Workers benefit from tripartite agreement in Nicaragua’s Free Trade Zones

Jorge Capelan, Nicaragua Solidarity Campaign, October 13th 2021

Free Trade Zones (FTZs) play a very important role in Nicaragua's struggle against poverty.  As distinct from most countries in the world, where FTZs are synonymous with terrible working conditions, no trade union organisation and very high levels of exploitation,  in Nicaragua they are seen as sources of well-paid and secure jobs.

In addition, they contribute hundreds of thousands of indirect jobs to the family, community, cooperative and associative economy that employs the majority of the population.
Nicaragua is a country that invests in free public health and education as rights for the entire population and also guarantees other basic services at affordable prices.

The social and productive stability of the country encourages FTZ companies to establish themselves in Nicaragua through agreements with the State and the unions, rather than being in a perennial state of war that affects their businesses.

Given that the country produces almost all basic foodstuffs for its population, the people, despite low salaries, receive much more for their income than the working class in the rest of the region.

In July 2021, after two and a half years marked by the 2018 failed coup attempt, followed in 2020 by the terrible hurricanes Eta and Iota and the pandemic, the total number of workers in the FTZs has returned to levels similar to those of 2017 when Nicaragua led Latin America in the economic growth tables.

Currently, the outlook is for a marked improvement as the global economy recovers from the pandemic. With forecasts hovering around 7% this year and 5% or more in 2022, Nicaragua is predicted to return to the path of economy growth.

In an interview Pedro Ortega, leader of the Central Sandinista de Trabajadores 'José Benito Escobar,' commented: "I believe that the FTZ sector has an enormous significance in the country's economy. The sector currently employs 127,000 workers; by the end of 2021 this is expected to rise to more than 130,000. We are recovering jobs lost due to Covid-19 related factory closures and brands were not sending work orders to the factories here in Nicaragua".

“Among the nearly 13,000 direct jobs expected to be generated in the coming months, 2,000 are in  cigar factories; 1,000 in call centres; 2,000 in new plants under construction in the department of Chinandega, and  3,500 in car parts factories.   The export predictions for the FTZs this year are around US$2.9 billion.”

"In Nicaragua, since the government of Commandant Daniel Ortega took power (in 2007), the FTZ sector has constantly consolidated and developed." says Ortega, recounting the history of conflicts that the working class has long had with the FTZ companies.”

“These companies began to establish themselves in the country as a result of the 1990 electoral defeat [of the Sandinistas] and the oligarchy's attempts to impose a neoliberal regime on the country until 2006.”

"In the FTZs, with the neoliberal governments, the rights of the workers were violated because businessmen made and unmade the laws of Nicaragua, and those governments never cared about workers’ rights. “

“When Comandante Daniel Ortega came to power, we held a meeting with him a month before his inauguration. The Comandante listened to the workers, especially when we told him that the government should pay good attention to FTZ sector because of the violation of the social rights of the workers due to the physical maltreatment on the part of the foreign officials of these companies", explains the union leader.

"In fact, with the government of Commandante Daniel, we proposed a social dialogue. Subsequently, we worked with foreign companies. The Ministry of Labour also worked to ensure the dignity of both women and men working in these companies. Through the training of employers and workers together, I believe that the Ministry of Labour also contributed to respectful labour relations, as well as the programmes of the International Labour Organisation, through a project called ' Better Work’, which contributed  to consolidating social dialogue," explains Pedro Ortega.

"Nicaragua has been recognised by the ILO for this type of social dialogue with the FTZ sector. For us, this dialogue has led the country to greater development and more stability for workers.

Through social dialogue and tripartite agreements [companies, trade unions and the State] we have eradicated some bad employment practices and we could say that there are already respectful labour relations in which the trade unions represented in the company are taken into account and defend the interests of the workers.” he adds.

The FTZs are an example of the Sandinista government's support for a comprehensive and dialogue-based approach. For example, in relation to the failed coup launched by the oligarchy and sectors of the recalcitrant right in 2018, Ortega is clear in stating that "here the workers in the different FTZ companies did not stop working despite the fact that they had to go through road blocks that became death traps.  Many women were touched up and sexually harassed by people who when they were not drunk were taking drugs.

"The working class of this FTZ sector also rejected these individuals. Proof of this is that in a textile company in Masatepe the workers themselves organised to obstruct criminal groups who wanted to stop the company [functioning].  The workers wanted to work and, effectively, the coup leaders were removed with brooms and balls" of string. After this expression by the workers, in the other FTZ companies in the country, we could say that no company stopped despite the situation and the chaos that occurred", he explains.

“Only during the year of the failed coup were there delays and some factories were fined for not meeting deadlines for different brands from the United States, but the workers were always producing.”

Regarding the effect of hurricanes Eta and Iota, Ortega explains that this sector was not hit because the factories in the FTZ industrial parks, especially in the Pacific, are in higher areas.

In some places there were attendance problems because the houses of some workers were flooded by constant rain, but this did not affect any industrial plant on the Pacific. However, in Kukra Hill, [on the Caribbean Coast] where there is an African palm  FTZ, there were problems with the rivers and also some African palm were blown over and  there were delays in production, but there were no economic losses in this sector,’ he explains.

Worker at the Korean owned Handsome Nica, in Mateare.

To confront the Covid-19 pandemic, the government, the unions and the companies approved a biosafety protocol that has guaranteed stability for the brands to continue sending orders to the country since the 127,000workers are protected.

Ortega says that due to the hurricanes and the Covid emergency some 9,500 jobs were lost and exports decreased by almost 20%, but today, in September 2021, all the lost jobs have been recovered and around 7,000 additional jobs have been generated. Exports, up to July of this year, increased by 45% compared to the same month last year.

Regarding the future of the FTZs, Ortega says that it is encouraging that, "in spite of the political situation that the government of the United States has against the people of Nicaragua, the dialogue that exists between the FTZ investors, the workers and the government has made it possible for us to work together for better social gains for the workers".