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Free Trade Zones and Women in Nicaragua: Exploitation or Empowerment?
From the Spring 2002 issue of WCCN's Sister State Update
by Rose-Marie Avin
What does globalization imply for women in the world economy, especially for women in Nicaragua? Globalization, defined as an "increased economic interdependence and integration in the world economy" through the expansion of trade, technology, investment, and finance, affects the lives of men and women everywhere. It is argued, however, that trade has a different impact on women than on men, given the patriarchal structures of societies, discrimination, and the marginalization of women in the Third World. The question is: Does globalization reinforce womens inferior status, or does it contribute to their empowerment? Studies have shown that the impact is varied, complex, and multidimensional. In this article, I will discuss one important aspect of globalization: the rapid expansion of trade through the creation and proliferation of Free Trade Zones (FTZs), also known as "maquilas," and their impact on the socioeconomic conditions of women in Nicaragua.
Globalization is not a new phenomenon. It is a process that started
after World War II as competition intensified between producers
of labor-intensive manufactured goods in industrialized nations.
Producers then shifted production to Third World nations to take
advantage of their cheap labor force. These producers received considerable
help from their respective governments, which changed their tariff
policies to allow the goods assembled abroad to reenter their economies
duty-free. At the same time, governments from a large number of
Third World nations made it attractive for foreign capital to relocate
in their countries by giving them tax incentives and by building
the infrastructure needed for manufacturing. South Korea, Taiwan,
Hong Kong and Singapore were among the first to set up FTZs. A large
number of poorer Third World countries in Southeast Asia took up
the strategy a decade later. Today, FTZs exist throughout Asia,
Africa and Latin America. All FTZs seem to have two things in common:
They are enclaves with no linkages to the rest of the economy and
the vast majority of the workers are poor young women working for
low wages under deplorable conditions. Moreover, many of these women
have no labor rights since labor unions are suppressed by the governments
of these countries.
In Nicaragua, factories operating under the FTZs model have increased
considerably during the period 1991-2001. In 1976, Nicaragua had
one industrial park, "Las Mercedes," with 11 factories
producing mostly clothes for the United States market. With the
arrival of the Sandinistas in 1979, however, the factories closed
their doors and moved their operations someplace else in Central
America. The electoral defeat of the Sandinistas in 1990 brought
to power a conservative government more sympathetic to the free-market
and free trade policies advocated by the World Bank, the International
Monetary Fund and the United States Agency for International Development
(USAID). With funds received from the World Bank and the Inter-American
Development Bank, new industrial parks were created and the foreign
investors came back to Nicaragua. The sector has exploded during
Today, the FTZ system consists of 12 industrial parks and the number
of firms has increased from 8 in 1992 to 45 in 2001. Of the 45 firms
operating in the FTZs, 14 are from Taiwan and 13 from the United
States with the vast majority (73 percent) engaged in the production
of clothes mostly for the United States market. The sector has also
been the most dynamic in terms of job creation: The number of jobs
increased from 1003 in 1992 to 38,792 in 2001. At the same time,
the value of exports grew from US $ 2.9 million to US $ 230 million
during the same period. While the sector contributed 7.5 percent
of the value of total exports in 1994, its contribution reached
32 percent in 2000.
What has been the impact of such rapid growth on the socioeconomic
status of women in Nicaragua? There is no doubt that the FTZs sector
is an important source of employment for Nicaragua and for poor
Nicaraguan women. It is estimated that 70 percent of the workers
are young women with a low educational level, with about 50 percent
being heads of households. For Nicaraguan women, having a job in
the FTZs means not having to sell food and trinkets in the streets
and also not having to leave the country to become maids in Costa
Rica. The reality is that there are no jobs in other sectors in
Nicaragua. In 2001, 58.8 percent of working age women were unemployed
and underemployed, and of those who were employed 75.5 percent worked
in the informal sector- the employer of last resort.
While the FTZs have been a major source of employment for women,
they have not created jobs that can bring women out of poverty and
contribute to their empowerment. On the contrary, management in
these factories pays low wages, provides difficult working conditions,
and tries to suppress the womens labor rights. According to
Sonia Agurto of FIDEG, a well-known research institute in Nicaragua,
the average monthly salary in the FTZs is 850 cordobas (about 62
US dollars) higher than the minimum wage of 400 (29 US dollars)
cordobas. However, the basic market basket for a family of five
cost 2550 (185 US dollars) cordobas. It takes three persons working
in a FTZ to buy the basic market basket. To make ends meet, many
women work extremely long hours.
Working conditions are also difficult. There have been reported cases of physical mistreatment, as was illustrated by the revolt at Chentex during the mid-1990s. At Chentex, workers rose up because of poor working conditions and the fact they were not been treated with respect by management. They were treated like "cattle" as one former worker said. According to Gladis Manzanares, former general secretary of one of the labor unions in the FTZs, one of the major problems is the difficulty of forming labor unions. Workers suspected of forming labor unions get fired and that can be a devastating blow for a female head of household. Furthermore, many women do not know the law and their rights.
It is obvious that the FTZs development model has not led to the transformation of womens lives through economic empowerment, but rather reinforces the conditions of marginalization of women in Nicaraguan society. Job segregation from the outset gives women unskilled production jobs that are the poorest paid. Lacking access to on-the-job training, women are not moving up the job ladder and are not acquiring social and political power. One organization working to empower women is the "Maria Elena Cuadra," (MEC) a womens organization working to improve the human rights of women, especially of women in the FTZs. This organization provides scholarships for nontraditonal jobs, has a small credit program for unemployed women, teaches women about their labor rights, and provides training for negotiation techniques. According to Sandra Ramos, the head of MEC, women need to have a consciousness raising that will empower them to take action but it takes time. The goal of MEC, then, is to create a space for reflection for the women of the FTZs so that they can achieve personal empowerment. Will that be the first step toward economic empowerment? Only time will tell.
Rose-Marie, a long-time WCCN supporter, participated in WCCN's January 2002 study tour to Nicaragua. The study tour focused on grassroots responses to the global economy, and looked at the free trade zones in Nicaragua as one aspect of globalization. Many of the people and organizations that she mentioned, such as Sonia Argueto and FIDEG, and Sandra Ramos and Maria Elena Cuadra, were visited during the study tour.