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Haiti’s Minimum Wage Battle

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In May 2009, both chambers of the Haitian Parliament voted to increase the daily minimum wage from 70 gourdes ($1.75) to 200 gourdes ($5). Haiti is the least developed nation in the western hemisphere. The approval of the minimum wage legislation is seen as a momentous victory for Haitians living in poverty. However, Haitian president René Préval declined to sign the proposed legislation into law. Instead, the president offered a counter proposal to raise the minimum wage to just 125 gourdes a day, further cementing the status of the Haitian working class as one of the poorest and lowest paid in the hemisphere. In early August, the Parliament approved the 125 gourdes adjustment. The recent minimum wage battle reflects the conflict between the business sector and Haiti’s poor underclass, and also highlights the harsh political realities that have plagued the embattled Préval since his presidential victory in 2006. Préval’s political capital has been continuously squeezed and pressured by Haiti’s business class as well as by external political players. Though Préval is the reputed champion of the poor, he also has been single-minded in trying to gain the support of the country’s pro-business faction that seriously opposed his victory in 2006.

Minimum Wage Background
Haiti is severely underdeveloped and consistently plagued with political upheavals as well as natural disasters. An estimated 80 percent of Haitians live below the poverty line, and more than half of the population lives in abject poverty. The last minimum wage increase was in 2003 under the embattled and ultimately ousted Jean-Bertrand Aristide administration, when the current 70 gourdes daily standard was established. Another minimum wage increase has been years overdue, as soaring inflation has made the cost of living for poor Haitians increasingly difficult to manage.

The years-long delay in implementing the minimum wage is in direct violation of Haiti’s Labor Code. Under Article 137 of that document, such wages should be reformulated on a periodic basis. That clause further stipulates that there should be a wage increase if there are any variations to the cost of living or if inflation goes up 10 percent in any given year. In fact, due to soaring inflation, the minimum wage increase approved by the Aristide administration in 2003 was merely an adjustment, and not an actual increase. The current legislation would not represent an actual wage improvement, as inflation already has soared well beyond the purchasing power of the minimum wage.

Business Backlash
There was a swift outcry from the business sector in response to the proposal to increase the minimum wage. The Association of Haitian Industries (ADIH), a prominent pro-business organization, issued a warning that stressed the economic dangers of improving the minimum wage. An increase to 200 gourdes a day, the ADIH warned, would result in a 50 percent layoff of the workforce in the industrial sector. Any layoffs would thereby aggravate the already astronomically high unemployment rate in the formal sector, which stands at an estimated 70 percent.

The president of the ADIH, Georges Sassine, stated that Haiti has a unique opportunity to lure multinational industries within its borders in order to manufacture and assemble goods and products, and then provide for them to be sent duty-free to the United States. Haiti’s government and the business sector remain optimistic that the HOPE II Act, a trade legislation passed by the United States Congress in the fall of 2008, which eliminates tariffs on Haiti’s manufactured goods for 10 years, will dramatically strengthen job opportunities among the poor. The ADIH and other pro-business organizations fear that HOPE II will be jeopardized if a minimum wage increase comes into effect. Sassine, who is also head of a presidential commission to oversee HOPE II, is on record as stating that Haiti’s low labor wages sustain and attract foreign investments.

In a country that is teeming with unemployment and poverty, sometimes any job is perceived as superior to none at all. Paul Chery, the Secretary General of Confederation of Haitian Workers, noted that the union group’s priorities are to lure jobs into Haiti, even if they are low-wage jobs. Chery remains optimistic that HOPE II can bring an estimated 50,000 new jobs to the country, but he remains steadfast that even that number is not quite enough. His attitude even reflects that of many business leaders in Haiti. Their priority is to draw in new jobs and dissuade efforts for higher wages for a broadened Haitian work force.

Deputy Steven Benoit of the lower house of the Parliament, who is the chief proponent of the minimum wage bill, has charged that Préval has succumbed to the interests of the business sector by hindering the enactment of the 200 gourdes standard. Benoit further claimed that the bill was not a radical measure, but rather that it was formulated on “scientific information” in hopes of alleviating the rampant poverty facing Haitian workers. Benoit remains steadfast in his support of implementing the minimum wage law, and would only concede that he would be wrong if an unbiased investigation found that a minimum wage increase might indeed bring economic catastrophe to Haiti’s working masses.

The Troubled Election
While Préval is widely seen in Haiti as a populist politician, his hesitancy to secure the 200 gourdes monthly wage improvement is not entirely surprising. The president’s reluctance is better understood within the context of the 2006 presidential election. The tumultuous and controversial ballot that catapulted Préval to his second presidential tenure in 2006 was seen as a populist victory. Préval began his first presidential term in 1996 and left office when Aristide was elected in February 2001. A violent coup staged in 2004 by the Haitian army and supported by the dominant business class, as well as middle-class parties, intellectuals and the international community, cut short Aristide’s mandated five year presidency. President Boniface Alexandre and Prime Minister Gérard Latortue established a violent interim government with the full support of the United States, Canada and France. After four postponements of presidential elections, Haitians finally went to the polls on February 7, 2006.

During the presidential campaign, Préval positioned himself as the champion of the poor in Haiti and it was the support from the poor factions that ultimately helped elevate him to the top of the presidential ticket. Préval switched to the Lespwa (Hope) party in order to distance himself from the ousted Aristide. Despite the malevolent efforts of Préval’s opponents to associate him with the ousted Aristide and the jailing and murder of members of the Fammi Lavalas party, Préval’s former association with the Lavalas party and with Aristide helped him win the election. Préval’s tumultuous victory was thus seen at the time as a major defeat for the dominant business and bourgeois factions within Haiti, who had worked to overthrow Aristide and solidify their political dominance during the reign of the interim government. In fact, Préval’s presidential win provided marked legitimacy to Aristide’s supporters. Many pro-Aristide Haitians and Préval’s supporters felt that the coup had occurred due to the manipulations of the rich and the powerful domestic and international political players who were hardly concerned in promoting the interests of poor Haitians.

Préval’s victory was not without significant controversy. According to electoral projections, he was expected to secure his victory in the first round of voting, with 51 percent of the votes. However, he obtained only 48.8 percent of the vote. Préval’s supporters, despite his calls for nonviolence and respect for the rule of law, took to the streets of Port-au-Prince in large and violent protests against evidence of voting fraud. Préval claimed he had direct proof that his opponents had perpetrated the vote count fraud in order to force him onto a second, more contentious election round.

Initially, the Provisional Electoral Council (CEP) dismissed Préval’s charges until fraud suspicions were raised when an estimated 85,000 to 90,000 blank ballots were discovered, which represented over 4 percent of the total vote count. In certain polling places, the numbers of ballots cast were not aligned with the number of voters who had actually chosen to vote, resulting in a missing 4 percent of the ballots. In addition, half-burnt and defaced ballots, mostly cast for Préval, were discovered in a garbage dump outside the Haitian capitol. These vast inconsistencies eventually forced the CEP to work with the American, Canadian, and French representatives to find an acceptable solution. The CEP wanted to quell the violence stirred by Préval’s supporters, and to decide how to reevaluate the legal standing of the ballots that were cast in order to allow Préval to sweep into a first-round victory.

Article 185 of Haiti’s electoral decree stipulated that any blank ballots cast must be included in the final tally. The Brazilian and Chilean diplomats involved in the dispute first suggested what became known as the Belgian Option. The CEP decided to proportionally distribute the blank votes to all 33 candidates based on votes received. It was the Belgian Option that ultimately pushed Préval into the 50 plus one percentile required in order to legally win the presidential race in the first round.

The United States, Canada, and the European Union formally recognized the new Préval government, despite the fact that the election did not adhere to standard electoral procedure. In following, the Haitian business leadership also declared their recognition of the new administration. Despite that recognition, however, these groups warned that the new president did not have an unfettered mandate and that he must represent all classes in Haiti and respect the rule of law. Without the legitimacy to be offered by an undisputed election, Préval’s opponents would gain great leverage to block the new president’s proposed populist reforms and would obtain the power to weaken his government if he did not adhere to the interests of the business sector.

Préval’s Contradictions
Préval knows firsthand the economic difficulties facing the country. With its staggering poverty and the high peaks of unemployment gripping Haiti, the country’s president is well aware that he is under extreme pressure from the huge number of the disadvantaged in his country to prioritize their needs, such as health, food security, agrarian reforms, jobs and infrastructural improvements. At the same time, however, Préval must appease demands from the private business sector, international institutions and foreign governments to increase foreign investments, preserve neoliberal reforms secured through the interim government, and to maintain low wages for the benefit of commerce.

Préval initiated his second tenure being politically vulnerable to the business sector due to accusations of electoral illegitimacy of his narrow win. The remainder of his term will be structured to oblige the huge bankrolls the business sector has given to his campaign and to his party. The minimum wage battle epitomizes the struggle Préval faces. By signing the minimum wage legislation into law, he appeases the Haitian masses that are restless for some economic reprieve, yet he does not have the strong political capital from the business sector to enact more ambitious and effective change. The parliamentary approval to increase the minimum wage to 125 gourdes, but not the intended 200 gourdes, represents only a minor legislative win for the president as he tries to temporarily appease both the mainstream poor and business sectors. However, Préval remains a politician with little room to maneuver due to his many conflicting promises.