alta-gracia’s-struggles-call-‘living-wage’-model-into-question

Alta Gracia, which makes socially acutely aware T-shirts and hoodies largely for faculty college students, is hanging on by a thread after gross sales collapsed within the wake of the coronavirus pandemic, placing its “living wage” attire manufacturing mannequin to the check.

The firm, which lately operated a 150-employee manufacturing facility within the city of Villa Altagracia within the coronary heart of the Dominican Republic, is now working a slimmer enterprise (regardless of a brightening outlook for friends) with 40 to 50 staff, in response to union officers who declare the agency is teetering on the point of chapter and received’t survive except it will probably quickly win new orders.

“They have gradually laid off 100 workers since early last year,” mentioned Ygnacio Hernandez, who leads the Dominican Federation of Free Trade Zones (Fedotrazonas) union representing DR’s clothes trade, which ships $400 million to $500 million in clothes yearly. “Those workers were laid off with 50 percent pay and some benefits but now they are not receiving anything and have taken jobs with other sectors.”

Still, in contrast to different Caribbean or Central American sewers incomes a median of $250 per thirty days, Alta Gracia operators loved a so-called “living wage” or wage exceeding the minimal wage. It was billed as the one such agency globally to pay staff a good wage within the creating world, encouraging activists to watch its enterprise to see if trend can profitably make garments with out exploiting staff.

“They paid the highest salaries in Dominican Republic,” Hernandez continued. “When they opened 10 years ago, they offered $500 a month with a 4 percent annual increase and went up to $550. No one pays more than $300 a month in Central America or the Caribbean.”

Alta Gracia additionally provided social advantages and allowed staff to cut price collectively. This meant it had fewer assets to compensate workers when Covid-19 triggered a extreme drop in orders from prime clients similar to Barnes & Noble and Follet Bookstores, which noticed gross sales flounder as college students started finding out on-line.

Not that Alta Gracia’s fortunes have been buoyant earlier than the virus hit. In October 2019, the agency slashed 40 p.c of its workforce together with administration in its Atlanta headquarters, to bolster working efficiencies amid waning gross sales. The agency didn’t reply to calls and emails for remark.

While some mentioned Alta Gracia’s troubles highlight the pitfalls of the residing wage mannequin, Scott Nova, government director of the Worker Rights Consortium (WRC), mentioned companies with deep advertising budgets might need a greater likelihood at success.

“Alta Gracia is small and never had much of a marketing budget to conduct a real test of whether there is enough consumer demand for living wage products,” mentioned Nova. “We need a company to put millions into marketing, go to consumers and test if they will pay a buck or two more for a shirt made with a living wage. Until someone does this, we won’t know if the model works.”

Meanwhile, Central and Latin American staff’ plight continues to worsen amid the pandemic with manufacturers and producers firing staff with out correct pay or participating in rights abuses, in response to Nova.

In its newest investigation, the WRC claimed Guatemala’s Elim ‘unlawfully’ dismissed 23 staff after they tried to kind a union. Elim, which makes university-licensed attire for the likes of Outerstuff and College Vault, is just not alone among the many Guatemalan and Central American companies accused of comparable habits.

Nova mentioned the WRC continues to work to persuade manufacturers to pay a proportion of their gross sales right into a fund that may assure staff’ severance pay, a automobile that would finally surpass $1 billion yearly, he claimed.

“Brands are getting tired of seeing factory-level fights over severance so they might start to see value in an organized system to address this crisis,” Nova mentioned.

Back within the Dominican Republic, nevertheless, enterprise is wanting up.

“We are producing at a 100 percent rate and there are no problems in most companies,” Hernandez mentioned, including that Alta Gracia is an remoted case. “Our free zone exports are up 5 percent so far this year and many companies have continued to work despite the pandemic.”

Gildan has stepped up sportswear manufacturing, as an example, whereas Hanes’ manufacturing facility was in a position to keep afloat by making private protecting gear (PPE), in response to Hernandez.

He famous that shipments from the nation fell 20 p.c final yr, a lot lower than the 40 p.c to 60 p.c reported in close by nations similar to Guatemala, Honduras and El Salvador.