Haiti: Creating New Opportunities by Addressing Old Problems
On Wednesday May 5, the House passed a bill (Haiti Economic Lift Program or HELP Act) that would extend duty-free access for most of the clothes it sells in the United States under the Caribbean Basin Trade Partnership Act (CBTPA) and a separate program for Haiti known as the Hemispheric Opportunity through Partnership Act (HOPE) through September 2020. The bill also passed in the Senate and is expected to be signed into law by President Obama.
Haiti’s unemployment is normally soaring around 70%, with the clothing sector accounting for 75% of Haiti’s export earnings and employing more than 25,000 people. Even amidst the devastation caused by the quake, the factories have quickly resumed production to pre-quake levels.
Haiti’s manufacturing sector represents the dillema of investment. Already a country with a low level of education and skills training, the manufacturing sector could be used as a step toward lifting Haiti out of poverty – but only if new manufacturing programs are implemented in a manner geared at empowering, educating, and training Haitian workers.
One large textile factory owner, Georges Sassine (also head of the manufacturers’ association), believes there is opportunity in the devastation. Sassine argues that the international attention on Haiti could pressure Haitian leaders to end the corruption and cronyism that has stunted Haitian democratic development for so long. As a factory owner, he travels the globe advocating for foreign direct investment (FDI) to continue to pour into Haiti.
Of course, the increase in manufacturing spurred by bills like the HELP Act has its critics. Cathy Feingold, director of the AFL-CIO’s solidarity center in Haiti, explains that “the main critique of using the textile industry as an economic development model for Haiti is that it failed throughout all the years because it’s never paid a decent wage to workers, it’s never offered a decent job.” Other international development academics cite that low productivity, common in low-wage, low-innovation environments, is a common contributor to high factory mobility. Low productivity, paired with capital flight to
a cheaper country stunts economic development of the country as a whole, and has been even observed in countries (Sub-Saharan African countries, for example), with little to no tariffs on exports.
So, by understanding the problems that Haiti faces in its efforts toward redevelopment, what can be done to increase economic development that benefits all sectors of the population? Here are some ideas:
• Civil society engagement: Talk to the Haitian people about problems that they believe have kept the country in poverty, especially to factory workers who are perceived as Haiti’s ticket out of poverty. This may sound like a no-brainer, but as Westerners (and you probably are one if you are reading this on your computer right now), we often lack the perspective to understand the small things that keep people impoverished (i.e., a worker has to pay a portion of his wages to a corrupt manager to keep his job or a would be worker can’t afford shoes that are required for the factory)
• Transparency: Ensure that the flow of all FDI, whether in the form of loans, grants or factory investment dollars is reported and publicly accessible. This holds government leaders and foreign investors accountable to the people. Transparency International has done great work in this field.
• Factory monitoring: While low wages may be the key to an immediate injection of FDI, sweatshop conditions should not be tolerable. They compromise the health of workers, their ability to contribute to the local economy, and ultimately impede worker productivity. As explained earlier, this leads to low economic growth and therefore, low development. Grassroots factory monitoring programs that are independent from retailer funded programs play an important role. Not only do they engage in worker outreach outside of the factory, but their reports are often transparent and open to the public, holding manufacturers accountable. The Worker Rights Consortium has been a leader in this regard.
• Worker engagement: International retailers should foster programs that encourage worker participation in democratic institution building. Make unions legal, create grievance mechanisms, work toward creating a living wage. Employers often perceive these initiatives as being antithetical to economic prosperity, but hungry, overworked and abused workers are not a productive workforce. Contributing to democratic institution building will ultimately provide a more stable investment climate, paying dividends to foreign investors and their shareholders as well.
The Right Respect is working with a team of other organizations on a proposal to address many of the developmental issues plaguing Haiti, and in particular the manufacturing sector. Stay tuned over the next few weeks for progress reports on these efforts.
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