USAID And Wage Increases In Haiti

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President Aristide, who was elected by over 67 percent of the popular vote, proposed raising the daily minimum wage from 15 gourdes to 25 gourdes.

The Haitian Senate called for a new minimum wage of 28 gourdes.

If President Aristide's reform measures had gone through, the new minimum daily wage in U.S. dollars would have been $ 2.94 a day, or 37 cents an hour. The Aristide government also pressed to reform the corrupt national workers health and pension benefit agencies.

Had Aristide's plan been accomplished, and had real benefit payments been made by domestic and foreign companies, the fully loaded minimum daily wage would have been $ 4.03, or about 50 cents an hour.

Had the Haitian Senator's wage package been approved the fully loaded minimum hourly wage would have been 53 cents an hour.

Though the new minimum wage under the Aristide government would have still been less than one-eleventh of the average U.S. apparel wage (50 cents versus $5.85 an hour), USAID opposed this increase and orchestrated opposition to it.

USAID GOES ON THE ATTACK AGAINST REFORMS
In the middle of the constitutional government's short reign, USAID was declaring that "signals" from the Aristide Administration "to the business community have been mixed." USAID went on the attack saying that, "decisions have been made which could be highly detrimental to economic growth, for example in the areas of labor and foreign exchange controls."35 USAID was displeased with the fact that the democratically elected government wanted to place temporary price controls on basic foodstuffs so the people could afford to eat.

But USAID's real wrath was targeted on labor reform efforts.

According to USAID, the proposed minimum wage increase would price Haiti right out of the low wage assembly market.

We are told that "wage systems should not be the forum for welfare and social programs..." USAID warned that "high distortion in labor costs"-- i.e. the 50 cent hourly wage proposed by the constitutional government-- "for example, can lead to capital intensive, rather than labor intensive responses to opening of markets."36 Haiti might turn into Switzerland or Denmark.

The Haitian government had to understand this one thing: "Haiti has comparative advantage in its location and in its highly productive, low-cost labor force." USAID set the game rules: "The business sector in Haiti has been a dynamic force since the mid-1970s with exporters, primarily in the drawback assembly sector, diversifying products and markets to capitalize on Haiti's comparative advantages in the world marketplace." USAID threw its full weight behind "stimulating the growth of demand for labor."37

USAID had work to do. In 1991, USAID stated, "Labor remains a major problem in business development and expansion in Haiti.

While Haitian labor is generally highly productive at the worker level, frequent disruption caused by strikes, unexpected holidays and labor actions impede overall productivity in Haiti." Also, "With the proposed minimum wage, Haiti's pricing of exported goods will exceed that of the Dominican Republic, Jamaica, El Salvador and Honduras."38

This was not true, and USAID knew it. A study commissioned by USAID showed that even if Haiti's manufacturing wage were increased to 75 cents an hour, well above what the Aristide Government was proposing, this would still be 15 percent lower than Jamaica; 35 percent lower than Cost Rica; 50 percent lower than Mexico; and 64 percent lower than Barbados.

The only country Haiti would surpass if a 75 cent an hour wage was achieved would be the Dominican Republic,39 USAID's proclaimed showcase of a successful-- and USAID sponsored-- development strategy.

Also threatening was that, according to USAID, the Haitian "labor courts have been viewed as predominately biased in favor of labor..." USAID would therefore, "address these judicial issues and work with the business community to document handling of labor disputes for dialogue with the government."40

Just how threatening to the investment climate in Haiti was the labor movement?

To answer this we will quote at length from USAID itself.

Jolicoeur, July 18 2010, 3:17 PM

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