VZCZCXRO5948
PP RUEHCHI RUEHDT RUEHHM RUEHJO RUEHNH
DE RUEHPF #1204/01 1811053
ZNR UUUUU ZZH
P 301053Z JUN 06
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 6966
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHXI/LABOR COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUEHGV/USMISSION GENEVA PRIORITY 1508

UNCLAS SECTION 01 OF 02 PHNOM PENH 001204 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP, EAP/MLS, DRL/IL--MARK MITTELHAUSER, AND 
EAP/TPP/ABT THOMAS LERSTEN 
LABOR FOR ILAB--JIM SHEA AND JONA LAI 
GENEVA FOR RMA 
STATE PLEASE PASS TO USTR--BARBARA WEISEL AND DAVID BISBEE 
 
E.O. 12958: N/A 
TAGS: ELAB ECON PGOV CB
SUBJECT: CAMBODIA:  GENERAL STRIKE CANCELLATION SETS THE 
STAGE FOR SECTORAL COLLECTIVE BARGAINING 
 
REF: A. PHNOM PENH 1202 
 
     ¶B. PHNOM PENH 1199 
 
¶1.  (SBU) SUMMARY.  The June 29 postponement of a general 
strike scheduled to start just a few days later paved the way 
for an announcement by garment manufacturers and eleven union 
federations that they will begin collective negotiations in 
August.  They have agreed to discuss wages, strikes, 
arbitration, and implementation of the Labor Law.  Despite 
this promising sign, success is far from certain as there is 
significant distrust not only between garment factory owners 
and unions but also among the various union federations. 
Nonetheless, the effort will almost certainly improve 
communication among actors in the garment sector and would 
yield substantial benefits if successful.  END SUMMARY. 
 
Collective Negotiations Announced 
--------------------------------- 
 
¶2.  (U) The announcement by the Free Trade Union (FTU) and 
the Cambodian Independent Teachers Association (CITA) that 
they will indefinitely postpone their general strike (Ref A) 
sets the stage for negotiations on a garment-sector-wide 
labor agreement.  While post focused on averting a general 
strike threatened to start on July 3, the International Labor 
Organization (ILO) and the American Center for International 
Labor Solidarity (ACILS) have been working on a longer-term 
effort to bring garment manufacturers and the fractious labor 
movement together to negotiate a broader labor agreement. 
 
¶3.  (SBU) On June 29, the Garment Manufacturers Association 
of Cambodia (GMAC) and 11 union federations issued a joint 
press statement announcing their intention to enter into 
negotiations about wages, strikes, arbitration, and 
implementation of the Labor Law.  The draft ILO/ACILS 
framework, which has not been made public, is a three year 
deal including an unspecified minimum wage increase, 
mandatory binding arbitration, and a moratorium on strikes 
and lock-outs for the life of the agreement. 
 
Unions, Factories, Ready to Trade Dirty Tricks for a Deal 
--------------------------------------------- ------------ 
 
¶4.  (SBU) A dramatic rise in the incidence of individual 
strikes at garment factories, as well as the threatened 
general strike, are symptomatic of a deterioration in labor 
relations over the past few months.  Unions are frustrated by 
factory owners' increased use of Cambodia's corrupt court 
system to penalize union activists via charges of destruction 
of property (often related to strikes), theft, and slander. 
Unions seem finally to have internalized the message from the 
embassy, the Cambodian government, and the garment industry 
that while unions have a right to strike, excessive illegal 
strikes will only hurt the garment industry and threaten 
workers' jobs.  For their part, factory owners are fed up 
with illegal strikes that stop production on short notice and 
cause missed deadlines and excessive overtime.  Each party 
now seems to be willing to consider turning away from its 
favorite dirty tricks (illegal strikes for unions, 
manipulating the court system for factory owners, and bribes 
on both sides) in exchange for agreeing to binding 
arbitration. 
 
¶5.  (SBU) Cambodia's Arbitration Council, which was funded by 
the US Department of Labor and established under the guidance 
of the ILO, is the only transparent dispute resolution body 
in a sea of judicial corruption.  The Arbitration Council's 
decisions become non-binding if either party formally objects 
to the award within seven days of its issuance.  However, 
both parties can agree in advance of the arbitration process 
to accept the Council's decision as a binding one, and many 
collective bargaining agreements, particularly in the tourism 
sector, contain this provision. 
 
GMAC Negotiation Success Allows Chea Mony To Be First Among 
Equals 
--------------------------------------------- -------------- 
 
¶6.  (SBU) The embassy's work to help the FTU/CITA and GMAC 
come close enough to an agreement to avoid a general strike 
and ILO/ACILS' work to bring eleven different union 
 
PHNOM PENH 00001204  002 OF 002 
 
 
federations together to negotiate with GMAC have been 
mutually reinforcing.  FTU leader Chea Mony was clearly 
looking to the threatened general strike as a way to raise 
his political stature (Ref B), and was reluctant to trade the 
drama and publicity of tens of thousands of workers in the 
streets for the lower-key success of a negotiated agreement, 
particularly one that would be shared with ten other union 
leaders.  Chea Mony told ILO Chief Technical Advisor on June 
21 that he could not agree even in principle to the draft 
ILO/ACILS framework agreement.  And it was only pressure from 
the embassy and the ILO that brought him back to the table 
for further multi-union discussions on June 29. 
 
¶7.  (SBU) In fact, it was the tremendous progress in 
negotiations between FTU/CITA and GMAC that gave Chea Mony a 
way to participate in the multi-union negotiation as the 
first among equals.  Because the FTU and GMAC had nearly 
reached a deal on the minimum wage already (GMAC offered a 
USD 7 increase over three years while FTU counteroffered with 
a USD 8 increase over three years), Chea Mony will be able to 
informally but legitimately claim most of the credit for 
raising the minimum wage.  At the same time, it will be up to 
the group of eleven union federations and GMAC to iron out 
the final details of the minimum wage deal in August, so all 
will be able to claim some degree of victory. 
 
¶8.  (SBU) COMMENT.  Sector-wide collective bargaining is a 
very ambitious idea that will likely meet with slow progress 
and uncertain success.  Factory-level collective bargaining 
agreements (CBA) are rare in Cambodia's garment industry, in 
place in only five of the country's nearly 300 garment 
factories.  In addition, Cambodia's union federations are a 
wildly divergent bunch who will have a tough time reaching 
consensus.  In addition to pro-government, pro-opposition, 
and politically neutral unions, some unions are essentially 
pro-management and all trade allegations of violence, 
harassment, and corruption.  Nonetheless, the negotiating 
process is likely to build trust in an area where it is 
sorely lacking.  A framework agreement, if reached, would be 
a tremendous boon to the stability of Cambodia's 
all-important garment sector and would herald a new era in 
Cambodian labor relations.  END COMMENT. 
MUSSOMELI