Free Trade Zone Workers in Nicaragua Suspended until June

“Carlos” received a voice message over the weekend that left him confused and relieved. The audio from one of the union leaders of the Gildan Free Trade Zone, one of the largest companies of the textile sector in Nicaragua, said that the company decided to suspend operations and return until June 7 due to the Covid-19 crisis.

“We reached an agreement and they are going to start giving, from April 13 onwards, fifty percent of the salary to each worker as a donation from the company, because they allege that they have no materials or orders to continue working,” is heard on the audio.

For this man who for five years has worked for Gildan “it is a relief because we are not fired, but it will be hard to survive with just half the salary.”

Gildan, with more than 11,000 employees spread over three plants located in San Marcos, Rivas and Masatepe, had already announced on March 23 that it was suspending operations until after Holy Week, as a measure to prevent a large infection by the coronavirus and for the lack of raw materials.

In the message, “Carlos” was informed that he will receive 800 Cordobas a week (approx. 24 USD) until they return to work. “The company’s response was that they do not have money and that they will make that donation to us as a way to help us, so we’re not out on the street,” he explained.

Agreed Measure

The free trade zone sector signed a three-party agreement within the framework of the coronavirus pandemic at the end of March, which establishes, that to avoid contagions, as well as facing the reduction of production orders by brands or for lack of raw material, the companies will be able to: “grant permits with a percentage of salaries, provide advance payment on vacations, reduce working-hours and carry out remote work activities.”

The agreement that was endorsed by unions such as Sandinista Workers Confederation (CST) and the Jose Benito Escobar Workers’ Trade Union Confederation (CST-JBE) also contemplates “temporary suspension of employment contracts under article 38 of the Labor Code.”

In the Free Trade Zones throughout the country until February of 2019, there were a total of 123,853 people employed in 187 companies which operate under this system, according to the Nicaraguan Central Bank (BCN).

The Executive Director of the Nicaraguan Association of Textile and Apparel Industry (ANITEC), Dean Garcia, explained that Gildan is until now the only company that has implemented the temporary suspension of the contract.

“They are abiding by the suspension of work, as a measure not to permanently affect employment, but they will give them that donation, which is not established in the agreement,” he said.

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Garcia said that other companies are evaluating the return of work, but “the situation is getting worse, because they were waiting to see if after Holy Week product orders arrived, but there are none.”

“Some companies are evaluating to produce other types of products such as masks, gowns for medical personnel, plastic face shields and other supplies to face the pandemic,” said the ANITEC leader.

Layoffs began

The Covid-19 pandemic is impacting the free trade zone sector, where at least 2,775 layoffs are already reported, said Sandra Ramos, former union leader and founder of the Maria Elena Cuadra Women’s Movement.

Ramos said that the companies are applying different measures such as sending the workers on vacation or applying a group suspension, which implies affecting thousands of workers.

A woman worker in the Gildan free trade zone plant. Archive/Confidencial

“When a company suspends workers massively, according to article 38, they only receive a six-day salary. What is going to happen to them afterwards? How are they going to pay off their debts or buy food? Ramos asked in an interview on Channel 10.

The Japanese transnational Yazaki, stopped operations in western Nicaragua at the end of March to prevent the spread of coronavirus Covid-19.

The 10,000 workers of the free trade zone company, located in Leon, were verbally notified of the temporary cessation of work, during which they would receive 50% of their salary.

Another company that chose to suspend its work temporarily was the Las Palmeras free trade zone located the San Marcos highway, Masatepe. This company employs 300 people who are responsible for making pants.