Welcome to Peace News, the newspaper for the UK grassroots peace and justice movement. We seek to oppose all forms of violence, and to create positive change based on cooperation and responsibility. See more

"Peace News has compiled an exemplary record... its tasks have never been more critically important than they are today." Noam Chomsky

  • facebook
  • rss
  • twitter

Undermining Haiti's Minimum Wage

As condemnations of Haiti's minimum wage increase are ringing out the long and disturbing history of external interference leading to a race down to the bottom needs to be remembered.

Apart from being Haitian Independence day whereby former slaves successfully removed the cruel grasp of colonial slavery 210 years ago in 1804, today is also supposed to see a much needed increase in the minimum wage in Haiti but has sparked controversy.

Protests have broken out in Haiti demanding a greater increase than has been proposed whilst a somewhat inevitable a race down to the bottom backlash from industry and the international community has argued against even the modest increase citing a concern about competitiveness.

Today’s increase lifts the wage from 200 to 225 Haitian gourdes (£2.76 to £3.11) for an eight-hour day. UNDP has reported that more than half of Haitians live in extreme poverty, less than $1 per day, and that 76% of the population lives on less than $2 per day.

Apart from being an important issue in of itself due to the fact that Haiti is a desperate poor country, the history of the minimum wage in Haiti is actually a useful microcosm to illustrate in part why Haiti is so poor. Despite a prevailing narrative that seeks to blame Haitians for this plight and sees little to no outside influence there is also an extremely strong external hand that has influenced events and the developmental path in the country. Lurking underneath the minimum wage issue is also a wider issue of liberal economics and its imposition on a weak and vulnerable country by the international community. To discuss issues about the minimum wage in Haiti is necessarily to also discuss issues of liberal economics more broadly. How the external influences on Haiti helped create the social calculus that results in the social disaster that followed the earthquake in 2010 has previously been addressed on this blog and is available here as a wider discussion to these issues.

At least on two previous occasions the US has actively tried to undermine an increase in the minimum wage in Haiti as well as imposing an economic order on Haiti that has largely been acknowledged to have failed. Despite this and the fact that Haiti’s economy is significantly more liberal than the US’s in terms of restrictions, the mantra of liberalisation is constantly reiterated regarding Haiti.

Suppressing the Minimum Wage: 1991-94

In 1990 Haiti held its first free and fair election which was overwhelmingly won by former Catholic priest Jean-Bertrand Aristide who campaigned on a platform of social justice, including a minimum wage increase.

In June 1991, with a democratically elected government in place for the first time which was undertaking a reform program instead of supporting these badly needed social and economic reforms a USAID report outlined the belief that, “If Haiti's investment climate can be returned to that which existed during the CNG... Haiti stands to experience significant economic growth.” The referred to CNG is the National Government Council which was the military that ruled Haiti, with murderous brutality, following the end of Duvalier and cancelled elections with violence in 1987.

Aristide was overthrown in a military coup in September 1991, the leaders of which were in the pay of the CIA,(1) that led to a brutally repressive military junta ruling the country for three years. Aristide was restored to the Haitian presidency in October 1994. During the junta’s reign of terror not only did the US undermine an embargo against the country but through USAID also used American tax dollars “to actively oppose a minimum wage increase from $0.33 to $0.50 an hour proposed by the Aristide government.

The suppression of dissent and the grassroots networks that had culminating in forcing the removal of the Duvalier dictatorship in 1986, resisting the military government that followed and the eventual electoral victory of Aristide in 1990 by the junta ended up dramatically undercutting the ability of the population to resist unjust social policies that had a legacy that outlived the junta. An example being the impact on the manufacturing environment during the junta when US companies in Haiti “used the climate of terror and military repression to destroy the unions in their factories.”

Another legacy of the junta was that the US restoration of Aristide to the presidency in 1994 came at a dramatic cost of administering certain economic conditionalities – most of which had been actively rejected in the 1990 election – one consequence of which was that Aristide’s proposal to increase the Haitian minimum wage become a “non-issue” with other social measures “not on the agenda” anymore according to a World Bank official.

Suppressing the Minimum Wage: 2008-09

In 2003 Aristide, now in his second presidential term, “announced the doubling of a desperately inadequate minimum wage”. Following another coup that again overthrow the democratically elected Jean-Bertrand Aristide in February 2004 and two years of unelected and repressive governance in Haiti, under the second presidency of René Préval (2006-2011) came an external assault on the working poor in Haiti.

Each year the US State Department issues a human rights report which covers all UN member states and those receiving US aid. In its report covering 2008 the State Department recorded that the legal minimum daily wage was 70 Gourdes, then the equivalent to $1.75, and that “[t]his wage did not provide a decent standard of living for a worker and family.”  Under the same headings the 2004, 2005, 2006 and 2007 reports all came to the exact same conclusion with the 2002 and 2003 reports also coming to the same conclusion but differ slightly in their wording. Unsurprisingly then when the minimum was at the lower level of 36 Gourdes the respective 1999, 2000 and 2001 reports also all come to the same conclusion that a minimum wage worker would earn was “not sufficient to provide a decent standard of living for a worker and family.

Despite repeatedly acknowledging the insufficiency of the minimum wage, as it had pervious done during the military junta that came to power in 1991 the US again intervened to prevent the raising of the minimum wage. In June 2009, a law that would raise the minimum wage to $5 a day was unanimously passed in the Haitian parliament, an increase which would still only pay Haitians less a day that the minimum hourly wage in America.  “Given Haiti's endemic poverty and brittle democratic culture,” wrote Gary Younge on this development, “the fact that an elected parliament could pass a law that would earn such popular support was encouraging. The US thought otherwise.

Leak US diplomatic documents reveal that the deputy chief of mission at the US embassy, David Lindwall, insisted the proposed law “did not take economic reality into account” and referred to the planned increase in the minimum wage as being a populist measure aimed at appealing to “the unemployed and underpaid masses.”  The so-called economic realities to which the US embassy was referring are those as expressed by the likes of Milton Friedman who in his book Capitalism and Freedom extols the virtues for the poor of not having a minimum wage. Friedman sees such legislation, where it has any effect at all, as “clearly to increase poverty” and to make unemployment rates even higher amongst the poor: “The state can legislate a minimum wage rate. It can hardly require employers to hire at that minimum all who were formally employed at wages below the minimum. It is clearly not in the interest of the employer to do so. The effect of the minimum wage is therefore to make unemployment higher than it otherwise would be... [and] the people who are rendered unemployed are precisely those who can least afford to give up the income they had been receiving, small as it may appear to the people voting for the minimum wage.”

Such arguments are simply race-down-to-the-bottom economics that are disingenuously disguised as protecting the poor. Charge d’Affaires to Washington Thomas C. Tighe reiterated these Friedmanite ideas in a confidential June 10, 2009 cable reporting on an Association of Haitian Industry (ADIH) report on the effect of an increase in the minimum wage: “Ironically, Tighe’s confidential cable one week earlier, on June 10, noted that the ADIH study had found that “overall, the average salary for workers in the [garment assembly] sector is HTG 173 (USD 4.33),” only 67 cents a day less than the proposed minimum wage. Nonetheless the study urged opposing any rise in the minimum wage because “the current salary structure promotes productivity and serves as a competitive wage in the region.” Tighe notes, however, in his next sentence that the “minimum salary for workers in the Free Trade Zone on the Haiti-DR border is approximately USD 6.00,” a full dollar more than the 200 gourdes ($5) demanded. Still, the ADIH report concluded somehow “that a minimum daily wage of HTG 200 would result in the loss of 10,000 workers,” more than one third of Haiti’s 27,000 garment workers at that time. Tighe said that the “ADIH and USAID funded studies on the impact of near tripling of the minimum wage on the textile sector found that an HTG 200 Haitian gourde minimum wage would make the sector economically unviable    and consequently force factories to shut down.

Economic arguments about competitiveness were also muted in the Haitian case in 2009 precisely because “wages in the Dominican Republic and Nicaragua (competitors in the garment industry) will increase also.” Another aspect of the economic realities to which Lindwall referred was those outlined by USAID, that Haiti’s prime resource was its low paid, unskilled workforce.

Between early February 2008 and October 2009 US Embassy officials closely monitored and reported on the minimum wage issue and “fully understood the popularity of the measure.” Such popularity amongst the people was hardly surprising considering the percentages of Haitians living on under $1 and $2 a day and the rates of unemployment. Coughlin and Ives report that Haitian factory owners lobbied heavily against the increase and that the diplomatic cables reveal they met with Préval on multiple occasions and with more than forty members of Parliament and political parties. Gary Young describes this pressure by both the US and the factory owners on René Préval as an attempt “to undermine the popular democratic will in the interests of greater profits for garment manufacturers”. In August 2009 Préval created a two-tiered minimum wage increase in a negotiated deal with the Haitian Parliament, one minimum wage for the textile industry, at about $3 per day, and one for all other industrial and commercial sectors at about $5 per day.

Whereas previous reports had commented on the adequacy of the legal daily minimum way in terms of standard of living, the US State Department country human rights report that followed Préval’s two-tiered system, 2009, made no such comment.  When the report reverted to type the following year it described the adequacy the new legal minimum wage afforded as providing a “minimal” standard of living and importantly the report told of a lack of enforcement of this minimum payment: “The minimum wage would put a household’s income at about twice the average in Haiti, but still provided for only a minimal standard of living. Minimum wage levels were often not effectively enforced.

Not only did the US actively seek to prevent the increase in the minimum wage, alongside Haitian factory owners the US also lobbied to force the 38p hourly rate even lower, pressuring Préval “to undermine the popular democratic will in the interests of greater profits for garment manufacturers until he created a two-tier minimum wage with workers in the textile industry getting just £1.86 a day.

Taiwan of the Caribbean

The issue of the minimum wage in Haiti is directly tied to the export market its industries seek to produce for. The arguments given for not increasing the minimum wage in a desperately poor country are that it would undermine competitiveness and that it is better to have low wage jobs in the export industries, mainly textiles, than not to have them in Haiti due to a lack of competitiveness. The constant promotion of Haiti as a producer for the export market by the international community, and the current president's pro-business mantra, locks in this circle of a race down to the bottom whilst doing so in the name of development.

In a move to boast much needed employment Haiti has returned, yet again, to the previously failed policy of producing, mainly apparel, for the export market to countries such as the US. For Haiti's finance minister, Wilson Laleau, “that means thousands of unglamorous factory jobs, mainly in the garment sector”. That the previous attempts have indeed failed is not a controversial issue and is widely acknowledged, including by former president Bill Clinton.

For almost thirty years Haiti was ruled by the murderous dictatorial dynasty of Francois ‘Papa Doc’ Duvalier who ruled from 1957 until his death in 1971 and then by his playboy son and heir Jean-Claude ‘Baby Doc’ Duvalier who succeeded his father upon his death. The dynasty finally came to an end in February 1986 when Jean-Claude was overthrown following a popular mass movement that was greatly inspired by liberation theology preached from the pulpit to the poor. It was during the Duvalier dynasty, particularly under Jean-Claude Duvalier, that Haiti was intended to become the so-called 'Taiwan of the Caribbean' through the creation of Export Processing Zones (EPZs) actively supported by the World Bank, Inter-American Development Bank and the US Agency for International Development (USAID). The creation of these EPZs saw the halving of Haitian wages whilst doubling Haitian apparel exports to the US during the same period. These zones also push many farmers off their lands, some 800,000 but only provided, at their height, 70,000 jobs creating a massive surplus of labour which in turn afforded factory owners the ability to suppress wages and working conditions.  As such a 'pioneer' of the free market, Haiti's commodity of exchange was its abundance of cheap, and exploitable, labour.  

In 1981 a USAID-World Bank development strategy was initiated in Haiti in which “a historic change toward deeper market interdependence with the United States” was envisioned, but as Noam Chomsky has commented, “Haiti remained Haiti, not Taiwan, which had followed a radically difference course”.  USAID held the belief that “Haiti's major economic resources are the abundance of unskilled and semi-skilled labor and a sophisticated and dynamic private sector.”(2) Not only is there an “abundance of trainable labor eager to work,” but as the US Commerce Department noted, “Haitian wage rates are among the lowest in the Caribbean.

USAID funded and promoted the development of Haiti as a low wage export platform for offshore assembly industries which targeted the US market: “Everything rode on the backs of workers. Their wages, the lowest in the Caribbean, had to make up for the fact that the Haitian business elite paid no taxes, that contraband trade was widespread, that corruption, graft and military patronage had driven up the cost of doing business by increasing port and utility fees to the point that they became the most expensive in the region.

The harsh realities of the Haitian assembly jobs that USAID was promoting were also known to the US government, indeed, in 1989 the US Commerce Department summarised the working and living conditions of Haitian assembly workers, describing them in subsistence terms.

These neoliberal policies “pushed peasants off their land” and in doing so “destroyed 800,000 agricultural jobs in Haiti” but even at its height in the 1980s “the offshore apparel industry only provided 70,000 jobs” leaving thousands out of work. In fact, the lack of jobs and the subsequent mass scale surplus of labour gave “gives factory owners a sense of impunity” in terms of workers’ rights and wage as they knew they could simply replace their workers.  A New York Times article in the days after the earthquake specifically highlighted the point that such acts of liberalisation have resulted in the creation and cementing of a predatory state at the expense of the majority of Haitians.   

Writing in 1998 investigative journalist John Pilger described in blunt terms the impact of Haiti's application of free market reforms on the lives of many Haitians who already lived in privation: “As a direct result of the imposition of this ‘free market’, half the children die before they reach the age of five. A child of two is called in Creole youn to chape - a little escapee from death. Life expectancy is about fifty-three years. Most American companies pay as little as they can get away with. More than 20,000 people work on assembly lines, a third of which produce goods for that symbol of all-American wholesomeness, the Walt Disney Company. Contractors making Mickey Mouse and Pocahontas pyjamas for Disney in 1996 paid eight pence an hour. The workers are all in debt, knowing that if they lose their jobs they will join those struggling against starvation.”(3)

The lack of controversy on this point is such that even the UN Development Programme (UNDP) has acknowledged such specific neoliberal reforms in Haiti have not worked in the manner in which they were supposed to, reporting that “[w]hat has worked in one place may not work in another”, noting that “both Mauritius and Haiti are island economies that created export-processing zones” but where such were “highly successful in Mauritius” they were “failures in Haiti.”

Despite such failures in Haiti, particularly in relation to the generation of harmful effects and the failure to significantly reduce poverty nationwide, “the thinking on EPZs [Export Processing Zones] has remained remarkably unaffected: creating assembly manufacturing jobs generates income for people, which improves living standards, resulting in human development. Haiti’s experience tells us the equation is more complex, however. We can’t assume a priori that employment in EPZs will contribute to sustainable development or improve human development.”  

This particular assumption is, however, one that has re-emerged, if indeed it ever went away, in the post-earthquake period and has been enthusiastically supported by the US, including in the May 2010 Haiti Economic Lift Program (HELP) act passed by Congress and expanded the 2006 Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act and its 2008 expansion (HOPEII).

Rice Production

The forced adoption of neoliberal economics on Haiti has had a dramatic effect on development as painfully evidenced by the decline in domestic rice production that has led to serious nutritional deficits and rising costs.

According to many analysts Haiti was almost self-sufficient in rice production, but “in 1995, when international institutions pressured Haiti to cut import tariffs on rice from 50% to 3%, cheap subsidised rice from the USA started coming into the country. Urban consumers benefited for a while from the low-cost imports, but they caused national rice production to plummet.” As of 2008 Haiti was importing “80% of the rice it consumes - just as world prices have doubled.

Haiti went from being essentially self-sufficient in rice production to being almost entirely dependent on imported rice. The consequence of this transformation eventually became so extreme in its devastating effects that it elicited an unprecedented confession of guilt and responsibility on the part of one of the key proponents of the policy, president Clinton.

In addition to the issues with rice production, Paul Farmer has pointed out that Haiti was also “once the world's leading exporter of sugar” but due to economic reforms is now “a net importer of subsidised sugar from the United States and elsewhere.”(4)

This plummeting of domestic agricultural production had a direct three-fold effect, included in which was the deteriorating of the nutritional status of children with surveys indicating “an alarming increase in malnutrition in urban areas.” Another effect was, according to a report by PAHO’s Health in Americas, “the widening of the trade deficit due to a rise in imports, notably food products” and that this “has been largely responsible for the devaluation of the country’s currency and the rise in cost of living”. A third effect was noted in 2010 by the World Food Programme who stressed the point that the dramatic shift in sourcing of rice also left Haiti entirely vulnerable to international prices and economic buoyancy.

This later effect was also highlighted in 2009 by John Mazzeo from DePaul University who noted that the impact of the global rise in food prices “reached a breaking point in Haiti” due to its “growing dependence on foreign food imports”. This decrease in the “affordability of imported food further exacerbated high rates of malnutrition” in Haiti which already “rank[ed] along with Afghanistan and Somalia as one of the three countries of the world with the worst daily caloric deficit per inhabitant.”(5)

One of the ironies of the decline in domestic rice production in Haiti is the one-sided nature of the liberalisation process. The shift from domestic agricultural production to providing cheap factory labour and the lowering of tariffs and protection was demanded by the US with appeals to free market theory whilst American farmers were heavily subsidised. During the Reagan administration such US exemptions to free market fundamentals provided 40 percent of US grower's gross income in 1987 whilst Haitian farmers were forced from their lands.

Despite what the constant developmental narrative extols about the need to further liberalise Haiti’s economy, according to the IMF trade restrictiveness index Haiti already four times more liberal than that of both the US and Canada.(6)

Haiti was been left in a position whereby it is unable to domestically compete with US imports and resultantly Haitian rice production has suffered and done so with no discernible positive impact on job creation in other sectors or increased standards of living. Indeed, a 1995 USAID report noted the natural consequences of such policies, observing that the “export-driven trade and investment policy” mandated by Washington will “relentlessly squeeze the domestic rice farmer”.  The scale of the resultant devastation stemming from these policies was such that it managed to extract an unprecedented apology by one of the leading proponents and implementers of the policy, former US president Bill Clinton: “It has not worked. It may have been good for some of my farmers in Arkansas, but it has not worked. It was a mistake. It was a mistake that I was a party to. I am not pointing the finger at anybody. I did that. I have to live every day with the consequences of the lost capacity to produce a rice crop in Haiti to feed those people, because of what I did. Nobody else.”(7)

Despite such candour, under his stewardship of the reconstruction effort Clinton could have stressed the need to reverse these policies but failed to do so. To the contrary, in the days after the earthquake it was reported that Clinton “wants to build up Haiti's export-processing zones”; following the passing of the May 2010 Haiti Economic Lift Program (HELP) in the US Congress, which essentially made the demonstrably flawed a priori assumption in the Haitian case that such export-processing zones will contribute to sustainable development or improve human development, Clinton, in a joint statement alongside former president George W. Bush, described HELP as benefiting both Haitians and US consumers: “This important step responds to the needs of the Haitian people for more tools to lift themselves from poverty, while standing to benefit U.S. consumers”.

Summary

Aside from the supposed debate on the minimum wage issue there is also the problem of enforcement whereby even the agreed upon wages are not being paid. Much like the suppression of the minimum wage in Haiti having a long history so too does this issue of non-payment of the legal minimum.

As with most debates the minimum wage issue in Haiti needs to be located in a historical context so as to illustrate the external role played in keeping Haiti poor as well as highlighting the fact that the current export market project has failed in the past and can't bring Haitians out of their current plight. Whilst what Haiti needs is complicated a simple starting point is for the international community to allow it to live instead of seeing it as the colonial French once did, to be exploited as a producer of wealth for others.

All previous Peace News blogs about Haiti can be found here.

Notes

1. There is a wealth of reports on this issue, including in The Nation and on numerous occasions in the New York Times including here, here and here.

2. Chomsky, Noam (1999b) Profit over People: Neoliberalism and Global Order, London: Seven Stories Press, p. 107

3. Pilger, John (1998) Hidden Agendas, London: Random House, p. 65

4. Farmer, Paul (2011) After the Earthquake, New York, p. 35

5. Mazzeo, John (2009) Laviche: Haiti's Vulnerability to the Global Food Crisis, NAPA Bulletin, No. 32, p. 11

6. Cited in the excellent book Damming the Flood by Peter Hallward (p. 6)

7. The full quote is cited in Farmer (2011), p. 150

Topics: Social Justice | Haiti