Bolivia’s already dwindling textile industry could take a huge hit as the sector is at risk for losing 55,000 workers because of a new, substantial wage increase.
Jesus Acosta, CEO of Bolivian Textile Conglomerate COTEXBO, said these workers could be displaced as a result of the government’s recent decision to raise the minimum wage by 20 percent and the basic salary by 10 percent, according to Bolivia’s Erbol. The increase is considerably higher than the 6.5% inflation rate in 2013.
Acosta explained that there are 15,000 business owners in the sector, and medium-sized companies employ around 100 workers and smaller enterprises employ 25 or less.
If the government continues to increase salaries, Acosta said, Bolivian textile companies could start to disappear because of an inability to cover costs.
Textile and apparel exports from Bolivia have been declining since 2010, dropping 26 percent between 2010 and 2013, due in part to the country’s loss of its preferential trade treatment with the U.S. under the Andean Trade Promotion and Drug Eradication Act, which expired on July 31, 2013.
Bolivian President Evo Morales announced the 20 percent minimum wage increase last month and cited economic growth as the reason for the raise. The minimum monthly salary for public and private sector workers will go from 1,200 bolivianos ($174) to 1,488 bolivianos ($215).