VZCZCXRO0917
PP RUEHCHI RUEHDT RUEHHM RUEHJO RUEHNH RUEHPOD
DE RUEHPF #0788/01 1620138
ZNR UUUUU ZZH
P 110138Z JUN 07
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 8541
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHXI/LABOR COLLECTIVE PRIORITY
RUEHBY/AMEMBASSY CANBERRA PRIORITY 2284
RUEHGV/USMISSION GENEVA PRIORITY 1605

UNCLAS SECTION 01 OF 03 PHNOM PENH 000788 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, DRL/ILCSR--MARK MITTELHAUSER 
GENEVA FOR JOHN CHAMBERLIN 
STATE PLEASE PASS TO LABOR FOR ILAB--BILL BRUMFIELD, JIM 
SHEA, CHRIS WATSON, AND ZHAO LI 
STATE PLEASE PASS TO USTR--DAVID BISBEE 
 
E.O. 12958: N/A 
TAGS: ELAB ECON PGOV CB
SUBJECT: CAMBODIA'S STRIKES WANE, BUT CONTENTIOUS LABOR 
ISSUES LOOM 
 
REF: A. 06 PHNOM PENH 1124 
     ¶B. PHNOM PENH 662 
 
¶1.  (SBU) Summary.  Cambodia's often tumultuous labor sector 
has been notably calm so far in 2007, with working days lost 
to strikes down 50% from 2006 levels.  A crackdown on a 
particularly notorious union, a recent minimum wage increase, 
embassy efforts to discourage illegal strikes, and slowly 
increasing sophistication among union members have all helped 
to contribute to the decline in labor unrest.  But, there are 
signs of potential trouble ahead.  Controversial issues of 
night shift wages, employmentcontracts, and union rights and 
responsibilities which have languished for years are finally 
being discussed, but these conversations are taking place in 
the pro-business Eighth Private Sector Working Group.  Unions 
have little effective say in the decisionmaking there--both 
due to the structure of the group and to their internal 
weaknesses--and as a result, worker's interests are not being 
adequately represented.  Minister of Labor Vong Sauth, who 
has now been in the job for one year, shows few signs of 
bringing effective leadership to this or any other issue. 
End Summary. 
 
Labor Unrest Subsides in Early 2007... 
--------------------------------------- 
 
¶2.  (U) Working days lost to strikes in Cambodia's garment 
industry have declined dramatically from record-setting 
levels in 2006:  in the first five months of 2007, only half 
as many days were lost to strikes as in the same period in 
¶2007.  Several factors contribute to the drop in labor 
unrest.  Last year's FTU-led effort to increase the minimum 
wage fueled unrest, labor observers say, while workers who 
now have an 11% increase in the minimum wage are reluctant to 
strike.  Embassy outreach to union leaders last year helped 
explain that strikes should only be pursued as a last resort, 
and emphasized that excessive strikes could lead buyers to 
pull out of the country due to fears about production delays. 
 Free Trade Union (FTU) President Chea Mony reported that 
some workers are becoming more aware that some unscrupulous 
union leaders are manipulating workers to be able to extort 
factory owners and are refusing to participate in illegal 
strikes. 
 
¶3.  (SBU) Government pressure against one notorious union, 
the CPP-affiliated Khmer Youth Free Trade Union (KYFTU), has 
also played a significant role in keeping labor unrest to 
reasonable levels.  The Garment Manufacturers Association of 
Cambodia (GMAC) lodged complaints against the union in 
November 2005 and September 2006 and post raised concerns 
about the union during meetings with senior Ministry of Labor 
officials in September 2006 and during the  Trade and 
Investment Framework Agreement Joint Council in February 
¶2007.  KYFTU leader Yun Rithy was reportedly detained and 
questioned for three hours in September 2006.  Seng Sekada, 
Director General of the Labor Department, tells us that the 
union has taken a lower profile after committing the "serious 
offense" of implying the Prime Minister endorsed a thinly 
veiled bribe request letter sent to garment factories. 
 
..but Big Issues Loom on the Horizon 
------------------------------------ 
 
¶4.  (U) The FTU's threat to hold a general strike in response 
to the National Assembly's expected passage of a lower night 
shift wage (ref B) seems to be fizzling.  The National 
Assembly has not taken up the issue as quickly as expected 
and the presidents of the FTU and its partner, teacher's 
union CITA, are leaving June 9 for three weeks of Sam Rainsy 
Party political and fundraising events in Long Beach, 
California; Lowell, Massachusetts; and Houston, Texas. 
 
¶5.  (U) In contrast to the deflating night shift wage issue, 
several labor observers have warned that two pending labor 
issues have the potential to seriously erode worker's rights 
and to create significant unrest:  fixed duration contracts 
and efforts to revise legislation about union rights and 
responsibilities.  Cambodian labor law distinguishes between 
two types of employment contracts:  fixed duration contracts 
(FDCs), which must be written, last for not more than 2 
years, and have a precise starting and end date; and 
undetermined duration contracts (UDCs), which are essentially 
 
PHNOM PENH 00000788  002 OF 003 
 
 
everything else.  Labor observers believe that fixed duration 
contracts can be easily abused, with working periods as short 
as 3 months before renewal creating perpetual job insecurity, 
particularly for union leaders and pregnant women who would 
be entitled to paid maternity leave.  Employers would like to 
negate an Arbitration Council decision that ruled that FDCs 
can be renewed only up to a total period of two years, at 
which point they automatically become UDCs.  Employers argue 
publicly that they need more flexibility in their workforces, 
and explain privately that firing unproductive or troublesome 
employees is much more likely to lead to strikes than simply 
failing to renew the short-term contracts of those workers. 
 
¶6.  (U) It is still not entirely clear what specific issues 
would be addressed in the discussion on union rights and 
responsibilities, but the ILO's John Ritchotte believes that 
illegal strikes, union registration requirements, and most 
representative status will most likely be included. 
Currently, the vast majority of garment sector strikes are 
illegal, with unions failing to give seven days notice and 
take a secret ballot vote as required.  Lax laws surrounding 
union registration and the government's failure to certify a 
single union at each factory as most representative for the 
purposes of collective bargaining have led to a situation 
where there are more than 900 factory-level unions competing 
for members in Cambodia's 300 garment factories.  As a 
result, factory-level union leaders compete with one another 
for members, fueling excessive demands and illegal strikes, 
and some unions harass and intimidate rival union members. 
 
Eighth Working Group is Where the Action Is 
------------------------------------------- 
 
¶7.  (SBU) There is substantial new energy and power in a 
year-old group tackling labor issues, but labor observers and 
unions complain that worker interests are often ignored in 
the business-centered process.  Like the other working groups 
affiliated with the semi-annual government-business 
conference called the Private Sector Forum, the group has 
business and government co-chairs, but unions have no part in 
the leadership structure.  While the working group has met 
three times, it has yet to consider any proposals submitted 
by unions, focusing instead on issues raised by businesses 
and at times frustrating even government participants with 
its strident pro-business tone.  Meanwhile, three out of the 
four union seats on the working group have gone to 
pro-government/pro-management unions, which are more numerous 
but smaller than the pro-opposition and independent unions. 
Unions are further disadvantaged by the poor organization of 
the group, which tends to meet in a series of frenzied 
discussions just weeks or days before they are called on to 
announce their progress in the semi-annual Private Sector 
Forum.  (Note:  The next Private Sector Forum is tentatively 
scheduled for mid-July.  End Note.)  Well-prepared employers 
come ready with proposals that they have already discussed 
with government officials privately, while unions seem to 
ignore rumors of what is likely to be discussed and only 
start thinking about a response when the issue is all but 
decided. 
 
¶8.  (SBU) The ILO is so disturbed by the lop-sided power 
structure of the group and the lack of effective worker 
representation that it has threatened to publicly resign from 
the committee if the process is not made more democratic. 
Employers are pleased that long-standing labor issues are 
finally being addressed.  Ken Loo of GMAC acknowledged that 
workers have relatively little say in the group, but favored 
reforming the group's functioning rather than scrapping the 
group altogether. 
 
The New Minister of Labor Unimpressive One Year On 
--------------------------------------------- ----- 
 
¶9.  (SBU) After a year in office, the Minister of Labor, Vong 
Sauth, seems to many to be as invisible and powerless as his 
ineffectual predecessor, Nhep Bunchin.  The minister rarely 
appears in public, has little apparent hands-on interaction 
with labor issues, and has little influence over the Eighth 
Working Group.  Pro-CPP union leader Vong Sovann described 
the new minister as ineffective, unresponsive, and lacking 
the authority to solve labor problems.  Men Nimmith, the 
Executive Director of the USAID- and DOL-funded Arbitration 
 
PHNOM PENH 00000788  003 OF 003 
 
 
Council Foundation, traveled with Vong Sauth on a study tour 
of labor relations in Australia and said that the minister 
seemed to have little knowledge of current labor affairs.  He 
was vague and unimpressive in his meetings with Australian 
officials, and refused to deliver a speech written at his 
request, instead having his staff distribute copies to the 
media and explaining to Men Nimmith that actually talking to 
the media was too embarrassing as they were prone to ask 
political questions. 
 
¶10.  (SBU) Employers have a slightly rosier picture of Vong 
Sauth, noting that, as a CPP member and the son-in-law of 
National Assembly President Heng Samrin, he has better 
connections than Nhep Bunchin, who complained of not even 
being able to control his CPP subordinates because he was a 
FUNCINPEC minister.  Nonetheless, even to employers, his role 
seems to consist of forwarding business-initiated proposals 
up the Cambodian leadership chain rather than pro-actively 
finding solutions. 
 
Comment 
------- 
 
¶11.  (SBU) The current relative calm in Cambodia's labor 
sector is a welcome change from the tumult experienced at 
this time last year.  Unions seem to be slowly maturing with 
regards to the frequency with which they launch strikes.  At 
the same time, national level unions remain ineffective 
representatives of their worker's interests, a critical 
failing which becomes more and more damaging as the Eighth 
Working Group manages to tackle long-simmering issues such as 
night shift wages, employment contracts, and union rights and 
responsibilities.  If this imbalance remains and important 
issues are decided without effective worker participation and 
against their interests, labor unrest is likely to increase 
once more.  End Comment. 
MUSSOMELI