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labor As El Salvador Increases its Minimum Wage, Big Business Increases the Pressure on Workers

After years of struggle, El Salvador workers have won a victory with a new minimum wage that has made an enormous impact in people's lives. Corporate power has not given up, preferring to pay starvation wages they are attempting to roll back the gains made.

"Maquila" workers are amongst hundreds of thousands of Salvadorans who received in an increase to their minimum wage this past January.,Equal Times

The municipality of Santo Tomas, El Salvador, absorbs the impacts of the maquila industry like a human body. Its daily routine ebbs and flows with the textile production schedule like blood through veins. At 06:00, the 37 bus bulges with women from Santo Tomas en route to work in the maquila zones of San Marcos and Olocuilta. At 17:30, the buses are full again, taking workers back home.

El Salvador’s maquila – or free-trade manufacturing – sector employs more than 10 per cent of the country’s private sector workforce. In 2014, this amounted to over 74,000 people, the majority of which are women, bringing in US$2.4 billion annually in export sales, according to IPS News.

Recent World Bank data notes the positive impact maquilas have had on El Salvador’s economic growth, but in Santo Tomas, the bodies of workers absorb other kinds of impacts. Sonia Sanchez, a renowned environmentalist in Santo Tomas, watched as her sister’s body failed her, piece by piece, after 20 years of repetitive motion. “First, it was surgery on her shoulders. Then her hands. Then she had to get her tonsils removed – they were clogged with lint,” Sanchez explains.

Given the chasm between their salaries and the cost of living (until recently, the average salary for a textile worker in El Salvador was US$211 per month; the estimated monthly cost of living is about US$590) the women of Santo Tomas have to be inventive to survive. But a historic increase to El Salvador’s minimum wage in January could improve their lives, along with the additional 235,990 employees in sectors covered by the raise.

Since the beginning of this year, the salaries of maquila workers have increased by nearly 40 per cent, from US$211 to US$295 per month, while coffee and cotton workers have seen their wages more than double, from US$98 to US$200 per month. In addition, other rural agriculture workers have seen their pay rise to US$224 per month, while employees of commerce, service and industries now receive a minimum of US$300 per month.

The new sectoral minimum wages – which still fall short of the cost of living in El Salvador and only apply to the minority of workers with formal jobs – was only possible thanks to years of organising in workplaces and on the streets by trade unions, and months of heated debate in the national Minimum Wage Council.

Nevertheless, the wage increase has provoked a strong backlash from what has been described as El Salvador’s “rabidly anti-union private sector”, with business lobbies issuing legal challenges, factories firing workers and other businesses threatening to relocate to countries with cheaper labour costs.

New minimum wage – and the immediate blowback

The minimum wage in El Salvador is one of the lowest in the Central America region, resulting in millions of working poor. Families that are able to stay afloat do so thanks to other income sources – largely remittances from the estimated 2.8 million Salvadorans living and working abroad, about 90 per cent of which are in the United States. According to Time, Salvadoran migrant workers sent US$4.6 billion back home in 2016, accounting for 17 per cent of El Salvador’s GDP and producing “one of the highest remittance rates in the world”.

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With nearly three million Salvadorans, slightly less than half of the population, living below the poverty line, it’s little wonder that its workforce is extremely vulnerable to exploitation. According to Estela Ramirez, general secretary of the textile workers’ union Sindicato de Trabajadoras y Trabajadores Sastres, Costureras y Similares (SITRASACOSI), wages in El Salvador have remained low because the mechanism for changing them has been controlled by the very people who benefit from paying workers so little. The Minimum Wage Council had long been responsible for producing proposals for wage increases, which the Ministry of Labour then approved or rejected, but it was previously composed of government representatives, private enterprise and pro-business trade unions.

After years of pushing for fairer representation on the Council, last year El Salvador’s independent trade unions finally achieved it. On 1 June 2016, the Council, led by the private sector umbrella group Asociación Nacional de la Empresa Privada (ANEP), submitted a recommendation for a 15 per cent wage increase of 5 per cent annually over three years. The Minister of Labour Sandra Guevara rejected the proposals, saying they violated human rights. But the atmosphere changed in December 2016 when increased trade union participation impacted on the routine elections of representatives to the Minimum Wage Council. As a result, a Council majority voted in favour of a substantive wage increase for the first time ever.

The new sectoral minimum wages came into force on 1 January 2017 and are currently valid until 31 December 2017; after this point the Council has agreed to review it. But despite the strong support of the government, the blowback from the business sector has been immediate.

According to the news website ContrapuntoANEP threatened legal action to stop the wage increase, while the Sociedad de Comerciantes e Industriales Salvadoreños (SCIS, or the Salvadoran Commerce and Industry Society) estimated that 20-30 per cent of workers in the affected sectors would be laid off as a result of it. In January, four companies even informed the leading industry association Cámara de la Industria Textil, Confección y Zonas Francas (Camtex) that they would probably leave El Salvador all together rather than absorb the increased costs.

But some businesses took it a step further: a large maquila, Textiles Opico, or TexOps, fired more than 70 workers after the wage increase was announced. In addition, TexOps –which produces clothing for at major sportswear brands including Adidas, Nike and Reebok –effectively lowered wages for all remaining workers by terminating their bonuses. In a mediated meeting on 20 January 2017 between TexOps and the textile workers’ union SITRASACOSI, TexOps representatives justified the lay offs by saying “the way this increase was approved makes it clear that El Salvador is a risk [for investors].”

On 9 February, the Ministry of Labour ruled that TexOps had indeed committed three infractions, and ordered it to comply within seven days or incur penalties but Ramirez of SITRASACOSI says the Ministry is yet to do a follow-up inspection. The Ministry of Labour was not available for an interview while TexOps did not respond to interview requests, but in a government document from the 9 February meeting, the company denied all three infractions.

As the TexOps debacle highlights, setting a new minimum wage is one thing, but implementing it is quite another. In January, the Ministry of Labour said that it was aware of 33 companies, mostly in the services sector, that were not complying with the new salary. But Ramirez is skeptical that anything will be done. “The Ministry doesn’t want to take on multinationals,” she says.

The struggle continues

As of 1 May, five months after the increase was introduced, only about 20 per cent of corporate expenses in El Salvador go to salaries, according to economist Saira Barrera. “The defense of starvation wages by private enterprise never ceases to amaze me,” says journalist Ileana Corado of Contrapunto.

Now the struggle is in the courts, where ANEP is arguing that the election of a pro-worker Council in December 2016 was illegal. The court has not yet announced a verdict but ANEP representatives have said they will “take all actions in national and international arenas to prevent the Ministry of Labour from continuing to manipulate and impose its will, through electoral fraud, in the heart of the Minimum Wage Council”.

For Claudia Liduvina Escobar, the general secretary of the Sindicato de Trabajadores y Trabajadoras del Ministerio de Trabajo y Previsión Social, the union of workers at the Ministry of Labour, the private sector has been relentless in its attempts to undermine the success of the minimum wage raise. “Enterprise has tried to make sure the increase looks bad. They’ve carried out public relations campaigns and fired people to give the population the impression that the increase is radical and harmful,” she says.

Nevertheless, the impact of the increase cannot be denied. “An average of US$80 a month more is huge for any worker. It’s a truly substantive increase, and there has been a lot of receptivity on the part of the working class,” she says.

According to Ulises Rivas, an airport maintenance worker who was involved in the campaign to increase the minimum wage through his role as general secretary of SITTEAIES, the airport workers’ union, the backlash against the minimum wage is rooted in something deeper. “In this country a raise like this had never happened, and companies basically used to pay whatever they wanted. This is something that changes the social status of workers,” he says.

An obvious remaining problem is that the wage increase, while requiring dogged work and creativity to pass, is not nearly enough. Nearly 50 per cent of non-agricultural jobs in El Salvador are informal and this class of worker has no protections – no maternity leave, no sick pay and no minimum wage. Even for those who are covered by the new wages, most salaried workers remain in poverty.

In the face of huge resistance to the improvement of workers’ rights, for independent trade unionists like Ramirez, hope lies in the workers. “The weakness of the labour movement here is that we don’t have funds to pay for lawyers. We have to study the law ourselves,” she says, adding that this self-education somehow must happen while working day jobs, raising families and organising workers.

Ramirez grew up during the Salvadoran civil war from 1980 to 1992 in a family divided between the army and guerrillas. Even now she can’t visit some family members who live across gang divides. Union organising drives her life; she quotes International Labour Organization (ILO) conventions like religious verses. “I have the opportunity to be useful,” she says of her union work. “My life has an impact, my passage through this earth has an impact. This is something spiritual, and life pays you back for what you do little by little.”

Danielle Mackey is a journalist based in El Salvador and New York.