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Discover how the digital advertising creatives behind PepsiCo decided to expand their offices to Nicaragua. Andrew Howlett, Chief Digital Officer and one of the partners of RAIN, talks about their investment experience in the country.
Jan. 24, 2013 - The Government of Nicaragua, private sector representatives and labor unions recently signed a labor agreement that establishes salary increases in the free zones sector through the year 2017 with the purpose of granting further stability to employees and predictability to investors.
The agreement, called the Free Zones Minimum Wage Tripartite Agreement, sets annual salary increases of eight percent for the 2014-2017 period for employees working within the country’s free zones sector. Furthermore, the agreement calls for the development of mechanisms aimed at increasing labor productivity within free zones companies and also for the creation of social programs to benefit employees, such as a fund for housing projects, the distribution of food packages and recreational and health programs.
This is the third tripartite agreement in which the parties involved have cooperatively sought to strengthen and further develop the free zones sector in Nicaragua, which currently employs over 100,000 people (16 percent of the country’s formal labor sector) and is one of the main motors of the national economy, with exports of over US$2 billion in 2012.
The first edition of these agreements, unprecedented in Latin America, was signed in 2008 in response to the international financial crisis as a means to protect the free zones sector, both employees and investors. Its ample reception and success in fostering the sustainability of the sector resulted in the signing of a second tripartite agreement in 2010.
“Back in 2008, as a country, we knew we had to react to the international crisis and come up with mechanisms to ensure that the free zones sector maintained its momentum of growth. The tripartite agreement was so successful in accomplishing this goal, that it has become an institutionalized initiative, giving Nicaragua’s free zones sector a nearly decade-long period of stability and setting the foundations for the sector’s continuous development”, commented General Álvaro Baltodano, Presidential Delegate for Investments and Technical Secretary of the National Free Zones Commission.
These agreements have highlighted the country’s efforts to improve working conditions and contributed in having Nicaragua become the first country in Latin America to adopt the International Labor Organization's (ILO) "Better Work" program, whose objective is to create a direct link between the application of labor laws and the opportunities to develop international trade. The U.S. Secretary of Labor, Hilda Solis, awarded Nicaragua US$2 million to support this program as the country was considered a gold standard in the enforcement of labor rights in the textile and apparel sector.
The American Apparel & Footwear Association Executive Vice President, Steve Lamar, also applauded “the Nicaraguan garment industry, the Nicaraguan workers, the Nicaraguan government for coming together with their buyers, U.S. brands, and retailers, to jointly make this commitment to launch the ILO Better Work Program”.