VZCZCXRO6750
RR RUEHCHI RUEHDT RUEHHM RUEHJO RUEHNH
DE RUEHPF #0602/01 0890938
ZNR UUUUU ZZH
R 300938Z MAR 06
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC 6374
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHXI/LABOR COLLECTIVE

UNCLAS SECTION 01 OF 02 PHNOM PENH 000602 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ELAB PGOV ECON PREL CB TH
SUBJECT: CAMBODIA:  UNIONIZATION EFFORTS STALL IN CASINO 
BOOM TOWN 
 
 
¶1.  (SBU) SUMMARY.  Unionization efforts at a Thai-owned 
casino on the Cambodian-Thai border were met with alleged 
management intimidation and firing of union leaders. 
Management objected to an arbitral award calling on them to 
re-instate 11 of the 20 terminated workers, has refused to 
implement the ruling, and declined further negotiations with 
the union.  Union leaders, who earlier had been committed to 
leading a strike, now worry that housing difficulties, lack 
of local support, and the potential for violence could 
preclude a strike.  The Thai Embassy has agreed to encourage 
the Thai casino owner to negotiate with the union.  The 
union's problems in organizing workers in the gaming 
industry--a logical next step for unionization 
efforts--highlight the challenges confronting the labor 
movement as it tries to expand beyond its garment and hotel 
sector base in Cambodia's largely informal economy.  END 
SUMMARY. 
 
Unions Allege Management Intimidation 
------------------------------------- 
 
¶2.  (U) The Cambodian Tourism and Service Worker's Federation 
(CTSWF), one of the most dynamic and fastest-growing unions 
in the country, began attempts to organize casinos in the 
Cambodian-Thai border town of Poipet in January 2005. 
Working closely with the American Center for International 
Labor Solidarity (ACILS), CTSWF organizers traveled 
frequently to Poipet and met with workers from each casino. 
Grand Diamond City Casino workers demonstrated the most 
enthusiasm for unionization. 
 
¶3.  (U) Despite urging from ACILS to wait until the union at 
Grand Diamond City was stronger and unions could be 
established simultaneously at other casinos, the CTSWF went 
ahead with local union elections on Nov. 15, 2005.  Despite 
having 500 dues-paying members, only 185 members voted due to 
alleged management intimidation.  In the two weeks following 
the election, the president, vice-president, treasurer, and 
advisor to the union were all fired without explanation. 
Following union-management negotiations, the vice-president, 
treasurer, and advisor were re-hired. 
 
¶4.  (U) In early December, management asked its 1,082 
Cambodian workers to fill out a survey asking whether they 
supported the creation of a union.  When more than 700 
workers responded with support for the union, management 
reportedly pressured workers to change their answers.  In 
late December and early January, 20 workers who refused to 
change their responses were terminated.  In early February, 
Grand Diamond Manager Jeelaphorn Khanaknith told EconOff that 
the employees had been terminated because management had lost 
confidence in them.  Unlike the garment sector, casino 
employees handle thousands of dollars each day, and trust is 
critical.  She noted that the casino had offered them 
severance pay, but they refused to accept it. 
 
Former Governor Unsympathetic to Union Efforts 
--------------------------------------------- - 
 
¶5.  (U) Former Banteay Meanchey province governor Gen. Heng 
Chantha (FUNCINPEC) was unsympathetic to unionization efforts 
at the casino, telling EconOff in February, "In the past, 
labor disputes occurred only at garment factories (which are 
located in other provinces), now this disease has spread to 
our province."  He described the dispute as "just a 
misunderstanding" and chided the union for not asking the 
provincial government to assist in getting management to 
accept a union presence.  Working conditions in casinos are 
better than those in the garment factories in Phnom Penh and 
Sihanoukville, he said.  And casino workers are the 
privileged few when compared to the thousands of residents of 
Poipet who are homeless or living far below the poverty line. 
 (Note:  Gen. Chantha was one of three FUNCINPEC governors 
removed from their posts last week as part of CPP's political 
infighting with FUNCINPEC.  CTSWF President Ly Korm intends 
to contact the new governor, Onn Sum (CPP), in the next few 
days.  End Note.) 
 
Arbitration Proceeds, but Award is Rejected 
------------------------------------------- 
 
¶6.  (SBU) Under Cambodian labor law, labor disputes that 
cannot be successfully conciliated by the Ministry of Labor 
are sent to the Arbitration Council, a uniquely transparent 
dispute resolution body founded with US support. 
Participation in the arbitration process is mandatory, but 
either party can object to an award, making the award itself 
non-binding.  Most arbitration cases have dealt with garment 
or hotel sector disputes in Phnom Penh and Siem Reap, and the 
Arbitration Council is now well accepted in these two 
 
PHNOM PENH 00000602  002 OF 002 
 
 
industries and geographic areas.  In many other industries 
and cities, few employers are familiar with the arbitration 
process and may fear participating in a judicial proceeding 
whose outcome they cannot control.  Arbitration Council 
Foundation staff worried that as a foreign owner operating 
far outside the usual geographic and sectoral scope of the 
Arbitration Council's cases, Thai casino owner Phunphorn 
Asawahem might refuse to participate in arbitration.  In such 
a case, the government would be unlikely to intervene against 
a powerful tycoon, setting the damaging precedent that 
arbitration proceedings can simply be ignored.  (Note: 
Phunphorn Asawahem is reportedly the son of former Thai 
Minister of the Interior Watana Asawahem.  End Note.) 
 
¶7.  (U) Econoff and Labor Assistant visited Poipet in early 
February to meet with union leaders and casino management, 
and to encourage both sides to refrain from any industrial 
action until after arbitration, and to participate in the 
arbitration process.  Both the union and the casino 
participated in arbitration hearings, which were held 
February 8 and 28.  The arbitral award issued on March 9 
called for the reinstatement of 11 of the 20 terminated 
workers, finding that workers who claimed to be union members 
but had not voted in union elections in November were not 
covered by laws protecting workers from anti-union 
discrimination.  Casino management objected to the award on 
March 16, and so far has refused to negotiate further with 
the union. 
 
Violence, Housing Fears Make Strike Less Palatable 
--------------------------------------------- ----- 
 
¶8.  (U) Despite strong support for a strike in December and 
January, now that union members are taking a closer look at 
the logistics of a strike, some members are losing interest 
while a fervent core continues to urge industrial action.  As 
part of their employment contract, the casino provides 
dormitory-style accommodation for most of its workers.  If 
the workers go on strike, they will need to find new places 
to stay.  Most workers are migrants from other regions of 
Cambodia and do not have relatives in the area who could 
offer them accommodation.  There are not enough low-priced 
hotel rooms in Poipet to house striking workers, and CTSWF 
leaders report that traveling to and from Poipet and 
participating in the arbitration process exhausted most of 
the funds they saved to support a strike.  Moreover, local 
residents--many of whom live below Cambodia's poverty 
line--are unlikely to be sympathetic toward striking workers, 
whom they may regard as well-paid whiners.  CTSWF leaders 
also worry about the potential for strike-related violence, 
particularly as police in Poipet are unaccustomed to dealing 
with striking workers. 
 
Thai Embassy:  What Labor Dispute? 
---------------------------------- 
 
¶9.  (SBU) In a meeting March 27, Thai Political Officer 
Songchai Chaipatiyut told Econoff and Labor Assistant that he 
was unaware of the labor dispute or unionization efforts in 
Poipet, and explained that the Thai government does not 
support Thai-owned casinos in Cambodia due to concerns about 
money laundering and other crimes, and tries to keep its 
distance from the casinos.  However, he was receptive to our 
concerns about the potential for violence and the potential 
economic impact of a strike.  He agreed to encourage the 
casino to negotiate with the union and, above all, to avoid 
violence. 
 
¶10. (U) COMMENT.  The Cambodian labor movement, which started 
in the garment sector and was given a huge boost by the labor 
provisions of the US-Cambodia Bilateral Textile Agreement, 
has slowly moved into other sectors of Cambodia's small 
formal economy, most notably luxury hotels and schools. 
Outside of these sectors, and outside of Phnom Penh and Siem 
Reap, few of Cambodia's workers are organized.  CTSWF's 
effort to expand the reach of organized labor to casinos in 
the busy and fast-growing border town of Poipet is an 
important and logical next step.  However, if the reaction of 
Grand Diamond City owner Phunphorn Asawahem is any 
indication, casinos are unlikely to accept unionization 
without resistance.  Whereas hotel and garment sector 
unionization efforts benefited greatly from international 
attention and a boycott of hotels involved in labor disputes, 
casino unions are unlikely to find such support from 
international activists, the predominately Thai casino 
patrons, or their neighbors in Poipet.  The Cambodian labor 
movement has already grabbed the "low hanging fruit;" future 
unionization efforts will be more difficult.  END COMMENT. 
Mussomeli