Lund University
Department of Political Science
STV004
Spring 2006
Supervisor: Catarina Kinnvall
Neoliberal Globalization
– the End of Labor Unions in the Third World?
A Minor Field Study on the Nicaraguan Labor Unions’
Struggle to Survive
Marcus Svensson
Globalization [is a] global networking that has welded together
previously disparate and isolated
communities on this planet into
mutual dependence and unity of “one
world”.
Emanuel Richter
Globalization is what we in the Third
World have for centuries called
colonization.
Martin Khor
Abstract
This thesis, based on a minor field study in Nicaragua, analyzes the impacts of
globalization on the Nicaraguan labor unions. It also poses the question of how
organized labor has responded to increasing economic globalization, in Nicaragua
characterized by the neoliberal policies pursued by the government since 1990,
backed by international financial institutes.
The analysis demonstrates that the effects of globalization have had major
negative consequences for the labor union movement. However, over the last
years the unions have increased their member base, making Nicaragua an
exception in a negative world trend for labor unions. In explaining how this has
become possible I use a theoretical model formed by Lévesque and Murray. It
focuses on three power resources that unions have to reinforce to resist the
negative effects of globalization – internal solidarity, external solidarity, and
proactivity. My conclusions are that all three resources have been reinforced in
Nicaragua. This is especially true for the first two factors. In combination with
two minor features – mass media appearances and the tradition of organizing – the
reinforcement of these power resources explains why the union movement in
Nicaragua has been able to turn the trend of decreasing affiliation.
Keywords: Nicaragua, Labor Unions, Globalization, Neoliberalism, Export
Processing Zones
List of Abbreviations
CST-JBE
DR-CAFTA
EPZ
FNT
FSLN
IMF
Maquila
NGO
PRSP
SAP
TNC
WB
WTO
Zona Franca
Confederación Sindical de Trabajadores – José Benito Escobar.
(Nicaraguan national union organizing mainly industrial workers,
workers in the EPZs, and workers in the informal sector. Member
of the FNT)
Dominican Republic and Central America Free Trade Agreement
Export Processing Zone
Frente Nacional de los Trabajadores. (A union umbrella
organization and the largest labor movement in Nicaragua)
Frente Sandinista de Liberación Nacional. (The major socialist
party in Nicaragua, usually referred to as just ”Sandinistas”)
International Monetary Fund
Company/Industry within an Export Processing Zone
Non-Governmental Organization
Poverty Reduction Strategy Papers
Structural Adjustment Program
Transnational Corporation
World Bank
World Trade Organization
The Nicaraguan name for an EPZ
3
Table of contents
Abstract
List of Abbreviations
1. Introduction…………………………………………………….. 5
1.1 Purpose and Research Questions……………………………………… 5
1.2 Disposition and Limitations…………………………………………… 6
1.3 Background……………………………………………………………. 7
1.3.1 The Union Movement in Nicaragua…………………………….. 7
1.4 Method………………………………………………………………… 8
1.5 Material ……………………………………………………………….. 10
2. Theory…………………………………………………………... 11
2.1 Ontological Perspectives……………………………………………… 11
2.1.1 Theoretical Discussion and Definition………………………….. 12
2.2 Labor and Production in the Global Economy…………………………13
2.2.1 Neoliberalism…………………………………………………… 14
2.2.2 The New International Division of Labor………………………. 15
2.2.3 The Race to the Bottom…………………………………………. 15
2.2.4 Structural Adjustment Programs and Export Processing Zones....16
2.2.5 Theoretical Discussion………………………………………….. 17
2.3 Specific Theory for Union Power……………………………………... 18
2.3.1 Globalization and its Consequences for Union Power………….. 18
2.3.2 Three Central Power Resources for Unions…………………….. 19
3. Analysis…………………………………………………………. 22
3.1 Neoliberal Globalization as a Threat to Unions……………………….. 22
3.1.1 SAPs Effects on Living Standards and Employment…………… 22
3.1.2 Labor Rights Violations in a Race to the Bottom………………. 24
3.2 The Response from Organized Labor in Nicaragua……………………26
3.2.1 Internal Solidarity……………………………………………….. 26
3.2.2 External Solidarity………………………………………………. 28
3.2.3 Proactivity – Agenda …………………………………………… 30
3.2.4 Country-Specific Factors……………………………………….. 31
4. Conclusions……………………………………………………... 33
4.1 Normative Suggestions………………………………………………... 34
5. References………………………………………………………. 36
4
1. Introduction
It is generally recognized that the trade union movement is in crisis, in most parts of the
world (…) In last year’s report we noted the manifestations of this crisis: loss of membership
and inability to organize the growing mass of unorganized workers; lack of power to resist
repression; lack of capacity to resist the neo-liberal agenda (Global Labour: Annual Report
2004).
Above account on the global labor union situation pictures the trend of the last
decades. In the same time-period several social science researchers claim to
identify an increasing globalization. It is widely argued that there is a close
correlation between these two circumstances: increasing globalization and
decreasing labor union power. The current structure of economic globalization
(frequently referred to as neoliberal) and of the labor union movement seem to put
the two in conflict with each other.
It is regarding this relation my thesis is written.
1.1 Purpose and Research Questions
My point of departure and object of analysis is Nicaragua and its labor union
movement, that in contrary to general world development has experienced
increasing union affiliation and influence, despite a neoliberal government policy
opening up Nicaragua to the globalization of world markets.
While some researchers argue that globalization weakens unions – i.e.
reducing their member bases and their power to influence companies, domestic
politics and civil society – others say that there is no empirical proof for this
conclusion. Accordingly there is still a need to examine and analyze these doubts.
The main question that this thesis poses is:
• How can labor unions in developing countries best adapt to neoliberal
globalization?
To answer this question it is necessary to first understand how neoliberal
globalization affects labor unions. Secondly, it is desirable to have an empirical
case showing that it actually is possible for labor unions to survive globalization
in the long run, thus having something to build analysis and conclusions upon. I
believe that Nicaragua is an adequate case to fulfil both these prerequisites. In
order to give a satisfactory answer to my main question, I have divided it into two
research questions that hopefully will make the analysis more comprehensible:
• To what extent is neoliberal globalization a threat to labor unions in the
Third World?
• How has organized labor in Nicaragua responded to increasing neoliberal
globalization?
5
Guided by the analysis of the two research questions, my aim is to provide
useful information on how labor unions in developing countries can adapt to
increasing globalization. I also intend to present normative conclusions,
suggesting how international aid most effectively can strengthen labor unions in
the Third World.
By linking the global theoretical perspectives with different union levels in
Nicaragua, using diverse examples from general union problems to specific
workplace issues, I hope to provide a deeper understanding of the globalization
phenomena, and how it affects different parts of society.
1.2 Disposition and Limitations
To comprehend the current situation of Nicaragua it is necessary to be familiar
with its history. Hence, a brief summary of political events and the development
of the union movement are provided first of all.
A major part of this thesis is devoted to the theoretical context and discussion
of globalization. The debate is so extensive and polemical that I believe it crucial
to position myself in it. The theoretical discussion also illustrates how the future
of Nicaragua can be anticipated through different perspectives. Since
neoliberalism is controversial and regularly referred to throughout the thesis, it is
discussed and defined in paragraph 2.2.1. Finally, a more specific theoretical
framework regarding labor union power and globalization is presented – provided
by the two Canadian professors Christian Lévesque and Gregor Murray – having
the potentiality to explain why the Nicaraguan labor union has been rather
successful. The theory part of the thesis can be seen as an upside-down pyramid –
not that different from Lundquist’s (1993:63-64) abstraction ladder – where
broader ontological perspectives in the top step by step are narrowed down to
finally reach the specific context of the national unions in the bottom.
In the Analysis of chapter 3, theory is confronted with the empirical research.
Key concepts are applied to the Nicaraguan context as well as the more specific
theory, and the two research questions are answered.
In the Conclusions of chapter 4, my analysis is summarized in an integrated
and reflective discussion in which normative suggestions are put forward. In this
part my main question is discussed – it shall be regarded as an outcome of the
analysis of the two research questions.
It is always tempting to enlarge the study area once you have started the
research, but factors such as time, logistics and essay space put limits on the work.
Though it would be interesting to make a comparative study including other
developing countries, or to examine several different unions in Nicaragua, I have
limited myself to study the national umbrella union, FNT, the national union for
mainly industrial workers, CST-JBE, and local unions belonging to the CST-JBE.
In time of writing, a debated issue in Central America is the DR-CAFTA. It is
a free trade project under construction between the U.S., Central America (except
Costa Rica so far) and the Dominican Republic. Being an economic venture in
line with neoliberal theory it is likely to vastly affect labor interests in Nicaragua.
6
However, to analyze this agreement and its effects would require considerable
more time and space, why I have had to leave it outside the reach of this thesis.
1.3 Background
Nicaragua became independent in 1838, seventeen years after its liberation from
Spanish colonialism. The 19th and early 20th century was predominated by power
struggles between liberals and conservatives and by corporate, military and
political involvement by the United States. In a coup d’état the leader of the
national guard, Anastasio Somoza, seized power in 1936. Supported by the U.S.
he, and the two sons succeeding him, ruled Nicaragua with a harsh dictatorship.
Among the resistance movements born in the 50s and 60s only the Marxist
oriented FSLN (Frente Sandinista de Liberación Nacional) survived. It gained
widespread support and overthrew Anastasio Somoza Jr. in 1979 (Utrikespol inst
2005).
The FSLN immediately initiated radical social reforms, including land seizure
and distribution, nationalizations and vast expansion of education and health care.
It also introduced – urged by the international community – free elections, which
the party won in 1984. When Ronald Reagan became president of the United
States in 1981 he cut financial support to Nicaragua, and put the country under a
trade embargo, heavily injuring the economy. The U.S. also started to back the
Contras’ rebel army, mainly constituted by former members of Somoza’s National
Guard. A civil war broke out that killed over 50 000 people, and in 1990 the
Nicaraguans voted the Sandinistas out of power (ibid; Armbruster-Sandoval
2005:108).
Since 1990 Nicaragua has been ruled by right-wing governments following a
market-oriented and U.S.-friendly policy. Among the reforms pursued during the
last sixteen years is structural adjustment programs (SAPs) recommended by the
International Monetary Fund (IMF), including budget reduces through cuts in the
public sector, privatization of state owned enterprises, and lowered tariffs on
imports. The new governments have also worked to expand the Export Processing
Zones (EPZs), to gain foreign investments and create jobs (FNT 2005; LO-TCO
2005; Utrikespol inst 2005: 9-18).
After Haiti, Nicaragua is the poorest country in Latin America. It has a
foreign debt three times the GNP and 80 percent of the population live in poverty,
around 50 percent in extreme poverty. Nicaragua is highly dependent on trade
with the U.S. and on foreign aid, and struggles with widespread corruption and
criminality (ibid).
1.3.1 The Union Movement in Nicaragua
The union movement in Nicaragua has undergone several reformations: alliances,
internal conflicts, corruption allegations, name changes etc. During the Somoza
dictatorship free unions were oppressed and union leaders persecuted. Hence,
7
several union activists joined the FSLN. Throughout the socialist epoch in the 80s
the percentage of unionized workers rose from 11 percent (1979) to over 50
percent (1986), despite the fact that the movement was split in three fractions –
ultra-left, left, and conservative. However, strikes were banned, conservative
unions were put under Sandinista-backed limitations, and leftist unions were
exceedingly ruled from the political top (Armbruster-Sandoval 2005:111-112;
Ruiz, 31-01-06; and Svensson 03-02-06).
In 1990 Frente Nacionál de los Trabajadores (FNT) was found, a leftist and
national coordinating umbrella union. With its seven member organizations
(FETSALUD - health workers; ANDEN - teachers; UNE - public employees;
FEDPES-ATD - university professors; FESITUN - university workers; CSTCP self-employed workers; and CST-JBE - industrial workers plus workers in the
informal sector) FNT is by far the largest labor union in Nicaragua. It affiliates
more than 100 000 workers, and adding the ATC (agricultural workers) that is
cooperating with the FNT the movement has over 160 000 members. The FNT
was created to achieve unity between the labor unions and to fight the neoliberal
policies of the new government. In the 90s the unions experienced a major loss in
affiliates, partly due to the shrinking public sector. Since the late 90s though, the
number of affiliates has slowly risen in most member organizations (FNT A
2005:1-2; Ruiz 31-01-06; and Parker 09-02-06).
1.4 Method
The thesis is based on a theoretical discussion confronted with empirical research,
obtained through a minor field study in Nicaragua. The methods used fall under
the techniques of a case study. The case-oriented study is useful to gain profound
and detailed information in a specific topic, and it affords an opportunity to
analyze different levels (e.g. the state level as well as the local level) and different
theoretical perspectives (see Hague et al 1998:273, 276-277). Accordingly, the
method used is qualitative, in contrast to quantitative, as I am more interested in
the questions of “how” and “why” than “how much” or “how many” (see
Lundquist 1993:103-105; and Yin 1984:13). The choice of method is always a
trade-off between complexity and generalizing, and the limit of a case study is of
course that it is difficult to simplify the specific observation as applicable to other
forms or places of the studied phenomena (see Peters 1998:5).
However, as Hague (et al 1998:275-277) argues, the case study analyzes
something that has importance beyond just the specifically chosen observation
area, it offers a detailed illustration of a theme of wider interest. In the case of this
thesis, I believe that my observations will be of interest also when studying other
parts of the world, within the same topic, as globalization – quite obvious – is not
isolated to Nicaragua or Central America. Accordingly the thesis may be seen as
an illustrative case, and to some extent even as a representative case (see ibid; see
also Yin 1984:21-26; and Peters 1998:137-138). At the same time, as Yin
(1984:39) points out, because it is always uncertain to generalize to other case
studies, the researcher should strive to generalize findings to theory. That is also
8
what this thesis is aiming at, in the second part of the analysis using a rather
specific theory model.
A central instrument in my field study has been interviews. The critique of
this technique is somewhat similar to the critique of the case study, saying that the
findings are not generalizable because the subjects are too few. The response is
also the same – the focus on a few but profound interviews is likely to give a
deeper understanding of the situation between the individual and the situation,
than it is possible to gain in, say, a survey (see Kvale 1996:102). Only open
interviews have been used, i.e. the theme of the interview has been set in advance
but not the exact questions. A good interviewer must make quick choices about
what questions to ask, what answers to follow up and to be able to assist the
interviewee in the unfolding of his or her narrative (ibid:147). Hence, I believe
that a set form of questions restrain both the interviewer and the subject from
having an open dialogue that, within the theme, may develop into narratives
difficult to foresee in advance, and of interest and relevance to the study. Persons
on all union levels have been interviewed, from national leaders to union
members in the maquilas (factories) in the EPZs. Some of the latter have been
given anonymity, and I can only guarantee my intentions of presenting their
opinions as correctly as possible.
Further, I have had numerous of informal conversations with persons with all
kinds of backgrounds, also outside the given study area. These conversations have
been important to my knowledge of the overall situation in Nicaragua.
Although the interviews are crucial to my study it should be stressed that they
are not central in the sense that a few interviews are the fundament of my
conclusions. They have not been subject to a profound discourse-analysis, but is
one part of a broad study including a wide range of other empirical research. In
the thesis I have tried to illustrate different factors with quotations, to make
important issues more visible to the reader.
Regarding research-strategy, I have worked with a vertical approach, meaning
that I have studied different levels of the labor union movement in Nicaragua,
beginning with grasping the general picture through the national umbrella
organization of FNT, continuing with studies of the sector-specific national union
CST-JBE, and finally making visits to and interviews in local work places.
Though generally discussing the national impact of neoliberal globalization, my
focus has been set on sectors mostly affected by the internationalization of
markets. Hence I have concentrated on the maquilas in the EPZs. The different
study-levels will not be separately or explicitly discussed, but are integrated
throughout the thesis, thus linking the individual together with the wider structure,
dealing with a micro and a macro perspective at the same time. This approach
make the study wide of course, but it is impossible to explain how Nicaragua has
been able to change a negative labor union trend by only examining one union
level, ignoring other parts of the union structure.
9
1.5 Material
The base of the thesis is a thorough discussion on globalization theory. For this
part secondary material is used, i.e. social science literature and research articles
in different science journals. To a lesser extent information from international
union organizations and daily press are applied.
Nevertheless, the empirical research undertaken in Nicaragua is of course
crucial to the analysis and the conclusions of the thesis, and is the very centre of
my globalization discussion. The empirical material is predominantly constituted
by primary sources. Through interviews and informal conversations I have
collected a material base of first hand information that has been essential to my
understanding of the current labor situation in Central America. I have also read
documents, reports, statistics and information summaries supplied by the labor
unions in Nicaragua.
It is of course a potential problem for the researcher when a major part of the
empirical material is information given by a biased part in the research area. It is a
risk that narratives given do not correlate with reality, even though it is not the
purpose of the interviewee to give incorrect or incomplete information (see
Lundquist 1993:108-109). To minimize this risk it is essential to analyze also the
sources, to compare them with other empirical evidence, and to understand the
cultural context in which the information is received (ibid:108-113). To reduce the
risk of incomplete or false information I have usually posed the same questions –
when sensitive or particularly essential – to several persons, also outside the labor
unions. Further I have compared local information with Nicaraguan journals and
daily newspapers, and with my own observations through visits to workplaces,
union congresses etc.
It should finally be stressed that even though primary sources sometimes may
give incomplete information, it is also likely to give the most exact empirical
material, providing the researcher with unique opportunities to learn about the
study-subject.
10
2. Theory
Even though my field study primarily is linked to some narrower theories, I
believe that it is important to position the study also in the larger ontological
discussion regarding globalization. Accordingly, I will start with providing a
summary of the big theoretical picture. First, I give a rough presentation of the
main ontological categorizations in the globalization debate as a whole. Second, I
examine the most central terms discussed regarding labor and production in
relation to economic globalization, focusing on the economic and social situation
of developing countries and on the relationship between the so called Third and
First World.
As the reader will discover, I also position my own ontological and theoretical
standpoints in this debate, so that the following analysis can be interpreted in the
light of the author’s inescapable subjectivity. Finally, I present the theoretical
framework of Christian Lévesque and Gregor Murray that will be my main guide
and instrument in the analysis of the second research question.
2.1 Ontological Perspectives
David Held’s (et al 2004) ”Global Transformations” provide a broad
categorization of three different perspectives of globalization. The three schools of
thoughts are based on the perception of the globalization’s importance for the
world order. They are labelled the hyperglobalist thesis, the sceptical thesis and
the transformationalist thesis. Between these perspectives – internally vastly
heterogonous – exists a substantial disagreement on how globalization should be
perceived and described, and what structural effects it has (see ibid:3-4).
Within the hyperglobalist thesis widely separated ideological schools such as
marxists and neoliberals are united in the perception of globalization as a new era,
inhabiting a new dimension of the political and economical structure of the world.
Foremost, globalization is seen as an economic phenomenon, in which the
influence of the market has exceeded that of states, being undermined by
transnational economic relations. Neoliberals such as Ohmae (1990 and 2000:1-7;
see also Held et al 2004:3-5) talks about “the borderless world” in which only
“one invisible continent” exists, lacking territory and borders. Similar terminology
is used by the neomarxists Hardt and Negri (2003), describing a new world order
– an endless dimension that abolish history. In this paradigmatic shift states have
lost their sovereignty to a universal bio-politic power, the empire. Even more
moderate neomarxists can be categorized as hyperglobalists, arguing that the
traditional north-south division have been replaced by a new international division
11
of labor with a more complex architecture of economic power (Held et al 2004:4).
Robertson (1998) summarizes the hyperglobalists perspective in the description of
the world as one place (see also Paolini 2002:59-60).
Also the globalization sceptics focus on economic factors. However, they say
– frequently using statistical arguments – that today’s economic relations are
nothing new or historically unprecedented. Rather the opposite. And states are by
no means passive victims of internationalization, but its primary architects.
Globalization is not only exaggerated, it is a myth (see Held et al 2004:5-7). Hirst
and Thompson (1998:7) describe globalization as an image with such attraction
that it has hypnotized the analytics and tied down the political thinking. But the
image is totally false (see ibid:7, 234).
The transformationalist perspective views globalization as a long historic
process that today have reach a level unsurpassed in history. The world is
restructured by economic, political and social forces, and behind this globalization
is an essential and driving vigour. Dividing lines such as north and south or core
and periphery are dissolving, although the trend of globalization has been spread
unevenly. But unlike the hyperglobalists the transformationalists argue that states
– even though the traditional pattern of power have been eroded – still occupy a
key role in development, and have not lost their sovereignty. Nevertheless states
exist in parallel – and are of course integrated – with a mounting supraterritorial
space. The globalization has also forced states to adjust its strategies and become
more active players on the international scene (comp Held et al 2004:7-9 and
Scholte 2000:8-9).
2.1.1 Theoretical Discussion and Definition
With the three ontological perspectives presented above follows at least as many
definitions on globalization. From a liberal and hyperglobalist perspective
globalization can be defined, according to Emmanuel Richter, as ”a global
networking that has welded together previously disparate and isolated
communities on this planet into mutual dependence and unity of ’one world’”
(Baylis & Smith 1997:15). The opposite would be a more sceptic and Marxist
indicated definition, like Martin Khor’s ”globalization is what we in the Third
World have for centuries called colonization” (ibid).
The hyperglobalist opinion of the world as ”one place”, mutually dependent
and deterritorialized, describes a potential future. As a contemporary illustration
the school can be questioned on at least two critical aspects.
First, despite an accelerating development in communication, financial
markets, information, technology etc, globalization remains an unknown concept
for most people on earth. World wide interactions and markets in its true sense is
a rare reality in most parts of the globe, since 80 percent of the earth’s population
live outside global consumer networks (see McMichael 1996:275-276). Although
tendencies points at a degradation of the “triadization” – Europe, North America
and East Asia widely dominating the world’s economic interactions – it may still
be questioned if other regions in reality experience the world as one global place
12
(comp Cohn 2000:357, and Agergaard & Winther 2003:23-24, 158-159). In the
light of these circumstances the hyperglobalist perspective appears to be a western
world theory possibly adequate to the First World, but applied to the whole globe
without empirical support (see Baylis & Smith 2005:11-12).
The second objection – closely linked with above argument – is that the
hyperglobalist school is lacking a satisfactory problematization of the concept ”an
interdependent world”. It seems difficult to imagine a mutual dependence between
the Third and the First World. Even though the hyperglobalists claim this division
to be an anachronism, it is hard to ignore it in several contexts, for example in the
aspect of international loans and aid receiving. It is a fact that most funds paid to
developing states generally are followed by conditions, regardless if the funds
come from single industrialized states or from international financial institutes.
Several developing states’ governments have to consider the thoughts of
international investors (almost without exceptions coming from industrialized
states) and of the WB and the IMF when they shape their politics. This
dependency can hardly bee claimed to exist to the same degree for developing
states towards financial actors, or towards investors from developing states (see
McMichael 1996:274-289).
On the other hand, the globalization sceptics overlook exactly the same
development; how economically poor states more and more have to consider
international actors, primarily based in industrialized states. This appears as a
trend of globalization, although it would still not be correct to speak about “one
world”. The sceptics also seem to disregard from the extension and deepening of
capitalism concurrent with, and through, increasing liberalisation of markets and
borders. The creating of supraterritorial spaces and the neoliberal development
identified by Scholte (2000) has empowered the system of capitalism, entering
new geographic and institutional areas (see ibid:97-99). Although North AmericaEurope-East Asia dominates international economic interaction, developments
such the mushrooming of EPZs in developing states shows that the Third World is
increasingly involved in an economic globalization (see ICFTU 2003:5, 8).
Accordingly, this work adopts the transformationalist’s perspective, in which
a qualitatively new and earlier unprecedented globalization is identified, although
we are not witnessing “a global and mutually interdependent world”. In line with
this position Held (et al 2004:16) provides an adequate definition of globalization
as:
A process (or set of processes) which embodies a transformation in the spatial organization of
social relations and transactions – assessed in terms of their extensity, intensity and impact –
generating transcontinental or interregional flows and networks of activity, interaction, and
the exercise of power.
2.2 Labor and Production in the Global Economy
Above theoretical categorizations provides an overview of the globalization
debate. My own declaration of ontological position also helps the reader to follow
the thesis’ observations and analysis. However, these categorizations will not
13
guide the continuing, and more open, discussion on labor and production,
although it will of course be helpful as a point of reference when understanding
different arguments. Following comparisons and discussions will emanate from
different concepts that have become central in the globalization literature
regarding labor and production. First though, I will briefly treat and define the
ideology of neoliberalism, as it is central to the thesis and to the theoretical debate
of globalization.
2.2.1 Neoliberalism
Neoliberalism is tightly linked with capitalism, since the former advocate the
greatest space possible for the latter. It may be perceived as a 20th century
renaissance of Adam Smith and David Ricardo, foremost associated with and
presented by the Chicago school economists Friedrich von Hayek and Milton
Friedman, and later implemented primarily by Margaret Thatcher and Ronald
Reagan (see Yergin & Stanislaw 1998:92-124, 141-149, 335-340).
Theoretically, neoliberalism can be explained as a reaction to the macroeconomic theories of Keynes, as it argues that priority should be given to inflation
control before unemployment measures. Further, prices and commodities are to
fluctuate and be able to move without government restrains – state intervention in
the market obstructs the economy and should be kept to a minimum (ibid: 145151). The “laissez-faire” state, conducting the discourse of export-led
development, is the model (Robinson 2004:137).
Regarding globalization, neoliberalism can be seen as:
A mechanism that adjusts national and regional economies to the global economy by creating
the conditions, including an appropriate macroeconomic and policy environment, the legal
framework, and so on, for internal productive reorganization and insertion into the global
economy (ibid).
To put it shortly, the neoliberal perspective legitimizes the globalization with
values of economic efficiency (Leisink 1999:2).
In the 1980s the Washington Consensus was created – a cluster of views that
made up the agenda for economic development. The consensus constitutes the
very core of neoliberalism and among other variables includes: fiscal discipline,
trade liberalization (reducing or eliminating trade barriers and tariffs), openness to
foreign direct investments, privatization of state enterprises, deregulation (of laws
that restrict competition), legal security for property rights, tax reforms
(broadening the tax base, cutting marginal tax rates), competitive exchange rates,
and market determined interest rates (Little 2003:70-71).
In practice, these measures also means an increasing coordinative role of
government policies by international financial institutes such as the WB, the IMF
and the WTO (see ICFTU:A 2004:10).
14
2.2.2 The New International Division of Labor
A phrase that is persistent in the globalization debate is ”the new international
division of labor”. It was invented by Fröbel, Heinrichs and Kreye (1980) and is
commonly viewed as the start of the globalization literature. In the book ”The
New International Division of Labor in the World Economy” the authors claim a
trend in which factories in industrialized countries close down to open up their
business in low-wage countries. Production is moved from regions with strong
labor unions and extensive labor rights to regions with high unemployment and
practically no protection for workers. The hypothesis of Fröbels and his coauthors had major impact since it met an already existing anxiety among workers
in the industrial world. The book was also one of the first to deal with the aspect
of gender, as it identified a tendency among TNCs to hire young, single women
who were more inclined to work long days without protesting or organizing. The
authors argue that this part of globalization makes workers of both the first and
the third world losers (se ibid).
The thoughts of Fröbels, Heinrichs and Kreyes still has strong support, but
have also been criticized, in particular by neoliberals. Ohmae (1990:179-180)
claims that in an integrated world no losers or winners exist. Today there is only
one recipe to give a country’s population a better life, and that is to open up itself
to the global economy and let corporations be free to operate within the borders.
Furthermore, high unemployment is a welcoming sign to investors looking for a
new place to start up an industry (ibid).
When world production raises living standard must follow, Krugman
(1995:115) contends. Foreign investors may lower wages, but they will also
increase the purchasing power with cheaper commodities. Nor will industrialized
states loose because of the new global structure of labor, according to the
neoliberal school. It is true, Krugman admits, that capital flight from the north to
the south may lower workers wages in industrialized states, but only in theory.
The actual capital flow since 1990 has been too small to have the impact many
people fear (ibid:115, 122).
The trade theory that Krugman refers to, predicts that wages will even out
through international trade, i.e. wages will fall in countries with capital intensive
production and increase where production is labor intensive. If this has happened
is debated, but it is acknowledged that the wage inequality within developing
countries has risen since the 80s. It is the low-skilled workers that are worse of
(Held et al 2004:184-185). In industrialized states calculations indicates that the
demand for unskilled labor has been reduced by some 6-12 million person per
year between 1960 and 1990 (Scholte 2000:220).
2.2.3 The Race to the Bottom
This concept is invented by critics to the neoliberal globalization. It refers to a
trend in the liberalized world economy in which developing countries are forced
to compete with each other for investments by powerful TNCs. The means of
15
competition are low wages, little legal protection for workers and labor unions,
tax reductions, minimal environmental restrictions, exceptions from tariffs etc.
Through outsourcing, subcontracting and short-time contracts TNCs are able to
quickly move production to new places, and hence put states and workers in
growing competition with each other. This is what “the race to the bottom is all
about” – a downward spiral of wages and working conditions (comp ICFTU:A
2004:18-19 and Armbruster-Sandoval 2005:8-9).
Implicit responses to this critique of global development are Ricardo’s
classical thesis of comparative advantages, and also the neoliberal school’s
argument of globalization as a creator of jobs and economic growth. The theory of
Ricardo is well-known; each country should produce what it is relatively best at,
and then trade its commodities for goods it is comparatively less good at
producing. Krugman (1995:124) updates the thesis to a 21st century model
adapted to the global labor market: “It is as if some of the North’s skilled workers
migrated to the South”. And the other way around. To put it differently – all parts
gain from this exchange.
Norberg (2001, see 180-183 in particular) provides a more explicit answer to
the race to the bottom-hypothesis. Using statistics he argues that wages in
developing countries are increasing generally, because low wages in a labor
intensive but unrestricted economy increases as productivity is improved. Further,
due to Norberg, companies do not primarily seek a cheap labor force but factors
such as good infrastructure, a well functioning legal system and skilled labor. And
in a more market-oriented world economic inequalities are diminishing and living
standards improving (ibid).
2.2.4 Structural Adjustment Programs and Export Processing Zones
Structural adjustment programs (SAPs) are probably one of the factors that have
mostly contributed to the integration of the Third World into the international
economy. These programs – recommended or made as conditions by the IMF and
the WB – have opened up developing states to foreign companies and investments
through economic deregulation. SAPs are intimately connected to neoliberal
ideology, since the fundaments of the programs were made up by the Washington
Consensus (see Little 2003:70-71). Those who advocate the SAPs say that they
are measures that generate higher productivity, domestic financial discipline,
cheaper commodities and services, and improved living standards (see Leisink
1999:2). The critics argue that the programs undermines job security and causes
unemployment, as local industry and trade are exposed to international
competition (Scholte 2000:222).
The amount of EPZs in the world has multiplied several times over the last
decades. 40 millions of workers, foremost young women in developing states,
were working in these zones in 2003 (ICFTU 2003:5). In order to attract
investors, there are few regulations and restrains on the companies within the
EPZs. This is one reason why EPZs are often referred to in the discussion of “the
race to the bottom”. The zones are set up in the purpose of creating jobs, earn
16
foreign currency, develop deprived regions, boost exports (particularly in key
sectors), promote the transfer of technologies and skills, and boost the economy as
a whole (ibid:8). The EPZs are good examples for the neoliberal school of
thoughts on how unregulated capitalism create employment and improve national
growth.
For the critics the EPZs are the worst aspect of globalization. Empirical data
rather than theoretical models are provided to support the case. Even though it is
usually difficult to get access to the zones – a fact that per se is an argument for
the critics – numerous of reports tell about violations of personal integrity as well
as of labor rights, and about poor workplace environments and extremely low
wages (see for example Elliott & Freeman 2003:52; and Klein 2000:249-276).
2.2.5 Theoretical Discussion
The neoliberal claim that unrestrained capitalism generates economic growth is
convincing. States with open economies generally show a better macroeconomic
performance than more market-isolated states. According to Norberg (2001), a
free market undermines oppression and dictatorship. Also, when foreign
companies are free to start up industries in developing states the local labor force
is no longer bound to one or very few employers, but can chose between different
workplaces: growth empowers the individual (see ibid:67).
However, there is reason to raise some doubts about the free market’s
possibility to benefit everyone. First, the very fundament of (neo)liberal theory
can be questioned: that all gain from free capitalism, based upon Ricardo’s thesis
of comparative advantages. Already Marx stressed a problem, or rather an unjust
factor, in the theory of Ricardo. According to Marx it consolidates an unfair
exchange, because the surplus value (or compensation) from high labor
productivity is greater than from low labor productivity (see Katz & Perez
2001:6). Later Marx presumption has been adopted by the dependency school,
talking about “negative terms of trade”, meaning that developing states’ (labor
intensive) export is decreasing in value each year in comparison to their (capital
intensive) import from developed states (see dos Santos 1996:165-175).
Further, the statement that open economies give workers opportunity and
power to chose between employers does not seem entirely true, since in most
developing countries a substantial problem is vast unemployment among lowskilled workers. An unemployment that tends to increase with liberalization of the
domestic market, as when SAPs are implemented (see Scholte 2000:222; see also
Armbruster-Sandoval 2005:114-115). That wages are affected negatively of such
a development – that is increasing unemployment – is predicted also by classical
economic theory of the relationship between labor and compensation: less jobs
equals less compensation (see Hirsch & Addison 1986:10-21).
On the other hand, according to Krugman (1995:115) decreased wages in a
globalized economy will usually be compensated with cheaper prices on
consumer goods, in the end making the purchasing power stronger than before. It
appears like Krugman overlooks the perspective of developing countries though.
17
Jobs disappearing in economic liberalization of the Third World primarily tends to
be jobs producing goods and services for the domestic sector, while the new jobs
that are created is in the export sector (mostly in EPZs). It is seemingly hard to see
how domestic purchasing power can increase because of cheaper prices on
consumer goods produced for export to the First World.
The most significant ideological difference in the debate of globalization’s
effect on labor and production in developing countries is supposedly, on one side,
the perspective that in accordance with Ricardo’s theory emphasizes the mutual
advantages with taking part of trade, and on the other side, the perspective that in
accordance with Marxism, structuralism and dependency theory emphasizes the
inherent inequality that comes with the economic globalization of today. As is
noticeable in the more reflective parts of this thesis, the author’s own perception is
closer to the latter perspective. A qualitatively new globalization is proceeding,
affecting several parts of the world and many different aspects of social and
economic life. It is a process carrying possibilities, but with its current neoliberal
character it has also affected workers in developing countries negatively. It seems
like working conditions and job security in particular are threatened when
economic policy making regularly is transferred to the forces of the free market.
2.3 Specific Theory for Union Power
According to Christian Lévesque and Gregor Murray (2002:39-65) globalization
exerts significant effects on labor unions, regardless if they are local, industry,
occupational or national. To resist the negative consequences of globalization it is
important to identify the sources of union power that best adapt to the new global
context.
The subsequent section will focus on the specific relation between labor
unions and globalization, in particular regarding power in this context. It will be
followed by the unions’ power resources that Lévesque and Murray identify.
2.3.1 Globalization and its Consequences for Union Power
A simple definition of a labor union can be found in an ordinary encyclopaedia:
“an association of wage-earners within the same industry or profession, with the
purpose to represent its’ members’ common interests, particularly in relation to
the employer” (Bonniers lexikon 2002:210, my translation). For a deeper
understanding of the phenomena Karl Marx becomes central. His thoughts are
cornerstones in the development of the union movement. The fundament of
Marx’s theory is well known and will not be widely discussed here. However, the
main point shall be stressed: when workers organize they become a class, sharing
the same interest. It is only with the coming together that they are able to become
powerful (comp Hyman 1999:94-95 and Moody 1997:143-147). How then, does
globalization affects the power of unions?
18
First, globalization puts labor unions under considerable stress. In
increasingly open economies capital becomes more mobile and the pressure
hardens on competitiveness; that is on technological change, to adopt new forms
of work organization, to be flexible, to modify the work place and to always press
costs. In this context the pressure on unions from its members – to intervene
effectively to minimize the damages of these changes – gets increasingly intense
(Lévesque & Murray 2002:43).
Secondly, the bargaining between union and company becomes decentralized,
as national borders are vanishing. Local unions’ possibilities to negotiate by a
larger national union are diminishing, thus isolating the local union and also
reducing its capacity to inflict economic costs on the employer (ibid).
Third, also the union as an institution is put under stress, as many managers –
under increasing competitiveness – seek to engage directly with the workforce
instead of using traditional communication ways with the unions. By doing so
they intend to make workers more loyal to the company than to the union
solidarity (ibid:43-44).
Moody (1997:303) describes the antagonism between labor and capitalism:
“capitalism thrives on competition; unions exist to limit one aspect of this
competition, that among workers”. The globalization of today, with its
neoliberal character, seems to escalate the capitalistic competitiveness in most
aspects of economic interaction, also between workers. That makes globalization
a challenge to labor unions.
2.3.2 Three Central Power Resources for Unions
Based on an analysis of various unions – mostly in Canada but also in the U.S.,
Mexico and elsewhere – Lévesque and Murray (2002:39-65) have created a
theoretical framework that argues that the real impact of globalization depends on
the capacity of unions to mobilize their power. Hence, labor unions must focus on
a number of power resources that are likely to become increasingly important in
the global economy. Three such resources are identified: internal solidarity or
democracy; external solidarity; and proactivity or agenda. These resources are,
according to Lévesque and Murray, not only critical for union action but they are
also mutually reinforcing. Since globalization exerts a considerable impact on the
three resources, the importance of their renewal, mobilization and development is
essential to union action and gain of influence (ibid).
Internal solidarity:
This factor relates to the mechanisms developed in the workplace to ensure
democracy and collective cohesion among workers. It includes membership
participation and the existence of delegate structures, as well as communication
methods between workers and leaders and the relationship between workers and
their union.
To achieve its agenda, the union must rely on the collective identity and
cohesion of its members. And it is democracy that underpins the achievement of
19
internal solidarity. Democracy here refers to the participation of members in the
life of their union but it also entails a number of basic internal structural variables
such as the existence of different means of communication between members,
stewards, and local leaders, and the access to educational programs.
Democracy also appears to be a key element in the identification with the
union and its objective. A major source of alienation is the perception of an
absence of democracy in decisions made by the local union. Labor union
democracy tends to be crucial regarding both membership perception of the
overall essential character of the union, and the underlying support for a basic
basket of union values and practices such as the importance of strikes etc
(Lévesque & Murray 2002:52-54).
External solidarity:
In a market driven context, the “us” easily becomes the workplace, including
workers and management, while the “them” is other workplaces including
management and unions. External solidarity refers to the capacity of local unions
to work and cooperate with their communities. It also relates to the ability to build
horizontal and vertical coordination within their union and with other labor
organizations. It includes the behaviour and participation of local unions in the
larger union structure, and their capacity to access the resources of this
community. Further, external solidarity incorporates the building of alliances
among unions, community groups and social movements. Even cross-border
cooperation is included in this variable. External solidarity is important to
promote an agenda, since isolated unions are less likely to develop an own agenda
and to influence the process of change (ibid:54-58).
The external solidarity-factor provided by Lévesque and Murray can be
complemented with the boomerang-effect model invented by Margaret Keck and
Kathryn Sikkink, and applied to union movement campaigns by ArmbrusterSandoval (2005:22-26). The boomerang-effect then can be explained as a building
of transnational advocacy network. For example: A powerful TNC or state
restricts a domestic NGO (union) from redressing its complaint (low wages, poor
working conditions etc). The domestic NGO then develop ties with NGOs beyond
its borders – forming a transnational network of alliances – whose members can,
in turn, pressure their state or head company to put pressure on the original state
or TNC (subcontracting company) (ibid).
Proactivity:
Proactivity refers to the ability of local unions to shape and put forward their own
agenda. It seems like many unions that confront the realities of globalization tend
to take a defensive role, reacting to new or presumed company actions rather than
promoting their own visions. Proactivity is an expression of the interests,
objectives and visions that unions are pursuing. This variable especially concern
local leadership’s ability to put forward an agenda, to develop strategies to
achieve it and to communicate that agenda effectively. According to Lévesque
and Murray it is crucial that the agenda is constructed from actual worker
concerns, and that it is autonomous and proactive. Even though defensive
20
strategies are necessary it is a vision and an offensive agenda that enhances the
members’ identification with their union (ibid:47-52).
21
3. Analysis
3.1 Neoliberal Globalization as a Threat to Unions
A validity problem when examining if neoliberal globalization per se is a threat to
labor unions is to separate specific government policies from globalization itself.
A government may be offensive towards labor unions of other reasons than
pressure from international development. However, in the case of Nicaragua I
believe that it is possible to identify a rather direct correlation between neoliberal
globalization and the effects on unions, even when measures negative to unions
are implemented by the government.
Another problem may be to separate the effects of neoliberal policies on
employment and social conditions from effects directly affecting labor unions. It
is here important though, to stress that it does not exist a clear division between
these to entities. Labor unions are built up by and consist of workers, on whom
changes in society inevitable impinge. Higher salary as well as poverty has the
similar consequences for the union as it has for the individual. Accordingly, I
believe that it is important not to disregard the overall social picture, closely
relating to organized labor. I will hence start with discussing the effects on labor
and social conditions in general, before treating the unions specifically.
3.1.1 SAPs Effects on Living Standards and Employment
Already the FSLN, in the end of the 80s faced with hyperinflation and capital
flight, introduced a series of IMF-like austerity measures, including devaluation of
the national currency and laying of public sector employees (ArmbrusterSandoval 2005:112). But the real neoliberal shift came with the government
coalition that won the election in 1990. Led by Violeta Chamorro, the
conservative government started a closer relationship with the IMF, and thus
followed the path of neoliberalism that most states in Latin America had pursued
since the debt crisis of the early 1980s. This policy change undertaken around the
continent is based upon the values of the Washington Consensus and is by
Gwynne and Kay (1999:3-13) called “a paradigmatic shift”.
In line with neoliberal theory of giving priority to inflation the new
Nicaraguan government froze living standards, by raising prices and wages at the
same time. To obtain loan to pay off the country’s tremendous debt, it also
implemented IMF-backed SAPs, including privatization of state-owned
enterprises and cuts in social spending (Armbruster-Sandoval 2005:113). These
measures hurt the labor union movement hard, because it led to vast
22
unemployment, resulting in membership-losses for the unions. The CST (today
divided in CST and CST-JBE) lost over 50 percent of its members due to
rationalisation measures, e.g. the sugar and coffee industries dismissed 15 000
respectively 55 000 employees (Barbosa, Morales, Ruiz 06-03-06).
Recommended by the IMF, Nicaragua continued by opening up for foreign
investments, in particular focusing on creating EPZs. As discussed in part 2.2.4
these zones have mushroomed the world the last decades and are closely
associated with neoliberalism. From having 7 maquilas (companies in the EPZs)
employing 1300 workers in 1991, Nicaragua in 2004 had 67 maquilas employing
over 66 000 workers (comp Armbruster-Sandoval 2005:115 and Utrikespol inst
2005). But this employment boom has not compensated for the 190 000 jobs that
were lost in the public sector between 1990 and 1997, because of cuts in public
spending (Bermudez 18-01-06).
The freedom to choose between several employers, that Norberg (2001:67,
see 2.2.5) predicts as an effect of foreign companies’ investments in developing
countries, is difficult to relate to Nicaragua. High unemployment – labor statistics
show a 68 percent underemployment in income in 2003 (ILO 2003) – makes it
possible for employers to choose workers, not the other way around. This is one
reason why the majority of the labor force in the burdensome maquila industry is
young women. The words of Delia Josefa Soza (26-01-06) – a 55 year old
Nicaraguan woman that for many years worked within the maquila industry –
support the trend identified by Fröbel (et al 1980; see 2.2.2), saying that TNCs
hire women because they are less inclined to protest against bad working
conditions:
We are the weakest. We have children and they must eat, we have more responsibility, and
for that we submit to maltreatment.
Delia Josefa Soza was herself fired and blacklisted after having informed a
colleague on her labor rights.
As established, the opening up of the internal market has not led to decreased
overall unemployment in Nicaragua. In another sense the classic theories of
economics are adequate though – with high unemployment the wages have
decreased (Hirsch & Addison 1986:10-21). However, according to neoliberal
theory, falling wages is generally compensated by cheaper commodities, thus
increasing the purchasing power (Krugman 1995:115, see 2.2.2). Also this
prediction has turned out to be false in Nicaragua, where the purchasing power
has fallen, as the price of staple foods has increased dramatically in comparison to
minimum and medium wages. In 1994 the minimum wage could by 1.24 Canasta
Básicas (basket of 53 staple commodities), in 2005 it only bought 0.6 Canastas
(FNT C 2005:5; also comp El Nuevo Diario 01-09-04 and Hoy 11-05-06). Two
plausible reasons to this lowered living standard is that production today is
focused on export and not on domestic needs, and that some privatizations of state
enterprises has meant considerably higher prices. For example, since the state
privatized energy supplies in 2000, costs have risen with hundreds of percent
(Bermudez 16-01-06; see also Armbruster-Sandoval 2005:114).
23
Has the neoliberal policies had no positive effects then? As mentioned it has
won the trust of foreign investors, who have poured into Nicaragua throughout the
90s and increased the value of exports. Importantly too, is that inflation dropped
remarkably from 13 000 percent in 1990 to less than 10 percent in 1999. On the
other hand, these results have been achieved during the same time as infant and
maternal mortality, malnutrition, unemployment, and income gaps has risen, and
workers with social security have dropped with 230 000 persons (ArmbrusterSandoval 2005:114-115; and Bermudez 19-01-06). The importance of
employment has to be stressed when comparing the effects of these new policies;
according to La Prensa (31-10-04) the most severe health risk in Nicaragua is
unemployment, which leads to poverty.
3.1.2 Labor Rights Violations in a Race to the Bottom
It is not only indirect circumstances that have affected union power. The new
governments of the post-Sandinista period seem to regard labor unions as a threat
to economic development, introducing laws that have reduced the influence of
organized labor. According to the CST-JBE, in 1991 courts ruled it prohibited for
workers to pay 1 percent of their income in labor union fee. The law was
withdrawn in 1996 but badly hurt the finances of union activities in the meantime
(Barbosa, Morales, Ruiz 06-03-06). Another problem for the labor unions is that
the new laws stipulate that a workplace can have several labor unions, as long as
every union has at least 20 affiliates. Employers have used this opportunity to set
up their own unions, usually called “Sindicatos Blancos”. One example is the
maquila Mil Colores in Managua, promising employees who join the Sindicato
Blanco better work assignments and higher payments. The purpose is to control
organized labor activity. (Recently the company-union have lost members to the
independent union though, since the latter part of the promise was hardly ever
fulfilled) (Meza Guilleri 15-03-06). It is true that it is difficult to link these
government measures against union activity directly to neoliberal globalization. It
can be stressed though that these policies have been implemented during a time
when the government have had a close cooperation on labor market policies with
the IMF. However, there are other factors harming labor unions that are more
intimately correlating with current globalization.
In parallel with neoliberal policies and increasing globalization, Nicaragua
has experienced swelling numbers of reports on labor rights violations. It is in the
EPZs that such violations are most frequent; the unions in the EPZs are
considered prime targets for employers. The last couple of years more than 5000
workers in the Nicaraguan textile industry (which is the main industry within the
EPZs) have been fired. There have also been reports of blacklists being distributed
with the names of hundreds union activists (comp ICFTU:B 2004:123-125 and
Bergfors 2005:28-33).
To answer why labor rights violations are especially frequent in the EPZs the
race to the bottom-theory becomes applicable (see 2.2.3), since the export sector
is the one mostly exposed to international competition. This is particularly true for
24
the textile industry. Despite the fact that Nicaragua is the second poorest country
in Latin America, and thus provides low wage costs, its maquila industries are
experiencing fierce competition. The main threat is China that attracts production
with a giant supply of labor, low wages and a ban on independent labor unions.
Furthermore China provides a modern assembly of machinery, well developed
infrastructure and an undervalued currency, compensating for the long distance (in
relation to Nicaragua) to the North American consumer market. Before 2005
China’s textile export was restricted through quotas decided in the so called multifiber agreement. Now when the agreement is abolished the WTO predicts that
China’s textile export to the WTO-countries will increase by 50 percent. Already,
the maquila sector in Central America is losing production to China. Like
Nicaragua, the Chinese textile industry is located in EPZs, employing 75 percent
of the worlds EPZs’ labor force (comp Andersson & Reyes 2005, Söderqvist
2005, Wong 2005, and Fonseca 2004).
A critique to the race to the bottom-theory is that it is simplified, since there
are several other factors, besides wages and labor unions, to take into account
when starting up an industry (see Norberg in 2.2.3). As Armbruster-Sandoval
(2005:8-9) recognizes the theory presupposes that TNCs easily can “cut and run”,
i.e. shut down its factories and move the production. In other words, the theory
presumes high capital mobility. Without evaluating this assumption regarding
other industries, it appears valid for the garment industry that is labor-intensive
and requires low start-up costs (ibid). Factory shut-downs in Guatemala in 1998
and in Honduras in 2000 (both due to union campaigns) give empirical evidences.
In Nicaragua textile companies like Chentex and Nicotex have publicly threatened
to shut down its’ factories if union members were not allowed to be dismissed
(ibid; and Bergfors 2005:29). Leonor Jimenez (18-03-06), union leader at the
Taiwanese maquila Roo Hsing Garment Co in the EPZ Las Mercedes in
Managua, is also familiar with these kinds of threats.
They tell us that the labor force is much cheaper in China, and that the company will move if
the union continues to cause problems. It feels like a real menace to us.
The maquilas in the EPZs usually work through outsourcing and subcontracting,
meaning that they produce, say clothes, for TNCs in industrialized states, but are
not owned by these companies. Critics argue that one reason for TNCs to
subcontract production is to escape wage and working condition responsibility,
thus saving money. Subcontracting in turn, seems to lead to short-time contracts
for workers (see Klein 2000:249-276). In the maquila-sector workers are
generally hired for one or three months. But if showing signs of union
organization interest they are unlikely to receive a new contract. If working hard
and staying out of unions the contracts usually get longer each time, or sometimes
even unlimited (Garcia 07-02-06; and Meza Guilleri 15-03-07).
A more specific example on how short-time contracts hurt the labor union
movement is the Coca Cola-company in Nicaragua. The company have cut down
its labor force from 6000 employees to 300. In practice it is not less persons
working, but only 300 have real contracts. The rest are subcontracted, mostly by
the truck drivers needing help with loading and unloading bottles. These
25
subcontracted workers are usually hired by the day, meaning that they have no
long term job security. Being without a formal employment they have lost also the
right to social security and vacation, which saves the Coca Cola-company money
(Bermudez 19-01-06). The last six years it has been an important goal for the FNT
to organize subcontracted employees as the Coca Cola-workers. Because shorttime contracts (e.g. one day-employment) makes it difficult for workers to
organize, as employment in practice is required to form a union (ibid).
3.2 The Response from Organized Labor in Nicaragua
As argued throughout the theory chapter and in the first part of the analysis,
neoliberal globalization puts labor unions under severe pressure, even threatening
their existence. However, after the dramatic drop in affiliation during the 90s,
union density in Nicaragua has increased in the last couple of years, also within
the controversial EPZ-industry, making the country an exception in a general
world trend. This fact may seem to contradict the theoretical arguments presented
in the thesis. But, as Lévesque and Murray (2002:39-65) claim, it is possible to
limit the negative impacts of globalization by reinforcing vital power resources. In
examining the Nicaraguan labor union response to global developments their
theoretical model becomes applicable. As I will show the union movement in
Nicaragua in several aspects has developed in a way that the theory of Lévesque
and Murray identifies as essential to strengthen labor union influence and power.
When considering the three factors provided by the theory – internal solidarity,
external solidarity, proactivity – it also becomes evident how closely connected
they are to each other, functioning mutually reinforcing.
I will finish the analysis part by providing two more country-specific factors
that are likely to have contributed to a relatively positive development for the
Nicaraguan union movement.
3.2.1 Internal Solidarity
According to Lévesque and Murray (2002:52-54) it is democracy that underpins
the achievement of internal solidarity. Democracy appears to be a key element in
the identification with the union and its objectives, and lack of democratic
member influence tends to create alienation.
In Nicaragua, as in Latin America in general, corporatism has been a frequent
factor in national politics. During the Sandinista era every aspect of society was
ruled from the top, and the leftist unions were controlled by the FSLN. The
Sandinista party is still associated with lack of democracy, and the FNT and its
member unions even today have political cooperation with the FSLN, e.g. holding
some of the party’s seats in parliament. However, and probably more important,
the unions are economically independent. Its autonomy is indicated by transparent
economic accounts and by democratic structures, in particular including open and
free elections to all posts, free from FSLN-control. There are also relatively open
26
sentiments within the labor union movement that the FSLN leadership should be
exchanged to promote democratization, indicating both independence and
daringness. Miguel Ruiz, responsible for international relations of the CST-JBE,
expresses the problem as well as the democratic development of the CST-JBE
(Ruiz 31-01-06):
The whole world knew that we were Sandinistas. Today we have a base of several political
opinions. Our leaders are democratically chosen and we do not ask for their political
standpoints (…) This is very important to us and it is our strength today. We have advanced a
lot and worked hard to become autonomous.
The democratic and autonomous transition that Miguel Ruiz refers to is supported
by my own empirical research – among other observations attending local leader
elections and the constitutional congress of FNT – and interviews with
international cooperation partners (Parker 09-02-06; and Svensson 13-03-06). It
appears like the dependency pattern is slowly changing – from the labor unions as
highly dependent upon close ties with the FSLN, towards a situation were the
FSLN is getting dependent on the support from the labor unions. Such a situation
is likely to strengthen the influence of labor unions in national politics. And,
because of the widespread association of FSLN being ruled by a few authoritarian
leaders, it is supposedly important for the FNT union-members’ perception of
their organization that it is independent from the Sandinista party.
A key factor to this dependency shift, and to the democratic transition of the
labor movement, is a seemingly shift towards grass-root organization. In the
maquila sector for instance, it is usually local workers that upon their own
initiative organize colleagues and form a union, and then is given assistance from
the CST-JBE. It is not the national union arriving to the workplace telling the
workers what to do. Even though this would seem as a legitimate strategy since
labor rights information is scarce, the fact that local unions are formed from
concerns first raised within the industry is likely to enhance the feeling of
identification and solidarity with the local union, as Lévesque and Murray find
important (Garcia 07-02-06; and Meza Guilleri 15-03-07).
The theoretical variable of internal solidarity (Lévesque & Murray 2002:5254) also identifies communication and education structures as important to
achieve democracy and collective cohesion among workers. In the case of the
labor unions in Nicaragua finances are constantly scarce, inflicting on
communication and education possibilities. In the maquila sector union leaders
most times have to pay at least part of their travel expenses – for meetings with
the larger union – themselves. With a wage of 2-3 US dollars per day a trade-off
between personal economy and union communication must be made for each
meeting. This is likely to restrain good communication between the local union
and the national union. However, a new and simple factor such as cell phones
somewhat compensate for this communication problem. Interviewed maquila
union leaders all carried cell phones, and expressed high satisfaction with the
accessibility of the CST-JBE, being available on line to give advice or
information, or arrive upon request (Garcia 07-02-06; Meza Guilleri 15-03-06;
and Jimenez 18-03-06). A federation of eight maquila labor unions has been
27
created, being one of the 14 federations within the CST-JBE. Besides support and
information-exchange between these unions and the CST-JBE top, the CST-JBE
headquarter is also accessible to any meeting for these unions. It is in the
headquarter elections and congresses are held, and were courses are given for
maquila union-members in and around Managua. With no space for local unions
provided by companies, and without money to hire other space, a residence for
reunions and meetings becomes an important factor to organize (Meza Guilleri,
15-03-06; and Jimenez 18-03-06).
Regarding communication within the local maquila union, it is restricted.
Meetings are not allowed on working hours, and after work many employees feel
too tired or do not have time to join meetings. Instead weekends and some times
lunch breaks are used (Guanica-visit 07-02-06). Recruitment of new members is
usually made outside the workplace, in the neighbourhoods. This way of
organizing is increasing, as a responsive union measure to the new labor rights
context (Meza Guilleri 15-03-06; and Svensson 06-02-06).
Education is highly prioritized within the FNT and the CST-JBE, the former
having an ambitious pyramid-structured organization of education, from basic
study-circles to advanced leader courses. It is not only labor rights’ issues that are
part of education. Since there are analphabetic maquila workers, education
sometimes has to start at a basic level. Several educational programs are funded
with international support, demonstrating how the resources of internal and
external solidarity are interdependent and mutually reinforcing (Ruiz 15-03-06;
FNT A 2005:8).
Scarce economic resources together with company crack-down on local
unions make it difficult to form a labor union structure on the lower levels that are
similar to the standards of developed countries. However, both educational
programs and communication structures has been, and are continually, improving
in Nicaragua. This is likely to further strengthen the democratic transition that the
labor movement has initiated.
3.2.2 External Solidarity
An early and essential reaction from the Nicaraguan labor union movement on the
paradigmatic shift to neoliberalism was to form the national umbrella organization
FNT in 1990. In line with the purpose of creating it, the FNT has become the
major union voice in Nicaragua. It has welded together seven national unions,
whose leaders meet weekly to form joint strategies, exchange experiences or ask
for support. In the FNT education issues and strikes are also discussed and
coordinated (Bermudez 19-01-06). This horizontal harmonization of building a
union confederation has probably vastly increased the national union power, as
suggested in the theory by Lévesque and Murray (2002:54-58). It also appears
like the creating of the FNT has spurred positive side effects, as increased
international cooperation, not only with Latin American partners but with
European and North American organizations. Besides different direct support to
the specific national unions, the FNT receives considerable financial backing from
28
international organizations, primarily from labor unions in developed countries,
adding up to more than USD 500 000. Nearly half of the international cooperation
has been initiated the last five years (Bermudez 24-01-06). A plausible
explanation to why the FNT has gained such respect among donor organizations is
its transparency and democratic structure, on the higher union level probably
partly due to the fact that seven member unions have to find a way of cooperating.
Such teamwork seems difficult without a fair structure for communication and
decision-taking. According to LO-Norway, cooperating with several unions in
Central America, the FNT is the most transparent and democratic labor union in
the region (Parker 09-02-06 and 11-02-06). Like Lévesque and Murray (2002:3965) argue, factors of democratization and external cooperation have been mutually
reinforcing.
A more specific external solidarity-response to increasing market power is the
“boomerang-strategy” (see part 2.3.2). An example of its use is the case of
Chentex in the end of the 90s. The Chentex-maquila in Nicargua produced clothes
for J.C Penney, Wal-Mart, K-Mart, Target and Kohl’s in the U.S. Poor working
conditions within the industry made some of the 2000 workers form a union. In
the campaign for better conditions the union got support from the National Labour
Committee (NLC) in the U.S., who helped produce a documentary for the
television series Hard Copy about the Chentex situation. The documentary created
a scandal, making thousands of consumers complain to the retailers in the U.S.
When Chentex because of the documentary dismissed 21 union members social
justice groups in the U.S. and Canada started rallies and demonstrations against
the TNCs that sub-contracted Chentex. The factory was pressed to back down and
signed a contract that improved working conditions (Armbruster-Sandoval
2005:107-134).
Later on the conflicts continued between the factory and the labor unions in
Nicaragua and North America. But the main point is that by using this type of
international cooperation – the boomerang-strategy – it is possible to influence
both the local factory and the TNCs. Even the Labor Ministry of Nicaragua was
affected by the campaigns and put higher pressure on Chentex as the conflict
became more public. When the local labor union is able to create a boomerangeffect it is less likely that the targeted factory will “cut and run”, since that would
increase the negative publicity for the retailers (ibid; see 3.1.2 regarding “cut and
run”). As the Nicaraguan labor union movement’s international cooperation is
increasing, the possibilities to use the boomerang-strategy more frequently
expands. Just recently Damarys Meza Guilleri, union leader in the maquila Mil
Colores in Managua, was on a two week tour in the U.S. to talk about the working
and living conditions of maquila workers in Nicaragua. She was invited through
the CST-JBE by the International Labor Rights Fund and met different social
groups (students, church members etc) – consumers able to influence the TNCs
that are sub-contracting in Nicaragua (Meza Guilleri 15-03-06).
Besides international cooperation the FNT is a member of Coordinara Social
de Nicaragua, a social cooperation platform including neighbourhood
organizations, women groups, small-scale entrepreneurs and industries, youth
organizations, Indian groups etc (Bermudez 24-01-06). The first paragraph on the
29
2006-2009 FNT-agenda is to strengthen the ties with other social organizations, to
be able to build a more equal society (FNT D 2006:1). The strategy of building
alliances with non-labor organizations is crucial according to several theorists, not
only Lévesque and Murray. Hyman (1999:101) claims that it is important for
labor unions “to appeal to a more diffuse set of interests which transcend local and
particularistic identities: the classic project of ‘social movement unionism’.”
Moody (1997:207) go even further, stating that building alliances with other
grass-root movements is necessary to organize the proletariat into one class, in
line with classical Marxist theory.
To summarize, both horizontal and vertical integration has developed rapidly
the last decade, seemingly increasing the power of organized labor.
3.2.3 Proactivity – Agenda
A defensive union agenda is necessary to respond to negative effects of
globalization, but more important is the ability to form a proactive and
autonomous union vision that expresses own interests and objectives (Lévesque &
Murray 2002:47-52).
Beginning with the national level of the FNT, the defensive role may seem the
most obvious. One of the very fundaments of the creating of the FNT was to
“luchar contra el neoliberalismo”, to fight neoliberalism (FNT B 2005:2). This
goal is also expressed on banners and in speeches addressed to union members.
To “fight neoliberalism” appears a somewhat vague aim to gather around for
affiliates and potential to be-members, referring to a rather complex politicaleconomic concept assumingly quite abstract from real workplace concerns.
However, the vision and mission formulated by both the FNT and the CST-JBE
focus on more autonomous duties, including: creating a strong organization that
has actual worker concerns as prime interest, struggle for a society that is equal
regarding social and economic factors and equal between men and women, and
struggle for a new society based on democracy and political participation (CSTJBE; FNT A 2005). In the FNT-agenda for 2006-2009, 17 paragraphs are drawn
up, including general aims like improving communication as well as more specific
goals such as working for a larger part of the public budget being transferred to
the municipalities (FNT D 2006:1-2).
Another autonomous project is the ALBA (La Alternativa Bolivariana para la
América). Though perceived as a response to the U.S.-initiated plans for a free
trade area of the Americas, it is a proactive project already under construction.
ALBA was launched by the Venezuelan president Hugo Chávez in 2001, and so
far it is only Venezuela and Cuba that is truly involved on the state level. The
project is not focusing on free trade, but on international cooperation in foremost
the social and educational sectors. The aim is to even out inequalities and erase
poverty (see Portal ALBA 2006). The FNT has joined the Bolivariana-movement
and are working for a Nicaraguan joining of the social project on the state level,
thus forming an alternative to current globalization (Barbosa, Morales, Ruiz 0603-06).
30
Though having carrying out too few workplace-visits to prove a general trend
of autonomous and proactive agenda-setting among local unions, observations
made show a high degree of autonomy, and that a proactive agenda seem to have
a positive effect on the willingness to organize. It should be considered though,
that in a context where organizing is associated with a high risk of being
dismissed, it appears as it is belief in what the agenda may achieve, rather than its
vision, that is most important to workers. In the maquila Guanica in the EPZ of
Diriamba, southwest of Managua, 22-year old Santos Enrique Gutierez Garcia
started a union in 2003. He was fired when the factory – producing clothes to
Wal-Mart and K-Mart among others – found out his activities. After assistance
from the CST-JBE and a court-rule in his favour he was rehired. Gutierez Garcia
has got 25 percent of the 1800 workers in Guanica to join the union, but says he is
feeling sentiments of mistrust towards the union as well as anxiety among workers
that they will be dismissed if they organize. However, when interviewing several
workers it is obvious that also among non-affiliates there is a high degree of
approval of the agenda that the union has put forward, and the results it has
gained. The agenda is based on concerns from the work-floor, including secure
parking lots for bikes and the availability of drinking water in the factory, and
both requests have been fulfilled by the company (Guanica-visit 07-02-06).
We try to affiliate workers through showing results, by achieving goals. In doing so workers
come to us and ask to join the union. We started with 30 members and have grown little by
little since then [to nearly 450 affiliates in two and a half year] (Garcia 07-02-06).
Both the former agenda, partly fulfilled, and the present – e.g. requests that the
company should provide lunch for the workers twice a week and better social
security insurances – reveals an offensive and autonomous character, seemingly
winning approval from the workers (see ibid). As stressed by the theory of
Lévesque and Murray, the different union power resources are mutually
reinforcing. In the case of Guanica it can be argued that the combination of
freedom and support – i.e. a relationship with the CST-JBE meaning support from
the national union without it trying to influence the local agenda – in combination
with democracy in the local union structure (e.g. addressing problems raised by
true worker concerns) has increased the incentives to join the union as well as the
union power to influence the workplace. Observations of other local union
agendas indicate the same results.
3.2.4 Country-Specific Factors
To fully answer why the Nicaraguan labor union movement has been able to
increase in affiliation while the general world trend (also true for the rest of
Central America) is the opposite, I believe that it is necessary to complement the
Lévesque and Murray-theory with two more country-specific factors: the role of
mass media and the tradition of organizing.
In Nicaragua most of the dominant daily media, including the major
conservative newspaper La Prensa , gives rather much space to articles concerning
31
the labor unions. The general secretary of FNT, Gustavo Porras, is frequently
interviewed regarding labor or union issues, and strikes and demonstrations are
widely covered. This may seem evident and natural. But according to Luis
Barbosa, head of the CST-JBE, it can not be taken for granted and it is an
important factor for the labor unions’ possibility to prosper. In comparison to
other Central American countries the Nicaraguan labor movement is less – i.e. not
at all – ignored by journalists and the media (Barbosa, Morales, Ruiz 06-03-06).
The labor unions seem to take good advantage of this fact, having as a strategy to
use media both for advertising and to draw journalistic attention to its struggle
(Bermudez 19-01-06; Parker 09-02-06).
The tradition and culture of organizing is a factor that is likely to facilitate
labor affiliation. In Nicaragua the revolution organized all levels of society, and
the union affiliation density was remarkably high. At the same time union leaders
in Honduras and El Salvador were executed (Bermudez 17-03-06). According to
Bermudez (ibid) the Nicaraguan revolution laid the base of today’s unions, as it
built a network in civil society (see Linton 2005:185-213 on how tradition affects
labor organizing).
32
4. Conclusions
The empirical study of Nicaragua indicates a clear correlation between the
neoliberal policies undertaken by governments (urged by the IMF) since 1990,
and worsened conditions for the labor unions. After an initial shock with dramatic
drops in affiliates, the union movement has reorganized and slowly increased its
member density, and seemingly also its influence on the national political agenda.
The power-relationship between the main leftist party, the FSLN, and the FNT
appears to have shifted in favour of the unions. Increased international support
and appearances in daily media also indicate that the labor union movement has
grown stronger, recognized as an essential player in society.
The theory model on union power resources provided by Lévesque and
Murray proves adequate when evaluating how the upswing for the Nicaraguan
union movement has been possible. All of the three different factors – closely
interlinked – seem to have been reinforced. This is especially true regarding
internal and external solidarity. The results suggest how labor unions can limit, or
adapt to, the consequences of neoliberal globalization. Even if implying that also
other factors – i.e. mass media and the tradition of organizing – have contributed
to the relatively positive development for the Nicaraguan labor union movement
over the last years, I believe that internal and external solidarity are of higher
validity. Though being a likely explanation to the inclination of organizing, the
factor of tradition does not seem capable of explaining why affiliation has
increased now, over the last couple of years. Rather, it is a favourable condition
that in combination with other factors probably has a positive effect. The
influence of mass media hardly has to be stressed, and this factor possibly, to
some degree, affects both union influence and member affiliation. But without a
strong force and organization behind, it is not likely that appearances in media
would have long term-effects on affiliation and political influence. Proactivity is
the variable most difficult to explicitly link to union achievements. Nevertheless,
on the local union basis it seems like an autonomous agenda, if it appears possible
to achieve, has positive effects on how the union is perceived among members
and non-members. The national labor unions have several features on its agenda
that are proactive and autonomous, thus creating an image of a strong and
independent organization with an identity not only based upon defensive stands.
The Nicarguan labor union movement is a useful model, I argue, for unions in
other developing countries. Though faced with difficulties it affords a somewhat
successful example on how it is possible to turn a negative trend in a neoliberal
context. It also indicates the union resources most important to mobilize: internal
and external solidarity (in particular), and proactivity. By integrating and
expanding horizontally and vertically, and by building this expansion on
democratic structures, it is possible to resist the negative effects of globalization.
33
4.1 Normative Suggestions
How then, should international support best be shaped to strengthen labor unions
in the Third World? It is established that the central power resources identified by
Lévesque and Murray – and verified in this thesis – are important to promote and
empower when determining international aid. It is also shown – in the
boomerang-strategy – how transnational campaign-cooperation can have positive
effects on local union struggles. The strategy demonstrates the importance of
exposing the link between consumers and producers. In the global market, with
company-strategies such as outsourcing and subcontracting, the link between
producers and consumers becomes increasingly diffuse. The worker’s alienation
from the product that Marx identified, seems to be what the consumer experiences
today, not knowing who made his/her clothes, on what conditions they were made
and perhaps not even where they were made. By building alliances between
consumers and producers it becomes easier to stress labor conditions and union
rights violations, and possible to pressure also powerful TNCs. Hence, it is an
important task for labor unions in the industrialized world to expose the relation
between producers and consumers.
Closely tied to above conclusion, it is suggested that labor unions seek to also
bring out good examples of companies that do take responsibility. If consumers
are provided with information not only on what products to boycott, but also what
goods they can buy, it is likely that the incentives for companies to compete in
social responsibility increases. The challenge is to create a race to the top, based
on consumer demands for fair producing. Financial support to labor unions in the
Third World is essential, especially for education, but organized labor will never
be able to compete economically with market forces. The Achilles’ heel of capital
is the trademark, and labor unions in cooperation with consumers must use that
factor in campaigns for better working conditions.
Finally, I would like to suggest how international partners can support
national labor unions in developing countries through measures on the global
level. Though the local, national and bilateral union levels are all vital in the union
structure, great challenges and opportunities lay on the global level. Goals
achieved on world trade agreements or universal human rights proclamations have
the possibilities to improve the situation for unions and workers all over the globe.
Some achievements have been done, e.g. by pressuring the WB and the IMF to
more profoundly evaluate the social effects of their policies. These institutions
have also stipulated (in 1999) that civil society, including labor unions, shall be
involved in Poverty Reduction Strategy Papers (PRSP) processes. The 80 percent
poorest countries in the world have to write these papers to receive low-interest
loans and debt relief. The problem, however, is that there is no way of controlling
if civil society in reality is invited by governments to discuss the PRSP (see
ICFTU A 2004: 34-37; ICFTU 2001:5; and Conefrey 05-03-06). In Nicaragua the
labor union movement is ignored by the government when forming these papers.
The government invites the right-wing unions, loyal to capital interests and
34
representing only a minor fraction of organized workers (Barbosa, Morales, Ruiz
06-03-06). This issue is one specific example on where international partners
should increase efforts to pressure the international financial institutes, directly
and through governments, to create a structure of control on how PRSP are
worked out. A positive result could strongly increase the influence for national
unions in developing countries.
Further on the global level, and even more important than the PRSPs, are the
trade agreements. Global union organizations already have ongoing campaigns to
link worker’s rights with trade agreements, thus ensuring fundamental workers’
rights across borders (ICFTU A 2004:36-37). If able to achieve the goals of this
campaign, it would be a major break-through for the global labor union
movement, and a very potential restrain on “the race to the bottom”. The demands
would most likely be met by more sympathy if they would come also from
governments. Hence, the task for NGOs and national labor unions must be to
influence their governments.
Further research on labor unions possibilities to resist the effects of neoliberal
globalization is desirable. In particular comparative studies are likely to improve
the knowledge of different results of union measures. It will also be of value to
analyze how the implementation of the free trade agreement DR-CAFTA will
affect the Central American unions. Since globalization seems to increase in speed
and space, there is little time to lose. As the Nicaraguan case show, the damages
are rapid but the building-up takes time and massive effort.
35
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January 19, January 24, and March 17, 2006.
Conefrey, Helen. Cooperation coordinator for the European Commissions
delegation for Nicaragua, Costa Rica, El Salvador, Guatemala, Honduras and
Panama. March 5, 2006.
Garcia, Santos Enrique Gutierez. Maquila union leader, Sabado 11, at Guanica,
Diriamba. February 7, 2006.
Guanica-visit. Anonymous interviews with workers at Guanica, Diriamba.
February 7, 2006.
Jimenez, Leonor. Maquila union leader at Roo Hsing Garment Co, Managua.
March 18, 2006.
Meza Guilleri, Damarys. Maquila union leader, Sindicato de Trabajadores Mil
Colores, at Mil Colores, Managua. March 15, 2006.
40
Parker, Christine. Responsible coordinator for Latin America at LO Norway’s
department for international relations. February 9, and February 11, 2006.
Ruiz, Miguel. Responsible for international relations, CST-JBE. Also working
with the maquila unions. January 31, and March 15, 2006.
Soza, Delia Josefa. Former maquila worker. January 26, 2006.
Svensson, Berit. Coordinator for VfSN (The Swedish-Nicaraguan Friendship
Association). February 3, February 6, and March 13, 2006.
41