Between the Rock of the Law of Minimum Wage and the Hard Place of Honduran Business

While the ongoing soap opera "Pepe Lobo In Search of Recognition" continues to fascinate us, for most people in Honduras, the more critical issues are those that affect their everyday life. Assassinations of environmental activists and journalists continue. Multiple sectors in Honduras have protested the new economic measures introduced by Lobo Sosa. Unions are restive or in outright resistance.

Among the issues that will affect all Hondurans that are pending resolution: setting the minimum wage.

As the English-language news site Inside Costa Rica reported today, Jose Luis Baquedano, Secretary General of CUTH (the United Workers Confederation) and other union leaders are calling for demonstrations if the minimum wage is not settled this week by Lobo Sosa and his Minister of Labor, Felícito Ávila:

"We will just wait this week for him to decide once and for all, otherwise there is no other alternative but to take to the streets."

The same legal requirement led to then-President Zelaya setting a new minimum wage increase in fall 2008, alienating business owners, credited as one of the factors leading to the coup d'Etat of June 28, 2009. When negotiations between unions and employers fail, the government is required to set the minimum wage. According to Inside Costa Rica,

Although the three major labor unions eased their position lowering the demand for salary increase from 30 to 15 percent, the private sector proposed only 3.7 percent.

The current minimum wage, even after the unprecedented increase by the Zelaya administration to 5500 lempiras ($291) per month for urban labor and 4035 lempiras ($214) for rural labor, is still below the level of funding necessary for purchase of basic household food needs, estimated at $324. The cost of the basic household food needs is "considered the most expensive in the region".

The positions of the two parties are far apart. According to La Tribuna, the unions have lowered their request for raises to 15%, and have indicated openness to 10%; but the business community has limited their offer to 3.7%. In US dollars, the union position requests just over $45 a month more (825 lempiras), while that of business would be an increase of about $11 (203 lempiras) a month.

La Tribuna's coverage says that Lobo Sosa will be meeting on Monday May 17 with the business sector to set the minimum wage, having succeeded this week in calling labor back to the negotiation. The paper says that

By tradition, if there does not exist an accord between the parties, the President on duty will proceed to announce the fixing of the wage by means of an Executive Decree on the International Day of the Worker [May 1], a thing that did not happen this year.

Workers groups reportedly are also threatening that if Lobo Sosa does not comply with his duties under the Ley del Salario Mínimo (Law of Minimum Wage) they will pursue a legal complaint against the Honduran government with the World Trade Organization.

So both by law and tradition, it seems, Lobo Sosa needs to set the terms of employment. There is no doubt that he does so between a rock and a hard place: with unions threatening to take to the streets and mount barricades, and with the specter of what happened to the last president to raise the minimum wage more than the business sector wanted hanging over the decision. So in one sense his hesitation is not surprising. Meanwhile, it is the minimum-wage laborers who are left with too little income to cover the basic cost of living.