US/LEAP
December 2000
by Robert Perillo

The crisis in the banana industry that is continuing to wreck havoc on banana workers, especially those in Central America (see August 2000 article) has several causes, including the lack of a resolution in a trade dispute between U.S. and Central American governments with Europe over the European Union's import system which protects Caribbean producers and has been declared "illegal" by the controversial World Trade Organization.

But another major factor is the oversupply in the world banana trade, driving down prices. Much of the oversupply comes from Ecuador, the world's largest banana exporter. Approximately one-third of Ecuador's bananas are exported to the U.S., another third to Europe and a third to other countries, including Russia, Argentina, Chile, and Japan.

Dole, through its subsidiary UBESA, is currently the number two banana exporter in Ecuador, up from number three in 1999. Of the major U.S.- based banana companies, Dole obtains the largest significant percentage of its bananas from Ecuador and Del Monte less so. Chiquita earlier this year suspended sourcing from Ecuador but is expected soon, claiming competitive pressures.

Ecuador's largest exporter is a national producer, Noboa, the world's fourth largest banana company. While the Big Three U.S.-based companies of Dole, Fresh Del Monte, and Chiquita generally control nearly all exports in Central American countries, Ecuador's banana export industry is dominated by national producers, with Noboa the biggest.

Ecuador's Comparative Advantage?

Though Ecuador suffers from a competitive disadvantage in its banana exports to Europe, owing to the fact its bananas must cross the Panama Canal in order to reach the European market, it also enjoys a distinct advantage in terms of labor costs: unlike its competitors in the region, Ecuador's banana industry is almost completely un-unionized. In an effort to better understand the labor conditions prevailing on Ecuador's banana plantations, US/LEAP commissioned a study in early 2000.

While Ecuador's banana export industry is a major cause of the crisis, Ecuadorian banana workers are significant victims. In the study performed at the beginning of 2000, Ecuadorian economist Carmen Galarza interviewed workers at three large plantations producing for three different exporters. Workers reported earning an average of 1,400,000 Sucres, or US$56 per month, with few if any benefits. This compares to an average monthly wage of over $500 in Panama, $200 to $300 in Colombia, $200 in Costa Rica, $150 to $200 in Honduras, and $120 to $150 on Guatemala's Atlantic Coast. In these other banana-exporting countries, banana workers, even some non-union workers, typically receive social benefits like housing, health care, potable water, electricity, and education for their children. In Costa Rica, many non-union banana workers still get benefits left over from when unions were strong.

The government of Ecuador estimates that about 383,000 people work in the country's banana industry, but this number includes everyone from part-time workers to family farmers where whole families labor on a few non-technified hectares, with low productivity on the order of five people per hectare, on up to the large, highly technified plantations which have achieved levels of productivity close to one person per two hectares.

In early October 2000, US/LEAP followed up the study by interviewing approximately 25 workers from a dozen or so plantations in Ecuador, including some affiliates of two functioning banana workers' unions, both of which are affiliated to a rural workers' federation in Ecuador's banana industry. All the workers interviewed, both union and non-union, produce for Dole.

Dole is one of the only exporters that pay the legally mandated price to producers of US$2.18/box. One can therefore probably assume that on plantations that produce for other exporters, like Noboa for example, conditions are even worse.

Forms of employment

Virtually all of the non-union workers interviewed are "eventuales" - workers who have no formal relationship with the plantation owner. They work in teams, called "cuadrillas." The team leader, or "jefe de cuadrilla," appears to be, at least in some cases, an actual plantation employee. He is instructed to put a team together, usually about 12 to 15 people, and he has responsibility for the team's performance. In exchange, he is paid about twice as much as the other team members make. In some cases, he is simply paid a lump sum representing the piece-rate for the team's work, and it is up to him to decide how this sum will be divided. In other cases, both team members and leaders are paid by the day, with the team leader making more than twice the amount of the best-paid team member.

"Eventuales" are technically temporary workers without a formal link to their place of employment, and are therefore not permitted to join a workplace union.

The utility of this system for plantation managers and owners is clear: it severs the link between them and the vast majority of their workers. "Eventuales" are generally not registered with the Ecuadorian Social Security Institute (IESS), and therefore have no formal rights when they are injured or become sick. Nor do they accrue normal benefits like severance, vacation, or the legally mandated annual bonuses. When they are fired they have little recourse, as the plantation owner does not formally employ them.

The "eventuales" are generally at the mercy of the team leader. If the team leader fires a worker, for example, the worker can try to appeal to the plantation management, but often the managers tell them that it's between them and the team leader. But even when the team leader is generous, he is powerless to protect his team members from management's arbitrary whims.

Salaries

At the beginning of 2000, the Ecuadorian government made the U.S. dollar Ecuador's official currency. Since "dollarization" went into effect, the official minimum wage has been increased three times. However, much of this increase has been eaten up by inflation and in any case remains a poverty-level wage.

"Eventuales" are either paid by the day, or by the task. Either way, their pay works out to be about the same.

At one plantation, male "eventuales" working in the packing plant earn about $4 for a 12-to-13 hour day, with no benefits. They are paid by the box. The team leader says he makes twice that amount, or $8 per day. Women, who did not start working in banana production until four years ago and now constitute about 20% of the packing-plant workforce on average, make less. Women packing-plant workers earn $2 to $3 per day.

All of the "eventuales" reported that they are never paid overtime, even if they have to work many extra hours and on weekends, as is common during the high season. Furthermore, during the low season they only get to work two to three days a week, and yet they must be on call seven days a week -- they never know which days they will be required to work. Therefore, they are unable to commit to working part-time in some other job as a way of complementing their income from the banana plantations.

Health, Safety, and Blacklisting

On many of these plantations, it is not uncommon to see signs that warn workers that they must leave the fields when aerial spraying begins, and remain away for at least two hours after it stops. However, at only one plantation did workers report compliance with this norm, and only after the banana workers' union there put up a fight. At other plantations, workers report that sometimes they are told to leave during aerial spraying, but must return to work immediately afterwards; at still others, they are compelled to keep on working through the spraying. Where there is worker housing on the plantations, the houses are often located in the middle of the fields and are thus exposed to spraying. Workers know that these chemicals are unhealthful but they report that no one has ever informed them of possible adverse effects of exposure.

Packing plant workers report that they, especially women, are exposed to chemicals used to disinfect and clean the bananas prior to packing. At times, they are supplied with rubber gloves. But some reported that they are provided with no safety equipment whatsoever.

Banana workers have little power under the current structure. They are at the mercy, first, of team leaders, and second, of plantation managers. All interviewees told of fearing that they would lose their jobs and be unable to find work in the banana industry if it became known that they were giving interviews to a person connected to any group concerned with labor rights. They all expressed extreme distrust in the ability -- or the will -- of government authorities to protect their rights to free association and freedom of expression.

What Can Be Done?

In the absence of social criteria governing world trade, consumers can play a strong role in support of banana workers. Efforts are underway to organize unions in Ecuador's banana industry. Though this is a long-term project, it will need significant support from activists and consumers in countries like the U.S. that buy large quantities of Ecuadorian bananas. Ecuadorian banana workers are not calling for a boycott; rather, consumers can express a preference for "sweat-free" bananas to retailers. Likewise, we can pressure the Ecuadorian government to respect its citizens' labor rights, as enshrined in the core ILO conventions to which it is a signatory, instead of routinely ignoring these rights while acting as a marketing arm for its banana industry.

New EU Proposal Favors Ecuador

The European Union, seeking to resolve the longstanding WTO banana dispute, recently proposed a First Come, First Served scheme. The Ecuadorian government has announced that it will support First Come, First Served, because it estimates that under such a scheme it will be able to double its banana exports to the EU. Dole, with its hefty position within the Ecuadorian banana industry, has also announced that it supports the proposal. On the other side, Chiquita and the Central American banana exporting countries, with Panama and Colombia, oppose it. If this proposal goes into effect in early 2001 as planned, the likely result will be an increase in non-union, highly technified banana production in Ecuador, and massive layoffs of banana workers in the more unionized areas of Central America, Colombia and Panama.