Maquilas: Enslavers or Saviors?
By Kurt Ver Beek ’86, Director of the Semester in Honduras program

Our closets are full of the results of the new global economy. We can walk down an aisle in Walmart or Target and find tennis shoes made in Vietnam, an electronic keyboard assembled in China and a Tommy Hilfiger sweatshirt made in Honduras. And it’s not just t-shirts and VCRs—everything from the nails that hold together our houses to the cars we drive is being produced internationally. Is this good or bad? What are we to think about this globalization?

The “Pollyannas,” including transnational corporations and many economists, argue that globalization results in lower prices for consumers, bigger profits for corporations and stockholders and more jobs for the less developed countries (LDCs). They argue that we should buy the best quality product at the lowest price and that the “free market” will eventually raise everyone’s living standards. The "Cassandras," including trade unions and human rights organizations, claim globalization results in a loss of U.S. jobs as well as horrible working conditions and below poverty-level wages for LDC workers. They encourage us to boycott companies like Nike and The Gap and countries like Honduras and Vietnam that allow their citizens to be oppressed. Which of these perspectives is the right one?

As Christians we have the additional responsibility to be Christ-like consumers. When we buy a company’s products, we support them and share in the responsibility of how they treat their workers. The worker making our tennis shoes or computers, whether in the U.S. or abroad, is made in the image of Christ. She deserves to earn a living wage and to be treated with justice and respect. At the same time the company owners need to compete in a global market and make a fair profit. So what factors should we consider when we buy?

It was questions such as these that led me to coordinate a study of the maquila industry (also known as “sweatshops” or “off-shore factories”) in Honduras. The maquilas in Honduras largely make clothing—like T-shirts, jeans and underwear for companies such as Hanes, Levi’s, Victoria’s Secret and The Gap. The cloth they use is made and cut by machines in the U.S. and then shipped by boat to Honduras were it is sewn, packed and shipped back to U.S. stores. This same process is going on in many poor countries including Mexico, the Philippines and Vietnam.

Why Honduras?
Honduras is a very good place to look at the effects of global production. First, it is a country that badly needs jobs, especially ones that will help people get out of poverty. The per capita yearly income is $600 compared to $26,980 in the U.S. Half of the population lives on less than $1.00 a day—not even enough to buy their minimum daily food needs with nothing left for housing, clothing or medical care. While nearly everyone in Honduras works (there is no government unemployment or welfare program) 30%-40% of the workforce is underemployed and 84,000 young people join the work force each year. Second, the maquilas are already a powerful force in the Honduran economy. Honduras has over 100,000 maquila jobs—over 27% of the manufacturing workforce. The maquilas’ production is almost 30% of all Honduras’ exports. By studying maquilas in Honduras we can begin to understand the impact of buying a Calvin College t-shirt made in Honduras or another poor country.

Situation of Workers
Much of the bad press about the maquila industry relates to their treatment of workers: poverty wages, forced overtime, sexual abuse and child labor. Critics often attack the industry by comparing wages, hours and treatment to U.S. standards. Supporters of maquilas defend the industry by stating that their workers enjoy wages and treatment better than the legal minimums and often above national averages. In my study, I decided to look at two questions: first, how do maquila workers’ lives compare to those of a similar group of non-maquila workers and second, should we as Christian consumers be satisfied with the wages and treatment of maquila workers? (This research was partially funded by the Calvin Alumni Association.) To answer these questions our team interviewed a random sample of 270 maquila workers and 149 people who were applying for a job in the maquila but had never worked in one before. We then compared the two groups to see who was better off. The answers to those questions were thought-provoking.

We found four areas in which maquila workers are worse off than non-maquila workers:

1. Health: 41% of workers vs. 11% of applicants had had a health problem in the last month that affected their work. The actual health of maquila workers is probably worse since the sickest workers would have been fired or quit.
2. Crime: 17% of workers vs. 9% of applicants had been the victim of a crime in the last six months.
3. Education: only 8% of workers vs. 14% of applicants were continuing their studies despite the fact that 66% had not studied beyond 6th grade.
4. Unionization: 8% of workers vs. 11% of applicants (in their previous job) worked in unionized shops. This statistic also hides a more severe problem since many of the applicants worked as maids or in small shops which are never unionized but all of the maquila workers work in shops of 100 or more employees. Maquila managers will openly admit that any worker who starts to organize to improve their pay or conditions is fired despite the fact that this is illegal in Honduras.

We also found four areas in which maquila workers are the same or better off than non-maquila workers but still not treated justly:

1. Age and Gender Discrimination: 90% of maquila employees are under 30 and 63% are women. Companies openly discriminate in hiring, including putting ads in papers to recruit single, young, and sometimes adding “attractive” women. Maquila workers are not alone in this problem; this discrimination is legal in Honduras and happens in other industries as well but it is still not right.
2. Salary: workers earned an average of $149 a month ($6 a day) vs. $89 a month for applicants. While maquila workers earn substantially more than non-maquila workers do, if she has more than one child, she is below the Honduran poverty line—not able to meet her family’s basic needs for food, clothing and housing.
3. Hours worked: Maquila workers worked an average of 45 hours a week and for 46% of them, overtime was mandatory. Applicants worked an average of 49 hours a week and for 55% of them, overtime was mandatory. So while the hours worked were fewer and less often mandatory, forced overtime, which is illegal in Honduras, is still quite common.
4. Childcare: workers’ children were more likely to be home with their spouse (14% vs. 3%) and less likely to be alone (4% vs. 10%). But the fact that 4% of children were left home alone and that only one company sponsored a small daycare for over 100,000 workers demonstrates that there is still room for improvement.

We also found four areas in which maquila workers are better off than non-maquila workers—without any qualifications:

1. Age: there were no minors in our random sample of 270 workers.
2. Treatment: 93% of workers felt supported by their supervisor, only 8% reported any mistreatment in the last 6 months and 48% had received bonuses.
3. Support for and from family: 52% of workers gave $40-120 a month to their family vs. 18% of applicants. 30% stated that their relationship with their spouse/parents had improved since they started working in the maquilas, while only 5% said it had gotten worse.
4. Participation in Society: workers were slightly more likely to have voted (50% vs. 42%), more likely to feel that they can influence government (29% vs. 20%) and more likely to participate in sports regularly (22% vs. 6%).

Summary of Results
What do these results mean for our two questions: how maquila workers’ lives compare to non-maquila workers, and should we as Christian consumers be satisfied with their wages and treatment?

On the whole the maquila workers in Honduras seem to be a slightly better off than non-maquila workers. The maquila workers are worse off than non-maquila workers in the areas of health, crime, education and unionization. They are a little better off but still in unjust situations regarding gender discrimination, salary, forced overtime and childcare. And they are better off in regards to treatment, support to and from family and social participation. So maquilas aren’t all bad. Maybe they are the best option available in poor countries and we should stop criticizing them.

But of course it not that simple. We have to remember what we are comparing. My survey compared two groups. The first was non-maquila workers employed by small Honduran businesses which need to make a product they can sell to Hondurans who earn less than $600 a year and still make a profit. The second group was maquila workers employed by very large U.S. companies that sell their product to U.S. consumers making $26,000 a year. U.S. consumers seem to be both willing and able to pay a little more for a pair of jeans so that the workers can earn a fair wage and the company makes a fair profit. So, the question should not be whether maquilas are paying more than other local businesses but whether they are paying a just wage for all those who manufacture our products. Workers made in Christ’s image deserve more than $6.00 a day. But what can we do?

Option 1: Buy only MADE IN THE U.S.A.
One option would be to buy only products made in the U.S.A. This would allow us to be relatively certain that the treatment of workers producing our goods met minimum U.S. standards. There are two principal problems with this option. First, the company manufacturing in the U.S. is competing with non-U.S. companies, both in U.S. and in other markets, which are producing at much lower labor costs (see table). As a result the U.S.-made products will be more expensive, a price some in the U.S. may be willing to pay but which other countries probably will not. Second, while it is true that the U.S. needs good paying manufacturing jobs, it is also true that our brothers and sisters in countries like Honduras with extreme poverty and high unemployment also need decent jobs.

It is interesting to note a contradiction here. While U.S. companies argue that they need to produce in countries with lower wages to compete with cheaper imports, they are at the same time fighting to lower protections (such as taxes on imports and quotas) against these imports while U.S. workers are fighting for more. The reason the companies do not want more protection from foreign competition in part is because it makes them more competitive internationally, but also they have learned that if they also produce overseas—even after passing as little of the savings as necessary on to consumers, they can still reap much higher profits than producing in the U.S. That is why a GAP t-shirt, made in Honduras does not cost $5.00 less than one made in the U.S., and why Michael Eisner, CEO of Disney, made $205 million in 1996 (about $100,000 an hour) while Disney workers in Haiti were making 31¢ an hour.

Option 2: Boycott Honduran Products
Another option would be for all of us to boycott Honduran-made products until companies guarantee all maquila workers a living-wage. This is an attractive and fairly easy response but has serious side affects that Honduran workers can not afford. First, an effective boycott would cripple an already weak and poor economy. The maquilas provide 100,000 jobs, 26 percent of all manufacturing jobs and 27 percent of export earnings. Second, while wages in Honduras are about 80 cents an hour, they are only 49 cents an hour in Haiti, 20 cents in China and as low as 10 cents in Bangladesh. So if we were successful in pressuring Honduras to raise their wages to a living level, we can be certain that the maquilas would quickly move to another country that can provide cheaper labor. While focusing attention on abuses in a specific country may slightly improve conditions and wages, any dramatic changes, which increases costs for companies, will probably make that country less attractive to companies and ultimately wipe out jobs.

Option 3: Boycott Specific Companies
A third option would be to boycott specific companies, such as Hanes, The Gap, Levi’s and Victoria’s Secret, which are paying less than a living wage. The result of this sort of pressure is likely to be similar to boycotting a country. Hanes may increase wages but other t-shirt makers will continue to pay as little as possible. If successful, this pressure will improve conditions for Hanes workers but will make Hanes less competitive and decrease its profits and will do little for the millions of non-Hanes maquila workers around the world. One clear benefit from these two boycott strategies is that they do make the general public aware of the problem, which is the first step to finding a solution.

Option 4: Focus on the System
I believe that for wages and conditions to improve for the vast majority of workers, the U.S. and other consumer countries need to address the system of globalized production. The first step would be to establish voluntary minimum standards for wages and working conditions for all workers producing for the U.S. market. The wage standard could be determined based on cost of living and verified by independent monitors. Products meeting these standards would be allowed to advertise the fact by using, for example, a “NO SWEAT” label. Concerned consumers might pay a little more for these products but would have the assurance that the workers who produced them were treated justly.

After these voluntary standards had been tested and refined, the U.S. and other consumer countries could make tariffs and quotas dependent on these standards. In other words, products that met these standards would have lower tariffs and higher quotas than products that did not—providing an additional economic incentive to companies to improve treatment and wages for their workers. Improving wages and conditions for overseas’ workers will also help U.S. workers. If they are forced to pay a just wage to their overseas workers, U.S. companies will have less incentive to move production jobs overseas and will be less justified in threatening such a move against U.S. workers seeking raises or better conditions.

How can this happen?
Implementing these voluntary and then mandatory standards could happen tomorrow, but only if consumers apply pressure. The Clinton administration began drafting standards in 1997 after Kathy Lee Gifford was targeted for exploiting the Honduran workers producing her clothing line, but as public pressure waned, the initiative stalled. However, there is a growing movement on college campuses drawing attention to “sweatshop” production of campus wear (see recommended web sites). What is needed is quite simple (but not easy)—significant and sustained political pressure to push industry and the government to implement minimum standards for the treatment of any worker employed by a U.S. company. We need to insist on what is fair—fair profits for companies, fair prices for consumers and fair wages and conditions for workers. Wages and conditions that recognize that all workers are image-bearers of God and our brothers and sisters. I believe Christians, more than any others, should be at the head of such a movement.