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Entered By: Mark
Entry Date: 2011-08-27 10:20:03
Subject: Honduras vs. Jobs

One of our primary missions here is to help the people take care of their own families, in other words creating jobs. With the eight acre farm, there is potential to give several people work with the right planning and management. However, the regulations are becoming more and more prohibitive here and regular, legal employment in Honduras is becoming scarce.

No doubt if you take a ride through the country side you'll see people picking coffee or selling fruit in roadside stands. Drive through the small towns and shops are everywhere with workers inside. Take a closer look and talk to the employees and you'll find that most all of them are either self-employed or are family of the shop owner. Why? The vast majority of jobs cannot pay minimum wage. It's just not possible, not enough profit margin nor productivity. There are a few grocery stores and banks that cater to people with money and are therefore able to legally employ workers. But even those companies will cycle through employees every six months rather than pay the "double pay" months and accrue separation pay owed to an employee for every year worked. They might keep a few key personnel, but everyone else is out of a job within 2-6 months.

Honduras has an annual minimum wage increase that is tied to inflation. Contrast this to the USA where minimum wage is raised, on average, every four years; which includes an annual increase in the 1970's due to 20% annual inflation. The problem is that productivity does not increase just because new regulations are passed. Here you have a group of labor leaders convincing the masses that the wealthy can and should pay more. Meanwhile, more are more large employers are shutting doors because they just cannot earn enough to justify higher wages. In 2009, when Mel decided to raise the min wage 88% in a single year, many factories were closed and the GDP fell by 4%.

There was a recent proposal by economic leaders to marry the annual wage increase with productivity gains. Labor leaders quickly dismissed that idea as exploiting the workers.

So here we have the farm. Minimum wage increases have deprecated traditional hand tool type farming because you just can't be productive enough with a hoe to earn that much. You also have environmental regulations and the land is very expensive (to the tune of $8000/acre in our rural area). We have about eight acres that could be farmed, but much of it is under heavy shade of pine trees that are forbidden to cut. With only eight acres, a tractor would be underutilized.

The coffee farms can still skirt minimum wage by paying pickers per pound of beans picked. When it's all said and done, these pickers make about half minimum wage and even that is only 3-4 months out of the year. I'd like to grow coffee, but our goal is to have steady jobs so that families aren't starving outside of coffee season.

The solution is to modernize a bit, short of buying a tractor. Also need to focus on crops that require manual labor (beans, bananas, citrus fruit). We recently bought an industrial grade weed eater to replace the one that was stolen. This machine replaces five men with machetes and helps the workers to focus on more profitable endeavors such as planting or picking. Beans and plantain bananas are on the horizon. Hoping to pay Mennonites to plow a field next week, saving the men a couple weeks of work. We need to sell some cows and all the hogs to help us focus on more lucrative endeavors.

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