The employment of more than 100,000 zona franca (free trade zone) workers in Nicaragua is severely threatened as the coronavirus pandemic spreads worldwide.
The Nicaraguan Association of the Textile and Clothing Industry (Anitec) admitted yesterday that it is expected that next week more companies of the zona francas will temporarily suspend their work, after the agreement they signed with unions and the Government.
The situation will worsen in a month and as the weeks go by as long as the companies fail to fulfill the purchases of their international clients.
The labor agreement that was signed this week between the free zone sector, the government and trade unionists, to deal with the emergency, shows that companies only have the capacity to maintain employment for a month, which would translate into a drop in exports and a wave of unemployment that will have repercussions on domestic consumption.
The Nicaraguan Foundation for Economic and Social Development (Funides) points out that the agreement that was signed is for a month, but the situation with the expansion of the pandemic seems to be extending much longer. The World Health Organization (WHO) estimates that it can be extended until August of this year.
“At the moment the free zone has the capacity to operate at least without a reduction in employment for a month, that is clear from the document, and it will be necessary to see at the end of the month what will happen, because the situation at the international level does not It seems that it will end in a month, that is why it is essential as part of the economic policies for the management of the coronavirus here in Nicaragua, that the government is designing some type of economic aid package for Nicaraguans who start to be left without their job, a package that obviously creates incentives,” explained the Funides in a statement.
The United States is not buying from Nicaragua
The problem with Nicaragua’s free zone companies is that the United States, as the main destination for 80% of its production, has stopped buying and it is unknown when the demand for that country could be reactivated, which jeopardizes the operations of textiles.
On Thursday, the United States became the first country with the highest number of Covid-19 infections in the world. A total of 21,000 have lost their lives. The US has out numbered China and Italy in the number of cases.
According to the Anitec, US stores such as Levis, Gap, Pull, and Target are closed, they are not buying.
The Anitec said the US brands have asked the companies in the free zone in Nicaragua “not to continue sending more garments, or to continue producing more.
So what will happen? The companies that have already invested in buying raw material, already invested in garments that are already made will remain in inventory.
As of yesterday, the companies confirmed the temporary suspension: Gildan located in San Marcos and Rivas, which employs more than 9,000 people, ANNIC in Masatepe that employs 300 people and Yazaki will suspend work for 15 days.