P 151302Z JUL 09
FM AMEMBASSY PORT AU PRINCE
TO SECSTATE WASHDC PRIORITY 0128
INFO HAITI COLLECTIVE PRIORITY
HQ USSOUTHCOM J2 MIAMI FL PRIORITY

UNCLAS PORT AU PRINCE 000642 
 
 
STATE FOR WHA/EX, WHA/CAR, EEB 
STATE PASS SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: EAID ECON ETRD HA PGOV PREL EINV
SUBJECT: HAITI'S MINIMUM WAGE LAW STILL STALLED 
 
REF: A) PORT AU PRINCE 583 B) PORT AU PRINCE 553 C) 
     PORT AU PRINCE 530 D) PORT AU PRINCE 486 
 
 
¶1.  (SBU)  Summary:  Haitian President Rene Preval continues 
to take a strong stand behind his formally submitted 
objections to raising the minimum wage to 200 Haitian gourds 
(HTG) per day.  In a sustained media campaign, Preval warns 
of the negative consequences of a wage increase on foreign 
investment and Haiti's already astronomical unemployment 
rate, and calls for a carve-out for the assembly sector 
producing for export.  Parliamentary supporters of the 
minimum-wage increase are demanding that factory owners 
submit financial statements proving that the increase will 
ruin their businesses.  The private sector continues to 
support a phase-in of the wage increase for the apparel 
assembly industry over several years.  Several leaders of 
trade union organizations conceded that a compromise might be 
necessary to allow workers to keep their jobs.  University 
students promise to hold more protests in favor of overriding 
President Preval's objections and passing the original 
version of the bill.  Deliberations in parliament may be 
protracted, as there is no constitutional limit on how long 
the Parliament can debate the President's objections to the 
proposed legislation.  This is the only issue in recent 
memory where the President has made a strong effort, by 
negotiating with stakeholders and using the media, to effect 
a legislative outcome.  End summary. 
 
Preval Explains His Objections, Proposes Gradual Increase 
--------------------------------------------- ------------ 
 
¶2.  (SBU)  President Preval on June 17 outlined his reasons 
for objecting to the proposed minimum wage legislation, 
including his suggested revisions, in a widely publicized 
letter addressed to the President of the Senate Kely Bastien 
and the President of the Chamber of Deputies Levaillant 
Louis-Jeune.  Preval stated that the law, in its current 
form, ''could pose many problems with great consequences'' 
for unemployment, investment, and job creation, citing the 
current global economic crisis.  He pointed to job losses 
following minimum wage increases in both the Dominican 
Republic and Nicaragua.  He also criticized the legislation's 
failure to take into account the public sector, or the 
tourism and agricultural industries, where the sudden wage 
increase ''could cause problems.''  He concluded on an 
optimistic note, conveying his openness to negotiations. 
 
¶3.  (SBU)  In an appendix to the letter, Preval proposed a 
gradual, phased increase in the minimum wage for apparel 
industry workers in the assembly sector, a proposal 
previously made by Georges Sassine, President of the Haitian 
Association of Industry (ADIH).  This proposal includes a 
wage increase for salaried employees to HTG 125 per day 
starting October 1, 2009, rising to HTG 150 per day on 
October 1, 2010, and HTG 200 per day on October 1, 2012. 
Workers paid piece-rates would receive a minimum of HTG 200 
per day starting October 1, 2009, rising to HTG 250 per day 
on October 1 2010, and HTG 300 per day on October 1, 2012. 
For other industrial and commercial establishments, Preval 
proposed that the minimum wage be fixed at HTG 200 per day 
for 8 hours of work, starting October 1, 2009.  National 
electronic and print media reproduced the letter in its 
entirety repeatedly the week of June 20. 
 
¶4.  (SBU)  On June 26 President Preval spoke to the media to 
promote his suggested amendments to the minimum wage 
legislation.  He specifically mentioned how factory jobs in 
the CODEVI free trade zone in Ounaminthe, located on the 
Haiti-Dominican Republic border, would be put at risk with 
such a large wage increase.  Preval urged parliamentarians 
and the public to consider how the law would increase poverty 
-- and Haiti's already high unemployment rate.  During the 
visit of UN Special Envoy for Haiti Bill Clinton to Haiti 
July 6-8, Preval spoke out again, in the company of the 
former U.S. President, about the need to balance the 
interests of workers, employers, and the nation.  Preval's 
daughter also appeared on national television, TNH, in 
support of his cause, interviewing factory workers who 
expressed fear that a minimum wage increase would cause them 
to lose their jobs. 
 
Parliament Divided, Conducting Negotiations 
------------------------------------------- 
 
¶5.  (SBU)  Although the original bill passed by a large 
majority in the House and unanimously in the Senate, support 
for Preval's proposed amendments is picking up.  Divisions 
remain deep, however, and it is still too early to say 
whether the vote will go Preval's way.  Deputy Stephen Benoit 
(LESPWA, Petion Ville), author of the minimum wage bill, 
claims that Preval arrived at his proposal for a gradual 
increase in a meeting with only a handful of parliamentarians 
who did not represent the majority.  Union representatives 
also claim that they were not included in these discussions. 
 
¶6.  (SBU)  Some members of the Lower House, including 
Deputies Ogline Pierre (MOCRENA, Maniche) and Antoine Rodon 
Bien-Aime (MPH,Cerca Carjaval), declared they had switched 
sides, aligning with Preval ''in the interest of the national 
economy.''  Rhetoric on the other side has been shrill. 
Benoit remains adamant in advocating the legislation in its 
original form.  Some parliamentarians accuse those siding 
with Preval of receiving bribes from the Government of Haiti 
(GoH) and the private sector.  At the same time, Deputy Eddy 
Jean-Pierre of Cap Haitien threatened to resign if the 
original HTG 200 wage legislation, now often referred to as 
''Benoit's Law,'' is not passed by the Lower House by July 9. 
 The week of July 6, Senate Vice President Andris Riche 
proclaimed that a vote in favor of Preval's amendment would 
''destroy the legislative branch of government.''  A week 
earlier, another deputy accused opponents of the original 
minimum wage bill of wanting to reduce Haitian workers to the 
level of slaves, reversing the victory of General Dessalines 
in Haiti's war of independence.  Recent press reports 
indicate that a considerable minority of deputies are willing 
to settle for a less than HTG 200 minimum wage. 
 
Labor Open to Compromise 
------------------------ 
 
¶7.  (SBU)  After several closed-door hearings with employers 
representatives, the Social Affairs Committee of the Chamber 
of Deputies met July 1 with four labor organizations, 
including the Union Coordinating Committee, the General 
Workers Confederation (CGT), and the CODEVI union, who all 
indicated that accepting a lower minimum wage might be the 
only way to prevent layoffs.  Deputy Gerandale Thelusma, 
president of the Social Affairs Committee of the Chamber, 
declared on July 9 that the Committee's report analyzing 
President Preval's objections would be presented July 16, and 
that a vote could take place that same day. 
 
Student Protests Fizzle, but Could Resume 
----------------------------------------- 
¶8.  (SBU)  At times violent, student demonstrations demanding 
that Preval sign the bill in its original version (refs A and 
B) fizzled out in mid-June.  On June 16 students broke the 
windows of three Haitian National Police (HNP) cars, the last 
recorded incidence of violence related to their protests. 
There have been a few calls for demonstrations, in the form 
of ''peaceful marches,'' since then.  Many students, 
particularly from the Faculty of Medicine and the State 
University of Haiti (UEH), are upset that the university 
administration declared a premature conclusion to the 
academic year, which means that students forfeited an entire 
school year because they were unable to take their final 
exams due to the protests.  They demand to meet with faculty 
leaders to press demands for changes in the university 
administration, in addition to pushing for approval of the 
original version of the minimum wage. 
 
Deputies Demand Proof Higher Minimum Wage is Ruinous 
--------------------------------------------- ------- 
 
¶9.  (SBU)  Minimum wage hardliners are demanding that 
businesses or Haiti's tax authority provide parliament access 
to their tax records to prove they cannot afford the higher 
minimum wage.  Some business leaders are pushing back. 
President Preval and members of his office met July 8 at the 
National Palace with a group of deputies and private sector 
representatives.  Several deputies, including Stephen Benoit, 
emerged angry and disappointed from the meeting, because the 
director of the Haitian Tax Authority (DGI) was not in 
attendance.  They were further concerned that the financial 
statements of the major textile companies were not presented 
to them as they had expected.  Some businessmen, including 
Reginald Boulos, President of the Chamber of Commerce and 
Industry of Haiti, refuse to share their documents with 
parliamentarians, arguing that revealing such confidential, 
proprietary information would undermine businesses' 
competitive position.  Deputy Guy Gerard Georges, however, 
announced that textile company owners agreed to show their 
balance sheets on the condition that they not be published, 
as they are business confidential. 
 
¶10.  (SBU)  Executive Director of the Haiti Hemispheric 
Opportunity through Partnership Encouragement Act (HOPE II) 
Commission Georges Sassine told EconOff on July 1 that 
factory owners were agreeable to allowing a GoH 
representative to view the financial statements at factory 
offices (as opposed to delivering records to the Parliament). 
 On July 9, President Preval suggested that President of the 
Chamber of Deputies Levaillant Louis-Jeune formally request 
the financial statements of local factories from the tax 
authority DGI.  In response, the Chamber of Deputies formed 
an ad hoc commission, which includes Benoit, to inquire about 
the financial state of twenty-six apparel assembly factories. 
 Benoit stated that he is ready to change his position with 
proof that a minimum wage increase to HTG 200 would lead to 
great job loss in the apparel assembly sector.  Social 
Affairs Committee Chairwoman Thelusma announced July 13 that 
her committee still expected to see the financial records of 
the 26 apparel factories. 
 
 
Comment 
------- 
 
¶11.  (SBU)  There is no assurance that the proposed date of 
July 16 for submission of the Social Affairs Committee's 
report will produce a quick vote in the Chamber of Deputies. 
The Senate could then take its time to schedule its own vote. 
 There is no legal or constitutional time limit for 
parliamentary consideration of Presidential amendments to a 
piece of legislation.  Parliamentary leaders who support the 
original bill are nervous and want to get their votes lined 
up, because a failure of either Chamber to override Preval's 
objections by absolute majority results in Preval's 
amendments becoming law. 
 
 
TIGHE