September 25, 2007

"LAST WEEK ALL OF A SUDDEN THE NEEDLE went right through me fingernail. But you can't use a thimble-it would hold you back." Women who work in Jamaica's "free trade zone" export assembly factories were meeting in a small house where four families of mothers and children share a common kitchen. "Today I didn't make my quota because I was feeling sick, so I'll have to work all day instead of half on Saturday to make it up." "The minimum wage [currently equivalent to $15.38 daily] just covers the basics, like flour, cornmeal, rice, and a little sugar and milk for the children. You have to work a lot extra to pay your bus fare and the rent, or if you expect to eat chicken once in a while." "You can't be too old, or too tired, and especially you can't get pregnant. If they find out they fire you, but they wait until 3 pm on the last day of the pay period, so you lose your last two weeks wages." "The government has said we can't bring free zone problems to them because what goes on in there is the owners' business. The free zone is a state unto itself." The workers have the story right. The World Bank calls the zones "a simulated free trade regime." In the Bank's free trade dream world, elimination of "anti-export biases''--such as minimum wage laws, protection of local agriculture and industry, and government and union "interference"-would enable the free market alone to "maximize efficiency." Conditions in today's free trade zones prefigure the consequences of unrestricted global free trade. "Textiles are working so well in the Caribbean," says World Bank program officer Christian Del Voie, because, "the investors already have the marketing channels, to Bloomingdale's and other stores. All the investor then has to do is to look at the cost of labor. Local labor skills are not important, and local inputs are not an issue, because all they are doing is cut-and-sew." Average hourly earnings of semiskilled workers in export factories in the Dominican Republic, Jamaica, and Haiti in 1987 were 79 cents, 63 cents, and 58 cents respectively, equivalent to 1/17th, 1/22nd, and 1/ 24th of the wages of U.S. workers in the same category, according to a World Bank study. The Bank claims the most effective export-promoting policies undertaken by Caribbean governments have been the currency devaluations required as a condition of IMF and World Bank loans that depressed wages and living standards in the mid-1980s. "Only the Dominican Republic and Jamaica undertook real devaluations," wrote the Bank. "The rapid growth of their manufactured exports after their devaluations confirms the key role exchange rates play in export promotion." AID has also begun to press for the expansion of Caribbean free trade zones. A 1988 AID memorandum on Caribbean development states that, ''Investors like them.. ..Caribbean countries could do more for themselves to attract investment to their shores. They could, for instance, eliminate restrictions on foreign ownership, withdraw curbs on remittances [of profits], remove exchange and trade controls, loosen moratoria on new construction, roll back excessive taxes on business, and revise depreciation rates on facilities." In addition, AID says, "Investment would be much easier to attract if wages were not so high. Countries in Women assemble electronics for export in St. Vincent these categories might find it useful to reconsider their exchange rate policies." JAMAICAN WOMEN HAVE SHOWN THEMSELVES willing to work long and hard to sustain themselves and their families. But many have balked at accepting sub-poverty wages and dangerous working conditions. Nor have they submitted meekly to abusive language by factory managers or to body searches carried out, factory operators say, to detect stolen cloth or thread. For three days in March 1988, more than 2,000 women from the Kingston free trade zone demonstrated to protest conditions in the garment factories. Word of their movement spread to women in the Dominican Republic, Antigua, Montserrat, and the Windward Island nations. When the government of Trinidad and Tobago announced a plan to establish export processing zones, it was met with strong protest by Trinidadian women. World Bank economists resent the intrusion of Caribbean women and other workers onto the Bank's plush-carpeted turf. Says Christian Del Voie, "The World Bank knows the needs of the Jamaican economy better than some local women's association. We can't direct the development of the Jamaican economy on the basis of the needs of those women in Kingston." There is no evidence that the net contribution of free trade zones to Caribbean economies is positive. Low wages and the low proportion of value added to export products means that the zones bring in little foreign exchange. Due to a lack of linkages to other sectors, the zones create few additional jobs outside the export factories. Most of the jobs created are temporary, lasting only as long as incentives and low labor costs add up to a more profitable deal than that offered by competing countries. The skills learned by export assembly workers are limited and typically not transferable to other productive activities. The number of jobs created in export manufacturing does not begin to make up for those lost by structural adjustment-mandated public sector layoffs and the failure of local businesses competing for scarce foreign exchange. It is no coincidence that the Caribbean countries which have shown the greatest "success" in export manufacturing-Jamaica, Haiti and the Dominican Republic- have .experienced dramatic decreases in living standards and the most political turmoil. As low as wages in the Caribbean factories are, they are two to three times higher than those of export factory workers in Thailand, Sri Lanka, and the Philippines, and far higher than wages in China. This fact alone casts doubt on the notion that export zones are the key to Caribbean development

Tags: Jamaica, free trade zone, foreign aid, labor

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