Reports from the Economic Front

a blog by Marty Hart-Landsberg

Corporate Globalization Drives Down Third World Wages

Opposition within the United States to approval of a fast track mechanism and its use to ensure passage of new trade agreements has, appropriately enough, focused on the negative consequences of these agreements for U.S. workers.  However, it is important to remember that third world workers also pay a heavy price for contemporary capitalist globalization dynamics.  The experience of workers in the Central American countries of El Salvador, Guatemala, and Hondoras are a case in point.

As a Americas Blog post notes, approximately 350,000 workers are employed in the maquiladora industry in these three countries: 80,000 in El Salvador, 150,729 in Guatemala and 120,000 in Honduras.

The maquiladora industry, is by definition, export oriented, and these workers are largely employed by multinationals such as Fruit of the Loom and Hanes to produce apparel for the U.S. market. In fact, Central America trails only China and Vietnam as an exporter of apparel goods to the the United States.

As the following chart shows, the daily minimum wage for these maquila workers is quite low, averaging only 13 percent of the U.S. federal minimum wage.

Because of the intense competition generated by the logic of corporate globalization the governments in countries like Honduras, Guatemala and El Salvador are continually pressed to offer leading multinational corporations ever lower business costs.  For labor-intensive industries like apparel, that means wages.  As the three following graphs show, national policies in these countries is producing a widening gap between daily minimum wages in the maquiladora sector and in the non-maquila manufacturing sector.



A study done by the Maquila Solidarity Network highlights the inadequacy of maquiladora minimum wages.   As the following chart shows, the average maquila minimum wage paid in these three countries is only 37 percent of the cost of a basic basket of consumer goods and services (MBCG).


New trade agreements designed to further integrate other low wage countries into the corporate structured globalization process will only intensify this national competition for foreign investment, leading to worsening living and working conditions for most workers.


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