduras, there are 25,000 workers employed by Gildan and Tegra that were suspended and were not paid their salaries,” Ruiz alleged. We want to sit with [the brands]. We don’t have an appointment yet but hope to meet with them as well as the authorities.”
The union boss acknowledged that while brands should pay workers, local governments must also do their part to ensure compensation pledges are fully met.
In El Salvador, the government forced a strict quarantine that punished brands that continued to sew, leaving them with no option but to shutter their mills.
“We want the negotiations to be bi-partite and tri–partite to determine a fair amount that workers should receive,” Ruiz said.
In Nicaragua, losses have also been smaller than expected. Initially, 50,000 jobs were expected to be lost but 30,000 were quickly recovered as factories were able to shift into personal protective equipment (PPE) manufacturing, according to Ruiz.
Sergio Chavez of the Maquila Solidarity Network in El Salvador, said Grupo Las Americas, a regional employers’ federation representing Gildan, Tegra, Levi’s, Adidas and Under Armour, among other labels, has expressed interest in participating in the negotiations. He noted, however, that it was too early to say whether any of these brands will actually donate money to the fund.
A top Tegra executive said the firm “was just made aware” of the fund but declined further comment. Grupo Las Americas and Gildan did not return messages seeking comment.
Ceballos said fashion trademarks are unlikely to help and noted local governments should take care of their workers.
“The brands won’t help. They are having a really hard time as it is,” Ceballos said. “This is really hard for everyone but the governments are the only ones that can do something.”
On the upside, Central American exports are gaining traction and losses don’t appear to be as extreme as the 50 to 70 percent originally estimated. Exports look set to hover around $4 billion this year, down from $6.8 billion in 2019, Ceballos concluded.