Free Zones going down the tubes.

[cobraboy]

I agree about costs too. You can't neglect the fuel cost of shipping the goods from SE Asia to the US(assuming that is the DR's main export market). The ave. wage of a Chinese factory worker is less than the DR which will certainly offest the fuel cost. BUT what would happen if the DR changed the labor laws to allow the companies in the Free Trade Zones to have more control? As it stand now talk with foreign investors in this country and they'll have a few "choice" words about the labor laws here.

When I move there, I fully intend to have a clear understanding of the laws.

Think about the non-transportation cost advantages when you factor out the shipping costs from the Far East/SE Asia.

They have to be eye-opening.

My gut tells me the companies don't care any more about the future of the DR any more than they care about the Far East. Their only concern is meeting consumer demands: high quality goods and the lowest prices possible. If that can be done in New York City, so be it. If it's in the DR, fine. If it's in the Lower Slobovia tundra by trained yaks, so be it.

 

[HOWMAR]

As it stand now talk with foreign investors in this country and they'll have a few "choice" words about the labor laws here.

But they won't mention the fact that payroll is costing them only US$0.84 today for every US$1.00 that they paid a year ago due to the peso going from 28:1 to 33.5:1.

 

[Chip00]

True, however

But they won't mention the fact that payroll is costing them only US$0.84 today for every US$1.00 that they paid a year ago due to the peso going from 28:1 to 33.5:1.

Yes that is true, of course - but these investors don't have anything personal against the Dominican Republic or their people - just the the labor laws! I promise you if they can make the bottom line work here that this island would full of factories like Central America. Don't take it from me take it from the investors who are packing up and leaving. Again, it's nothing personal, they want to make their margins.

 

[cobraboy]

Yes that is true, of course - but these investors don't have anything personal against the Dominican Republic or their people - just the the labor laws! I promise you if they can make the bottom line work here that this island would full of factories like Central America. Don't take it from me take it from the investors who are packing up and leaving. Again, it's nothing personal, they want to make their margins.

^^^That sums it up very nicely.

Business is business, hard and cold. Business is not a social program.

 

[Onions&carrots]

With all due respect about "Poor dominicans in general consider Zona Franca jobs as rubbish" I've known quite a few "poor dominicans" where I've lived in Moca in el campo and Santiago and they honestly speak about having a job in the Zona as almost a trophy. The "semi" educated middle class are more likely to look down on a Zona Franca job, not the poorest of the poor who don't know where their next meal will come from. What the poorest of the poor don't like to do here is cut platano.

The lesser of two evils continues to be evil nonetheless. I have spoken to dozens of poor dominicans and they despise Zona Franca jobs as rubbish. Overworked, underpaid,exploited and humiliated by foreigners esp. Korean managers who seem to think that slapping employees is part of the job. Some dominicans have struck back. They complain alot about Miami Cuban managers who are loud by nature not soft spoken like dominicans. Many Miami Cuban managers have also been put in their place.

Zona Franca jobs are the modern day version of the sweatshops on Hester Street circa the 1920's on NY's Lower East Side. Sweaty, smelly, inhuman, crowded and dangerous- these jobs may be better than cutting platano but the margin is negligible at best.

 

[Onions&carrots]

^^^That sums it up very nicely.

Business is business, hard and cold. Business is not a social program.

You're kidding right. As bad as those jobs are, what is it that you want? Camps were workers sleep next to their work station like in China. How about earning half what they presently make? Electricity to keep the workers in line, yeah that's the ticket. No holidays, no christmas bonus. Maybe you should work in those filthy jobs and see if you'll be spouting your "Invisible Hand" malarky.

 

[SantiagoDR]

But they won't mention the fact that payroll is costing them only US$0.84 today for every US$1.00 that they paid a year ago due to the peso going from 28:1 to 33.5:1.

Is it not true that in the previous year(+/-) before that, the dollar was 45+/-:1 ?

Thus it IS COSTING them more, I know for sure it is costing me a heck of a lot more to live here. ITBIS taxes increased from 12 to 16%, and more things are covered by ITBIS taxes. Prices of most everything went up when Leonel dropped the exchange rate.

Did the government increase their taxes and tell them to give the workers a raise after Leonel took office?

Your quote of just one rate change is very mis-leading. State all the facts, not just one thing that emphasizes your point.

Wow, I must be rich with the rate increase from 28:1 to 33.5:1

I don't think so...... It is getting harder and harder to continue to live here.

 

[Chip00]

Jobs

The lesser of two evils continues to be evil nonetheless. I have spoken to dozens of poor dominicans and they despise Zona Franca jobs as rubbish. Overworked, underpaid,exploited and humiliated by foreigners esp. Korean managers who seem to think that slapping employees is part of the job. Some dominicans have struck back. They complain alot about Miami Cuban managers who are loud by nature not soft spoken like dominicans. Many Miami Cuban managers have also been put in their place.

Zona Franca jobs are the modern day version of the sweatshops on Hester Street circa the 1920's on NY's Lower East Side. Sweaty, smelly, inhuman, crowded and dangerous- these jobs may be better than cutting platano but the margin is negligible at best.

When you know of some people who want to leave the Zona Franca please let me know as I have A LOT of friends and family who would like a job as such.

 

[HOWMAR]

Is it not true that in the previous year(+/-) before that, the dollar was 45+/-:1 ?

Thus it IS COSTING them more, I know for sure it is costing me a heck of a lot more to live here. ITBIS taxes increased from 12 to 16%, and more things are covered by ITBIS taxes. Prices of most everything went up when Leonel dropped the exchange rate.

Did the government increase their taxes and tell them to give the workers a raise after Leonel took office?

Your quote of just one rate change is very mis-leading. State all the facts, not just one thing that emphasizes your point.

Wow, I must be rich with the rate increase from 28:1 to 33.5:1

I don't think so...... It is getting harder and harder to continue to live here.

Then why not go back 4 years to 20:1? I think you missed the point. Companies that derive their revenues offshore have gained dramatically with the rate change. A 1 million peso nomina in 2002 cost US$50,000. That same 1 million dollar nomna in 2006 costs the employer US$29,850. The employees have not gotten a 65% increase in salary in the past 4 years.
BTW, we aren't talking about your costs of living here, simply your costs of labor. The ITBIS has nothing to do with this as the Free Zone's are exempt.

 

[Chris]

A 1 million peso nomina in 2002 cost US$50,000. That same 1 million dollar nomna in 2006 costs the employer US$29,850.

Howmar, I assume you mean peso in both instances? Can you clarify?

 

[HOWMAR]

Howmar, I assume you mean peso in both instances? Can you clarify?

My error, meant peso to peso. Thanks.
Should read:

A 1 million peso nomina in 2002 cost US$50,000. That same 1 million peso nomna in 2006 costs the employer US$29,850

 

[cobraboy]

You're kidding right. As bad as those jobs are, what is it that you want? Camps were workers sleep next to their work station like in China. How about earning half what they presently make? Electricity to keep the workers in line, yeah that's the ticket. No holidays, no christmas bonus. Maybe you should work in those filthy jobs and see if you'll be spouting your "Invisible Hand" malarky.

I made no comment on the social aspect of those jobs (my best friend in the DR is a production manager of a FZ company in STI). I just said that business is about the bottom line where decisions are made on fraction of % delta.

If FZ companies cannot hire people with the wage/benefit/working conditions offered, then they will alter those, perish, or just leave. Just like the Union-dominated Rust Belt in the US.

And, no, I'm not kidding. One thing is for sure: one poster said there may need to be changes in the labor laws to keep FZ companies from leaving; I guarantee you the changes do NOT include raising the wages, etc.

 

[batich]

DR as a place for business or making money - is joke (on exception of corrupted government/military officials who steal whatever they can carry ex-oficio)

Centuries of laid-back and relaxed slow caribbean life did not produce a hard working human breed. You cannot argue it.

But , cheap DR used to be an attractive touristic/retirement destination until the greed and skyrocketed prices of local lawyers, RE agents, restarant/hotel owners made living here unaffordable.

Practically all these services currently are 50%-100% more expensive than in NYC.

The word that DR is not what it used to be is out in many foreign websites and forums that I am following very closely.

Greed is the worst thing for any business.

 

[HOWMAR]

And, no, I'm not kidding. One thing is for sure: one poster said there may need to be changes in the labor laws to keep FZ companies from leaving; I guarantee you the changes do NOT include raising the wages, etc.

There are many changes that can be made in the present Labor Laws that would benefit both the employer and the employee. Take the present system of liquidation.
How it hurts the employer.

Employees with over 6 months of service start to amass a liquidation amount that begins to dwarf their regular monthly salary. In practice, many employees will secure a promise of a new job and then become a problem at their present job, forcing the employer to liquidate them. The employee takes his liquidation check and starts his new job the next day, in effect receiving double pay. The system should be changed so that liquidation is paid similar to Unemployment in the US. You get paid weekly as long as you remain unemployed and ready to work. The employer still has the liability for unemployed workers, but the employee cannot benefit by becoming unemployed.​

How it hurts the employee.

Long term employees are afraid to seek better positions with other companies as they will loose all the liquidation credits that they have amassed. A mid-level manager in a company with little growth potential will not accept a position that has the prospects for advancement with another company as he loses his liquidation parachute. This is counterproductive for people to want to advance themselves. They stagnate in their present jobs and fail to improve their status.​

 

[cobraboy]

There are many changes that can be made in the present Labor Laws that would benefit both the employer and the employee. Take the present system of liquidation.
How it hurts the employer.

Employees with over 6 months of service start to amass a liquidation amount that begins to dwarf their regular monthly salary. In practice, many employees will secure a promise of a new job and then become a problem at their present job, forcing the employer to liquidate them. The employee takes his liquidation check and starts his new job the next day, in effect receiving double pay. The system should be changed so that liquidation is paid similar to Unemployment in the US. You get paid weekly as long as you remain unemployed and ready to work.​

How it hurts the employee.

Long term employees are afraid to seek better positions with other companies as they will loose all the liquidation credits that they have amassed. A mid-level manager in a company with little growth potential will not accept a position that has the prospects for advancement with another company as he loses his liquidation parachute. This is counterproductive for people to want to advance themselves.​

I agree with this change. But that alone would not keep a FZ company in the DR unless all other costs are reduced. There would still be a contengent liabilty on the part of the employer, whether he pays a lump sum liquidation or an "unemployment insurance" type premium.

The current system is a disincentive to hire, a disincentive to retain and a disincentive for employee efficiency. It's, IMO, a crazy system.

 

[El Vegano]

The hidden costs in the labor laws.

First off, in regards to the Korean and other Asian treatment of Free Zone employees pointed out previously, it is true. I am amazed at how they treat, or mistreat, their employees and most are forced to take it due to their personal economic conditions.

In regards to the costs of an employee in the DR, Free Zone or not, it is approximately 31% over the basic salary.
- 8% for 'regalia' (13th month or double pay) in December;
- 13% for 'liquidation' or termination benefits;
- 7.7% employer's contribution to Pension Fund (additional 2.3 deducted from employee's pay);
- 2.5% employer's contribution to Social Security.

Liquidation and Pension is really an illegal double-whammy since you should have one or the other, not both.

That is, of course, that for every 100 dollars you pay in salary you must come up with another 31 for these benefits.

It would be interesting to compare with Central American countries and Mexico, for example, just to see how the DR stands. Does anyone know?

 

[HOWMAR]

Liquidation and Pension is really an illegal double-whammy since you should have one or the other, not both.

Illegal because you object to it? . Try not to comply and see what is illegal.

Liquidation and Pension are serve two completely different purposes. Liquidation is equivalent to Unemployment compensation whereas Pension is to cover longterm inability to work due to old age and disability.

BTW- those are not "hidden costs" as everybody doing business in the DR is well aware of them.

BTW, BTW- you forgot the 13 paid Dominican holidays in your "hidden costs".

 

[laurapasinifan]

this is such a dynamic subject.....so many things have little effects and they add up.....if they cut the benefits and pay to the point it is desireable to make the product in the DR... then the workers have a poorer quality of life as a result(less pay, less benefits)...if they keep the benefits to the employees up with benefits as well, then the owners decide to make their products where they can make more money...then the people suffer again....via loss of employment.....tough ..who is right?.....who knows....thats democrats against republicans to an extent..

I think you need to make similar products in the country to offset the need to purchase the products abroad...just putting heavy duties on the incoming products, ends up costing the people..

I wonder if anyone knows if the free trade zones have some exemptions for benefits or pay that owners outside the zones dont have.

bob

 

[batich]

I see that liquidation and other benefits are calculated from the amount of worker`s salary, correct?

But what if I hire a salesperson to be paid commission only from each sale that he makes?

What will be my liability to him if he did not make even a single sale and I close my business and terminate him?

 

[HOWMAR]

I wonder if anyone knows if the free trade zones have some exemptions for benefits or pay that owners outside the zones dont have.

There is a different minimum wage scale in the Free Zones, lower than those outside the Free Zones for similar job classifications. Also, the Free Zones are exempt from paying the 10% profit sharing required of non-Free Zone companies.