El Salvador: Workers win big minimum wage rise

March 10, 2017
A Salvadoran Textile Industry Union protest outside the San Bartolo Free Trade Zone on March 1 against the sacking of garment workers after the country's minimum wage was raised.

Workers in El Salvador won a big rise in the minimum wage on January 1 — in some cases doubling their pay.

But before they had time to celebrate, the multinational companies who thrive on the country’s still-low wages counterattacked with mass layoffs, judicial manoeuvres and a bid to undermine the eight-hour day.

“With the increases in the minimum wage, which are absolutely historic, we delivered an enormous blow,” said Estela Ramirez of the Textile Workers Union, SITRASACOSI.

“Now part of their campaign is to fire people, to carry out a terror campaign that businesses will leave and people will be without work. I think that this year will be one of enormous struggle, and we hope to have the support of our international allies.”

How the rise was won

The National Minimum Wage Council, a regulatory body made up of government, labour and private sector representatives, sets minimum wages in El Salvador’s private sector.

After the left-wing Farabundo Marti National Liberation Front (FMLN) won the presidency in 2009, the possibility emerged that labour and the government could vote together against the private sector on the wage council for the first time in the country’s history and bring some long-overdue relief to working families.

But union representatives had, for decades, been controlled by business interests and were notoriously corrupt. The depth of their betrayal was widely revealed last June when labour representatives sided with big business to approve a paltry minimum wage rise rather than the government’s much heftier proposal.

Under the FMLN government, the Ministry of Labour has remained relatively conservative. Due to the continuing power of the country’s oligarchs, the FMLN has trodden carefully.

However, outrage from large swaths of the population over the council’s decision gave new Minister of Labour Sandra Guevara the courage to hold new elections for labour representatives, opening up the process to public and private sector unions and ensuring a level of transparency that had never existed before.

The progressive labour movement agreed on a common slate of candidates, and won.

Seven years ago, recognising the historic opportunity the FMLN’s victory represented, progressive and left unions began to organise broad-based federations based on a shared class interest that would allow them to compete with the existing representatives.

The new elections to the Minimum Wage Council created the opportunity they had been waiting for.

The council moved quickly to approve a new minimum wage that took effect on January 1: $300 a month in commerce, service and industry; and $224 a month in rural agriculture.

The largest rises came in the maquila or textile industry, notorious for low wages and difficult working conditions, where the minimum wage rose nearly 40% from $211 to $295 a month, and for seasonal coffee and cotton pickers, who will see their wages more than double from $98 to $200 a month.

Employers respond

Though the hike merely brings El Salvador on par with neighbouring Honduras and Guatemala, business is not accepting the change quietly.

“At first the reaction was one of surprise,” said Wilfredo Berrios of the Salvadoran Union and Social Front. “Then it was recalcitrant and miserly.”

The blowback includes judicial challenges, threatening to close factories and proposing their own labour “reforms” that would undermine the wage rise, specifically in the textile maquilas and call centres.

Both sectors have become very important in the Salvadoran economy. Throughout the 1990s and early 2000s, right-wing governments and international financial institutions like the International Monetary Fund decimated the country through privatisation and attempted to create an export-oriented economy dependent on foreign investment.

Multinational corporations seeking low wages dominate the textile sector, which makes up 46% of El Salvadoran exports and employs more than 73,000 workers. The industry boasts that it makes up nearly half of all manufacturing jobs in the country; manufacturing overall represents 22% of workers in the formal sector.

Factories run in large part by Salvadoran, Taiwanese and Korean owners produce for brands like Adidas, Walmart, and Hanes. Fruit of the Loom is the largest single private-sector employer in the country, employing an estimated 12,000 workers directly across four of its own plants, and thousands more through contractors.

Call centres are a newer phenomenon, although they have grown exponentially by taking advantage of the influx of English-speaking deportees from the United States. As some of the largest private sector employers, maquila and call centre owners do not hesitate to throw their weight around.

Eleven-hour day?

Within weeks of December’s minimum wage victory, the private sector renewed its push to “flexibilise” the eight-hour day. Ramirez said this proposal was previously introduced — and defeated — in 2011.

The “compressed week” proposal would change El Salvador’s Labour Code to allow employers in textiles and call centres to institute a four-day week with 11-hour shifts.

Ramirez and SITRASACOSI say this schedule would functionally eliminate overtime pay, leading to a loss in monthly earnings and jeopardise other rights enshrined in the Labour Code, including paid holidays, which are based on an eight-hour day.

But they are most concerned about the physical strain that an extended workday would push onto an already overexploited labour force. The change would also fall hardest on women, who are usually responsible for most of the domestic work in the home.

It is unlikely that flexibilisation of hours would be confined to textiles and call centres, Ramirez said, calling this first attempt “a pilot program.”

Employers have also pushed back against the minimum wage victory in and out of court. The National Association of Private Enterprise, the country’s main business lobby, challenged the election of the labour representatives to the Minimum Wage Council and asked the Supreme Court to overturn the rise.

A number of large businesses announced layoffs, blaming the wage rise. SITRACOSI members said Textiles Opico, which produces sports apparel for Nike, Adidas, Under Armour, Levi’s, GAP and Reebok, among others, used the new minimum wage as an excuse to sack more than 80 workers in one day, among them many union leaders.

[Luke Walsh-Mellet is a solidarity activist currently based in El Salvador.  This is an edited version of an article first published on Labour Notes.]

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