Capitalism in the raw

The Economist

Labour rights and free trade with the United States

Every weekday, Dora Amelia Ramos, a single mother, leaves her breeze-block home in a village south of San Salvador at 6am to go to her job at a maquila factory making clothes for export from imported cloth. Earning the minimum wage of just over $5 a day, she is perched on one of the lower rungs of the world economy. But she counts herself lucky to have a job at all. That is because she is a trade unionist.

This year people like Ms Ramos will be the object of fierce attention in Washington, DC. Last month El Salvador and three other Central American countries concluded talks for a free-trade agreement with the United States. This week American officials tried to wrap up a similar deal with Costa Rica, the isthmus's richest economy. Once that is done, the Central American Free-Trade Agreement (CAFTA) will go to the countries' respective congresses for ratification.

In the United States CAFTA is controversial. Lobbyists for some textile and sugar producers oppose it (see article). Their aim is to protect their own uncompetitive businesses. To do so, they will pick on labour rights.

The trade agreement requires countries to enforce their own labour laws, and to "strive to ensure" that those laws uphold international labour standards. For opponents, such as Sander Levin, the senior Democrat on the House of Representatives' Ways and Means Committee, this is far too weak. His committee will scrutinise the treaty, probably in early summer. He argues that labour laws in Central America are "way off the mark compared to international standards". The treaty will be "politically unsaleable to workers in the United States who have to compete with suppressed workers in other countries." Mr Levin threatens to throw out CAFTA unless "meaningful labour agreements" are added, by which he means fines and penalties for breaching agreed standards.

His fears are echoed by opponents in El Salvador. They claim an influx of new maquila jobs will lead to a further deterioration of working conditions. Ms Ramos says these are already bad. In her last job, at Confecciones Niños, a textile factory in a free-trade zone owned by a former general, she says she was often denied drinking water, bathroom visits and time-off to see a doctor. Her wages were paid late, and overtime not at all. She adds that when she tried to form a union, she was threatened with the sack and blacklisting. All of this breached the country's labour laws.

Ms Ramos's experience is far from unique, according to recent reports by Human Rights Watch, a New York-based group, and the National Labour Committee, in Washington, DC. Some Salvadoreans agree. There is "a total neglect of labour rights by the state here," says Carlos Aristides Jovel, a labour-court judge. The independent ombudsman for labour rights complains of a "lack of political will" to enforce them. Workers in maquila plants often lack contracts, say the critics.

Individual abuses may exist, says the government, but it disputes such general criticisms. Jorge Nieto, the minister of labour, brandishes a book-length certificate from the International Labour Organisation to prove that the country's labour laws do meet international standards. He disputes the ombudsman's claim that government labour inspectors are too few (there are 62, for a workforce of 2.6m) and too corrupt.

El Salvador is one of Central America's more modern economies. Conditions in poorer Guatemala and Honduras are probably worse. But the wider question at stake is how to remedy the abuses, where they exist. Better enforcement of national laws is important. Supporters of CAFTA also argue that the trade accord will bring more investment and more jobs to Central America, driving unemployment down and wages up and thus encouraging bosses to treat their workers as assets rather than pawns. Is that what the opponents want to prevent?