Central America’s Garment Industry Faces Strategic Shift: Investment In Workers Key To Sustainable Growth
The garment and footwear sector in Central America is entering a moment of strategic transformation. Disruptions from the Covid-19 pandemic, conflicts in the Red Sea region, and evolving U.S. tariff policies have positioned the region as a critical link in the U.S. supply chain. Central America’s geographic proximity, established apparel infrastructure, and artisanal craftsmanship make it a strong candidate for sourcing diversification. However, labour challenges threaten the stability and long-term resilience of the industry.
Worker Wellbeing: A Strategic Imperative
Persistent labour issues, such as outdated manual systems, limited HR processes, weak compliance and poor enforcement of workplace protections, continue to affect wages, conditions and social security. These factors directly influence workforce retention, productivity and supply chain stability. Rapid industry growth without addressing these issues risks amplifying vulnerabilities.
Partnerships with worker organizations rooted in local communities are crucial. These collaborations can create safer workplaces, improve retention, reduce production disruptions, and minimize sourcing risks. Yet labour movements remain uneven: while organized trade unions have strengthened conditions in Honduras, Guatemalan factories remain largely unprotected due to the risks faced by trade unionists.
Gender Equity as a Core Focus
Women constitute the majority of the garment workforce, yet they face disproportionate challenges, including harassment, unsafe conditions and limited advancement opportunities. Over the past decade, women’s participation in factories has fallen from 80% to 35%. Addressing these issues requires targeted action, such as strengthening of policies against workplace violence and harassment, promoting women into technical and leadership roles, implementing comprehensive social protections, including childcare and pregnancy safeguards, and expanding access to inclusive financial services to reduce indebtedness.
Purposeful Investment in Workers
For Central America to fulfill its nearshoring potential, businesses must prioritize workers’ rights, particularly for women. Proactive engagement can enhance workplace culture, reduce operational risks and strengthen reputations.
RISE, in partnership with CARE, has demonstrated the benefits of investing in women workers. Programmes in Guatemala, Honduras and El Salvador have improved digital literacy, financial skills and awareness of workplace safety, reaching thousands of workers and showing measurable gains in confidence, assertiveness and use of financial tools.
Looking ahead, RISE aims to expand programmes addressing financial health and gender-based violence across the region. Cross-sector collaboration between brands, factories, donors and local organizations can help build a resilient, equitable garment and footwear industry that benefits workers, communities and businesses alike.
