Nicaraguan President Daniel Ortega has accused foreign textile companies, mostly Taiwanese, of "enslaving" workers and leaving the country instead of paying higher wages.
Ortega said several industries closed in free zones following the government's recent decision to increase the minimum wage by 18 percent.
"There is talk that the companies are going to leave the free zones, that people are going to be left unemployed," the leftist Ortega said in a speech late on Wednesday.
"When they find that they have to pay more, it is no longer worthwhile and they leave," he said.
The president said the owners of textile industries "enslave" Nicaraguan female workers, forcing them to work long hours in exchange for "the lowest salaries in all of Central America."
"When they see that they should increase their employees' wages by 18 percent, they decide to leave for places like ... China and Vietnam, although they are Taiwanese," Ortega said.
The Nicaraguan president said his country needed "long-term investment and not this kind."
Free zones, which offer incentives to foreign companies by cutting tariffs and quotas, started to operate in Nicaragua in 1990 and have become an important source of jobs. More than 83,000 people work in 112 firms, most of them from Taiwan, South Korea and the US.
Miguel Ruiz, secretary general of the Sandinista Workers Union, which is close to the government, said on Wednesday that at least five factories have closed this year.
He attributed the fact to "a 30 percent reduction in work orders."
In related news, Taiwanese Ambassador to Nicaragua Wu Chin-mu (
Wu said the policy to increase salaries was put in place after Ortega took over the Nicaraguan presidency, but that labor costs still were the lowest in Central America.
A Nien Hsing official who mentioned some of the problems encountered in Nicaragua's free zones in an interview with the Miami Herald last week said that pulling out its investments was one of the company's possible strategies.
The report was picked by Nicaraguan newspapers this week.
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