Sign up for PayPal and start accepting credit card payments instantly.

Guatemalan firms threaten 6,000 layoffs over wage hike

The organization representing Guatemala's textile and clothing manufacturers said firms plan to lay off 6,000 workers this month in response to the hike in the minimum wage decreed by President Alvaro Colom.
Companies "will reduce their payrolls by 10 percent in the month of January to be able to cover their costs," Vestex chief Carlos Arias told a press conference.

He said the layoffs are a consequence of Colom's decision to increase the daily minimum wage by 96 cents.
Textiles and clothing constitute "the country's most important export sector, which supports some 70,000 families and contributes 6 percent of gross domestic product," Arias said.

To avert layoffs, Vestex asked the president to "gauge the negative consequences" of his decision and "substantially reduce" the wage increase.

As Guatemalan clothing and textile manufacturers are unable to raise prices in the current international environment, "no other alternative is left to our sector than to eliminate jobs to survive in this market," Arias said.
Colom imposed the increase after the National Salary Commission, comprising representatives of the employers, workers and the Labor Ministry, failed to reach agreement on the 2011 minimum wage.

The president said the hike he ordered will allow the earnings of low-paid workers to almost keep pace with inflation, which was 5.39 percent last year.

More than half of Guatemala's 14.4 million people live below the official poverty line and upwards of 2,000 Guatemalan children died last year of causes related to malnutrition.

Read more: Fox News