VZCZCXYZ0010
PP RUEHWEB

DE RUEHNR #2418/01 1531009
ZNR UUUUU ZZH
P 021009Z JUN 06
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC PRIORITY 2158
INFO RUEHXR/RWANDA COLLECTIVE PRIORITY

UNCLAS NAIROBI 002418 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR AF/E, AF/RSA, EB/TPP/MTA, AND DRL/IL 
DEPT ALSO PASS TO USTR FOR BILL JACKSON 
DEPT ALSO PASS TO LABOR FOR PATRICK WHITE AND JIM SHEA 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ELAB AGOA ECON ETRD PHUM PGOV UG
SUBJECT: Uganda Makes Progress on GSP/AGOA Labor Complaint 
Issues 
 
REF: 05 Nairobi 5184 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1. (U) Summary: Regional Labor Attache's second visit to 
Kampala found encouraging progress on addressing the worker 
rights issues described in the AFL/CIO petition seeking to 
revoke Uganda's trade privileges under the General System of 
Preferences (GSP).  Uganda has passed four significant labor 
reform laws and negotiations are underway over union access 
in the textile industry.  The International Labor 
Organization (ILO), which helped draft the new labor laws, 
considers the final version of the laws passed by Parliament 
to be compliant with international labor standards.  Unions 
are more free to organize and operate; labor inspectors will 
more than double in number; and the Industrial Court has 
more power and independence.  In the historically anti-union 
textile industry, the textile union has been meeting 
regularly with manufacturers to finalize a union recognition 
procedural agreement that will pave the way for a collective 
bargaining agreement.  LabAtt and Embassy Kampala will 
continue to use opportunities with senior GOU officials to 
advocate continued attention to implementing the labor laws 
and resolving the labor issues, and hope that Washington 
agencies will do the same.  End summary. 
 
Labor Reform Laws' Status 
------------------------- 
 
¶2. (U) Regional Labor Attache (LabAtt) Randy Fleitman 
visited Kampala May 8-11 to follow up on progress on the 
worker rights issues identified in the GSP petition filed by 
the AFL-CIO against Uganda.  He met with textile union 
leaders, the Labor Commissioner, employers, the ILO, and 
President Yoweri Museveni's AGOA advisor.  All agreed 
Parliament's March passage of the labor reform laws was a 
significant achievement and demonstrated political will to 
protect Uganda's African Growth and Opportunity Act (AGOA) 
trade benefits included under the GSP. The president signed 
the new laws on May 31, 2006. 
 
¶3. Parliament passed the four labor laws March 29, 2006. 
David Ogaram, Commissioner of Labor at the Ministry of 
Gender, Labor, and Social Development (MGLSD), explained 
that Parliament made only two minor changes to the draft 
bills principally drafted by the ILO and previously sent to 
Washington agencies: maternity leave was extended from 6 
weeks to 60 working days, and four days of paternity leave 
was added.  LabAtt will forward the changes or the texts of 
the laws to Dept. of Labor for its review.  According to 
sources in Parliament and the Labor Ministry, the reform 
bills provide that: 
 
- No minimum number of members is required to establish a 
union and register it with the government. 
- The Registrar must make its decision on a union 
registration application within 90 days. 
- Unions are not required to represent a minimum percentage 
of workers in order to be recognized by an employer. 
- Every District will be required to have a labor officer. 
- The Industrial Court will be funded directly by the 
national budget (not through the Labor Ministry) and become 
functional. 
- The Industrial Court is elevated to the status of a High 
Court, giving it the power to enforce its decisions by 
imposing fines. 
- The Industrial Court has the power to re-instate employees 
it finds were improperly dismissed. 
- Aggrieved parties (workers or employers) can petition the 
Industrial Court directly, rather than having to file 
petitions through the Labor Ministry. 
- The time line and requirements for going on strike are 
shorter and simpler. 
 
Implementing the New Labor Laws: Show Me the Money 
--------------------------------------------- ------ 
 
¶4. (SBU) Labor Commissioner Ogaram told LabAtt the budget 
allocation for the Industrial Court received a four-fold 
increase, and he anticipated cases would be filed there 
soon.  (Note: Ogaram said no cases are currently pending, 
which Labatt interpreted as an indication that workers and 
employers recognized the Court's dysfunctional status.  End 
note.)  Ogaram admitted that further budget increases may be 
needed, noting the Court Clerk does not even have a 
motorcycle on which to deliver summonses to employers. 
 
 
¶5. (SBU) Ogaram said the Ministry of Labor had already 
started restructuring to facilitate its implementation of 
the new laws.  The Ministry plans to divide into two 
sections: Industrial Relations and Inspections, and 
Employment Policy and Statistics.  The Ministry for Public 
Service must review the Ministry's restructuring proposal 
and forward it to the Cabinet for approval. 
 
¶6. (SBU) Ogaram said the new laws would require a large 
increase in the Ministry's staff, including statisticians, 
macro-economists and safety and health officers.  The number 
of labor inspectors based in the Ministry in Kampala would 
rise from four to 12.  The new law also mandates a labor 
officer for all 69 Districts.  District labor officers were 
optional under the old law, and only 28 districts had one. 
Ogaram stated the Ministry would have to convene a 
tripartite group (government, labor and employers) to draft 
implementing regulations for the new laws.  Although some 
areas in the laws were specific enough for immediate 
enforcement, Ogaram believed very detailed regulations were 
needed in some areas, including safety and health medical 
exams and strike action procedures. 
 
¶7. (SBU) Ogaram acknowledged that increased GOU resources 
would not be available until a national budget supplemental 
was considered by Parliament, or the 2007 budget.  In the 
meantime, he planned to draft a detailed request for 
assistance to give to the ILO at the June meeting in Geneva, 
the World Bank, the Scandinavians and other potential 
donors.  He hoped Denmark would help fund inspector 
training.  LabAtt noted the USG had no resources for funding 
these processes, but offered to try to arrange a digital 
video conference with the U.S. Department of Labor to 
discuss inspector training curriculum and procedures. 
 
¶8. (SBU) Ogaram said he is working closely with the textiles 
union in its negotiations with manufacturers.  He agreed 
with the union that the proposed text from the Textile 
Manufacturer's Association of Uganda (TEMAU) was too 
restrictive in who was eligible to join the union.  However, 
he noted that none of the manufacturers or union leaders had 
experience negotiating union agreements.  Although one of 
the textile manufacturers, Apparels Tri-Star Ltd., had long 
resisted unionization, Ogaram applauded its recent decision 
to finally join the Federation of Ugandan Employers (FUE), 
which has the capacity and experience to improve the 
company's labor relations.  He also supported LabAtt's 
suggestion that TEMAU fund a training seminar on ADR and 
negotiating procedures for its members and the union. 
 
Union Excited but Wary 
----------------------- 
 
¶9. (SBU) LabAtt met with Uganda Textiles, Garments, Leather, 
and Allied Workers' Union General Secretary Catherine Aneno 
and Chairman Eileu Cosmas, together with the leader of the 
break-away Confederation of Free Trade Unions (COFTU) and 
other COFTU member unions.  They welcomed the new reform 
laws and President Museveni's implied promise in his May Day 
speech to provide more resources for the Industrial Court. 
They argued that donors should focus their resources on 
supporting unions for organization and recruitment, rather 
than support strengthening labor dispute resolution 
mechanisms.  They claimed that if a union could organize an 
overwhelming percentage of the workers at a factory, the 
employer would recognize the union, even without an 
Industrial Court Ruling.  The union leaders welcomed 
LabAtt's suggestion that it participate in an employer- 
funded joint training seminar on ADR and negotiating 
procedures. 
 
¶10. (SBU) Aneno confirmed the union had delayed responding 
to TEMAU's draft recognition procedural agreement in order 
to solicit advice from the International Textile, Garment 
and Leather Workers Federation (ITGLWF) and the Solidarity 
Center.  Aneno confirmed she had recently received the 
solicited input and would send the union's  response to 
TEMAU that week.  She explained that Section 2 of the 
proposed agreement, "Scope of Unionized Employees," was too 
restrictive, leaving few if any employees eligible for union 
membership.  Aneno argued that this issue and the Dispute 
Settlement procedures detailed in Section 3 of the proposal 
belonged in the CBA instead, where they could be negotiated 
and revised when necessary. 
 
¶11. (SBU) Aneno also warned that the union strongly opposed 
TEMAU's proposal to reclassify many of their workers as 
contractors in a piece rate system, which would render them 
ineligible for union membership.  She claimed that no other 
Ugandan manufacturer uses a piece rate system, and neither 
do any textile or garment producers in the Organization for 
Economic Cooperation and Development (OECD) countries.  She 
noted that many of the sewing machines were old and broke 
down frequently, which would make it difficult for workers 
to meet production targets.  She also believed a piece rate 
system would set workers against each other and make it 
easier for employers to dismiss workers. 
 
ILO Awareness Raising Project Ready to Publicize New Laws 
--------------------------------------------- ----------- 
 
¶12. (U) The ILO Awareness Raising Project Office in Kampala 
is still surviving on the remnants of Department of Labor 
funding, using radio programs and documentaries to increase 
general understanding of Ugandan labor laws and worker 
rights.  Project Coordinator Jackie Banya Adongakulu and her 
assistant Beat Mutyaba told LabAtt they had already 
developed plans to publicize the labor reform laws.  They 
believed that, as people came to understand the new laws, 
they would press the GOU and Parliament to devote more 
resources for implementation. 
 
Phenix and Nytil's Industrial Position 
------------------------------------ 
 
¶13. (SBU) A representative of Apparels Tri-Star Ltd. said 
Manager Kananathan was out of the country, so LabAtt visited 
the other two TEMAU members to discuss labor conditions and 
their competitive interests.  Phenix specializes in 
exporting 100% organic cotton yarn to Kenya, Tanzania, 
Mauritius, Ethiopia, Egypt, and now, Europe.  Managing 
Director Yuichi Kashiwada explained that Phenix produces 
about 600 tons of yarn per year, and plans to expand into 
knitting organic cotton fabric and then garment production 
with financing from a Japanese bank.  Phenix is seeking 
certification from Germany's BioEquitable Forum for its 100% 
organic label, Environment ISO-14,000, and Fair Trade 
practices, which require producers to meet certain labor 
standards.  EcoSat is the inspecting organization. 
 
¶14. (SBU) Phenix understands that organic cotton would 
receive AGOA benefits, and is interested in the U.S. market. 
Kashiwada sent a representative to the Magic tradeshow in 
Las Vegas, and accompanied President Museveni to Washington 
and New York.  Unfortunately, a U.S. buyer's request for 
10,000 lbs of organic cotton products was beyond Phenix's 
capacity, so Kashiwada will focus on European buyers while 
trying to boost production capacity. 
 
¶15. (SBU) Nytil Picfare (formerly known as Southern Range 
Nyanza) Chairman Kishor Jobanputra said a trial AGOA export 
two years ago demonstrated that high transportation costs 
for inputs and outputs made their products too expensive to 
compete in the U.S., or with China and India in export 
markets.  Nytil produces its own fabric, linens and clothing 
for East and Central Africa, and has developed its own brand 
for marketing.  Jobanputra recommended the EAC countries 
build up a regional market for cotton, yarn, fabric, and 
products and protect it from imports with higher tariffs to 
encourage growth in the textile industry and job creation. 
Uganda and Tanzania produce 180,000 tons of medium quality 
cotton per year.  Nytil could boost its fabric production 
from 1 million meters per month to achieve competitive 
economies of scale if Uganda and the EAC had an industrial 
policy protecting Nytil from Chinese firms with access to 
low-interest financing.  He argued that more government 
support would compensate for the costs of recognizing the 
union. 
 
¶16. (SBU) Besides competition from cheap, low-quality 
Chinese and Pakistani products, Jobanputra complained that 
Chinese firms have pirated his trademark with counterfeit 
products smuggled in without paying the tariff or value 
added tax.  He said the Bureau of Standards had done nothing 
about his complaint.  Nytil subsequently sent samples of 
counterfeit linens to the Embassy to demonstrate his point. 
 
¶17. (SBU) Both Jobanputra and Kashiwada discussed bad 
experiences with militant workers and claimed the AFL-CIO 
petition's allegations were inaccurate.  Both acknowledged 
the new union leaders were an improvement, but said tensions 
 
remain and workers still do not understand the pressures 
globalization puts on manufacturers.  They supported 
LabAtt's proposal for TEMAU to fund a training session on 
ADR and negotiating procedures that would help illustrate 
the need for partnership.  Both welcomed the new labor laws 
for providing a more predictable regime.  TEMAU hired the 
Federation of Ugandan Employers to develop standardized 
terms and conditions of employment as a basis for 
negotiating a CBA, and it would like to see Uganda's smaller 
producers raise their standards to TEMAU's.  Kashiwada 
defended TEMAU's proposal to put workers on a piece rate 
system with a fixed monthly salary and bonuses for more 
productive workers.  He noted that China and Indonesia used 
the system to achieve both high quality and quantity.  TEMAU 
would try to convince the union to accept the proposal by 
stressing that experienced, productive workers could earn 
much more under the piece rate system.  LabAtt pointed out 
that neither China nor Indonesia are admired for their 
respect for worker rights, and predicted it would be very 
difficult to sell the proposal to the union. 
 
Federation of Ugandan Employers (FUE); Moderating Influence 
on TEMAU? 
--------------------------------------------- ------------ 
 
¶18. (SBU) Executive Director Rosemary Ssenabulya found it 
encouraging that Tri-Star had finally decided to follow 
Phenix and Nytil in joining the FUE.  The textile producers 
had little or no experience dealing with unions, and TEMAU 
had contracted with FUE for advice on negotiations and to 
prepare a consolidated human resource manual with policies, 
terms and conditions of service.  The manual has 12 
extremely detailed chapters that include policies on issues 
such as disciplinary procedures, sexual harassment, 
discrimination and occupational safety, health and 
environment.    LabAtt suggested that, based on experiences 
in Kenya, it would be useful to propose incorporating the 
provisions on sexual harassment into the CBA.  Ssenabulya 
said FUE had suggested that TEMAU fund a training seminar 
for management, unions and GOU on ADR and negotiating 
procedures.  She said FUE had previously organized a 
successful seminar for the plantation workers union and 
management.  She believed the union would find such a 
seminar a credible exercise, even if it was organized and 
funded by employers. 
 
¶19. (SBU) Ssenabulya stressed the GOU's responsibility for 
providing the resources for hiring, training and equipping 
new labor inspectors.  Under the current decentralization 
policy, District Labor Officers are recruited and paid by 
District governments.  It appeared the Labor Ministry 
planned to re-centralize the labor inspectorate by making 
all District Labor Officers employees of the Ministry.  She 
said FUE had submitted a proposal to create an autonomous 
labor inspectorate under the Labor Ministry to handle 
District-level inspection duties. 
 
Child Labor Policy 
------------------ 
 
¶20. (U) On a separate issue, Ssenabulya said the FUE has not 
developed a policy for its members on combating child labor. 
However, the tea, sugar and rice sectors have child labor 
committees, some CBA's include child labor provisions, and 
FUE has provided training on child labor for many employers. 
Ssenabulya agreed to review the Federation of Kenyan 
Employers' child labor policy drafted under the ILO-IPEC 
program and to work on developing a similar policy in 
Uganda. 
 
President's AGOA Advisor on Implementing the New Laws 
--------------------------------------------- --------- 
 
¶21. (SBU) Special Presidential Assistant on AGOA and Trade 
Susan Muhwezi said she was not sure how the Labor Ministry 
planned to incorporate the new inspectors.  She believed 
Parliament intended for the District Labor 
Officers/inspectors to be GOU civil service employees hired, 
trained, paid, and equipped by the Labor Ministry, but 
housed in the District Government offices.  She agreed to 
check with the Labor Ministry on how it planned to proceed. 
 
¶22. (SBU) Muhwezi said that TEMAU members had not seen any 
advantage to accepting the union, but working together on 
finalizing the reform laws had opened their eyes to the 
potential benefits as well.  She acknowledged the importance 
 
of building both workers' and employers' awareness of the 
new laws and said her office would work with the ILO project 
office.  LabAtt stressed the importance of GOU 
implementation of the new laws through budget allocations to 
the Labor Ministry and Industrial Court as a further 
demonstration of continued political will to address the 
issues raised in the GSP petition.  She noted that, although 
it was too late to incorporate increases in the budget 
scheduled to be published in June 2006, the Labor Ministry 
could apply for a budget supplemental. 
 
Comment 
------- 
 
¶23. The Parliament's passage of the labor reform package 
made significant improvements for workers rights in Uganda, 
but the practical effects of the new laws will only be felt 
if the Labor Ministry implements and enforces the laws.  The 
Labor Ministry will need time to restructure and request a 
larger share of the national budget.  All interlocutors 
shared concerns about the GOU's sustained political will and 
financial ability to implement the new laws.  Although 
frustrated by the delays in negotiating the union 
recognition procedural agreement, the Labor Commissioner and 
the two parties to the negotiation accepted the inexperience 
of both sides made such delays inevitable, both now and in 
the future.  The union is still wary of employers, 
especially Tri-Star, interpreting their actions as being 
aimed to weaken the union.  While the progress to date is 
encouraging, the workers' actual conditions have not changed 
significantly, and LabAtt believes it is too soon to close 
the petition review.  LabAtt and Embassy Kampala will 
continue to use opportunities with senior GOU officials to 
advocate continued attention to implementing the labor laws 
and resolving the labor issues, and hope that Washington 
agencies will do the same. 
 
Bellamy