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ZNR UUUUU ZZH
R 110637Z AUG 09
FM AMEMBASSY COLOMBO
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INFO RUEHIL/AMEMBASSY ISLAMABAD 8858
RUEHKT/AMEMBASSY KATHMANDU 7097
RUEHNE/AMEMBASSY NEW DELHI 3231
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RUEHCI/AMCONSUL KOLKATA 0398
RUEHBI/AMCONSUL MUMBAI 6743
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RUEHC/DEPT OF LABOR WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 05 COLOMBO 000795 
 
SIPDIS 
 
STATE FOR SCA/INS, SCA/RA, AND EEB/MTAA HHELM 
STATE PLS PASS TO USTR MARIDETH SANDLER AND VICKY KADER 
 
E.O. 12958: N/A 
TAGS: CE ECON ELAB ETRD
SUBJECT: SRI LANKA: REVIEW OF LABOR STANDARDS 
 
REF: A. 08 COLOMBO 1073 
     ¶B. 09 COLOMBO 259 
 
 ¶1. (SBU) Summary:  On June 24, the AFL-CIO submitted a 
petition to the Generalized System of Preferences (GSP) 
subcommittee alleging that the Government of Sri Lanka (GSL) 
was not taking steps to afford internationally recognized 
workers, rights.  In order to assess the current situation, 
EconOff met with representatives from the  private and public 
 sectors to ascertain the status of workers, rights in the 
country, and to determine the accuracy of the petition. 
While the trade unions that signed the GSP petition do raise 
valid points, Post,s assessment is that progress is being 
made, and the GSP petition should not be accepted.  End 
Summary. 
 
¶2. (U)  On June 24, the AFL-CIO submitted a  petition to the 
Generalized System of Preferences (GSP) subcommittee alleging 
that the Government of Sri Lanka (GSL)  was not taking steps 
to afford internationally recognized workers, rights and 
requested that Sri Lanka be removed from the list of GSP 
eligible countries.  In order to assess the current 
situation, EconOff met with representatives from the  private 
and public  sectors to ascertain the status of workers, 
rights in the country, and to determine the accuracy of the 
petition. 
 
Labor in Sri Lanka ) Background 
------------------------------------------ 
¶3. (U)  Sri Lanka is a member of the International Labor 
Organization (ILO) and has ratified 31 international labor 
conventions including all eight core labor conventions.  The 
labor laws in Sri Lanka are laid out in almost 50 different 
statutes.  The country has a labor force of approximately 7.7 
million, of which 7.2 million are employed.  The private 
sector workforce is estimated to be 3 million with an 
additional 2 million people classified as self-employed.  The 
public sector employs over 1 million people.  The remainder 
of the work force consists of migrant workers working abroad. 
 
 
¶4. (U) There are more than 1900 registered trade unions and 
24 federations in Sri Lanka.  The ILO works with a group of 
17 major trade unions that it considers representative of the 
unions in the country.  Four of the seventeen were 
signatories to the GSP petition.  Eight trade unions in total 
signed the petition.  Of these three are private sector 
unions and five are public sector.  The Export Processing 
Zones (EPZs), which employ  117,000, or 1.7 percent, of the 
working population, are represented by 11 trade unions, 156 
Employee Councils and 31 Workers Councils. Sri Lanka has 12 
export processing zones (EPZ) that are populated by 259 
companies.   10 percent of the EPZ workers are members of a 
trade union. 
 
GSP Petition, Fact or Fiction? 
---------------------------------------- 
 
¶5.  (SBU)  Many discussions were conducted with industry, 
government, and NGO representatives to investigate the 
veracity of the issues detailed in the petition (Ref A and 
B).  Almost all agree that workers, rights in Sri Lanka can 
be strengthened in order to be gauged as fully effective. 
Everyone also agreed that workers, rights regulations and 
labor conditions in Sri Lanka were the most advanced in the 
South Asia region.  The principal area of disagreement was in 
how the remaining issues should be addressed and whether the 
government was doing an adequate job of addressing them. 
 
¶6. (SBU)   Leslie Devendra, Secretary General of the Sri 
Lanka Nidahas Sewaka Sangamaya Union (SLNSS), one of the 
largest unions in the country, said that the petition was not 
formulated in consultation with his, or most of the other 
major trade unions in Sri Lanka.  According to him, the 
signatories to the petition had an agenda other than 
workers, rights. 
 
¶7. (SBU)   Anton Marcus, head of the Free Trade Zones and 
General Services Employees Union (FTZ & GSE), had a very 
 
COLOMBO 00000795  002 OF 005 
 
 
different take on the state of workers, rights in Sri Lanka. 
 Marcus is one of the primary backers of the petition; 
however he does not want GSP benefits to be removed.  Rather, 
he is using the petition as a way to bring attention to the 
problems of workers.  Marcus feels that this is the only way 
to force the government to listen to their concerns.  He 
claims that all other approaches have been ignored. 
 
Abiding Mistrust of Unions 
------------------------------------ 
¶8.  (SBU)  Approximately 20 percent of the workforce in Sri 
Lanka is unionized; however, union membership is declining. 
Most of the major trade unions are affiliated with political 
parties.  As a result, trade union activity has sometimes 
been linked to political issues without any clear labor 
demands.  There is a perception among workers that trade 
unions have agendas beyond supporting workers, rights. 
During a meeting with the Workers Council of the North Sails 
company, EconOff was told that the trade unions were a ( 
quote) destructive social force (end quote)  and that they 
did not have workers, interests in mind.  Most of the 
workers EconOff spoke with preferred working with the 
employee and workers, councils rather than trade unions. 
They saw the councils as a way to work hand in hand with 
management, while unions were seen as confrontational and 
unproductive. 
 
¶9. (SBU)  The lack of access to workers in the EPZs has been 
a major issue for trade union leaders.  In order to gain 
entry to an EPZ, approval from the Board of Investment (BOI) 
is required in advance.  The BOI said that it would grant 
such access if the purpose of the visit was not ( quote) 
destructive (end quote).  Officials reiterated that, if 
employees wanted to form a union, they would not get in the 
way. 
 
¶10. (SBU) EconOff talked in detail with trade union leaders 
on both sides of the debate over conditions in the EPZs. 
According to Anton Marcus, the majority of the labor problems 
occur within the EPZs.  The employees  work overtime without 
additional pay, many of the women were malnourished, and 
owners were using the economic crisis as an excuse to fire 
workers or reduce wages.   Anton said that because access to 
the workers in the EPZs is  difficult,  union representation 
are not able to address the problems.  According to Sri 
Lankan law, a union is authorized to bargain on behalf of its 
members when it has a membership of at least 40 percent of 
the workers.  Marcus claimed that the GSL and factory owners 
were doing everything possible to prevent unions from 
organizing ) union leaders were being intimidated and 
refused access to the workers; the government was taking too 
long to hold a referendum that would show the union had 40 
percent representation. 
 
¶11. (SBU) SLNSS Secretary General Devendra said that the 
problem was not entirely access to the EPZs or even 
conditions in the EPZs, though it was an issue.  According to 
Devendra, the issue of trade unions within the zones was more 
of an administrative one.  Most workers in the EPZs don,t 
have an abiding interest in the factories; they stay for five 
years in order to receive a bonus and then leave.  The high 
rate of turnover makes it difficult for unions to reach the 
40 percent representation needed to bargain on behalf of the 
workers.  He said that the 11 unions operating in the EPZs 
did not have any major issues in representing the workers and 
that people like Anton Marcus had difficulties because they 
were suspected of having agendas outside of the labor area. 
 
Forty Percent Representation Requirement a Matter of Debate 
--------------------------------------------- -------------- 
 
¶12. (SBU)  One of the biggest areas of contention in the 
labor debate is section 32A(g) of the Industrial Disputes Act 
of 1999 which states that no employer shall refuse to bargain 
with a trade union which has in its membership not less than 
40 percent of the workers on whose behalf the trade union 
seeks to bargain.  Anton Marcus and Palitha Atukrale, 
President of the Progress Union, both say that this 
percentage requirement is too high and makes it difficult for 
 
COLOMBO 00000795  003 OF 005 
 
 
trade unions to be established in the EPZs.  Leslie Devendra, 
Secretary General of SLNSS, thinks that the 40 percent 
requirement is appropriate and that the percentage could be 
even higher.  In his view, having less than 40 percent 
membership makes it difficult for the union to claim that it 
represents the workers as a whole. 
 
¶13. (SBU)  All the trade unions expressed frustration with 
the amount of time taken by the Ministry of Labor to 
recognize a union after the 40 percent representation level 
is reached. Even the Employers Federation of Ceylon (EFC) 
which represents owners agreed that it was an issue. 
Employers have the right to ask the Ministry of Labor to 
conduct a referendum confirming the required level.  Unions 
feel that it takes the Ministry too long to conduct the 
referendum.  They say that the process can take up to a year. 
 This makes it difficult for union leaders to keep workers 
together.  The Ministry of Labor disagreed with this 
contention.  W.J.L.U. Wijayaweera, Commissioner General of 
Labor, said that referenda normally take place within three 
to four months of the request being filed. 
 
¶14. (SBU)  It was emphasized by both the Ministry of Labor 
and the Employers Federation of Ceylon (EFC) that the 40 
percent requirement only applied to a union,s right to 
bargain collectively on behalf of the workers.  Any size 
group can declare themselves a union and engage in talks with 
employers and talk about individual issues; they just cannot 
represent the entire workforce to bargain collectively on 
their behalf. 
 
Public Sector Representation 
--------------------------------------- 
 
¶15.  (SBU)  Government workers are not allowed to join 
confederations of their own choosing, including organizations 
of workers in the private sector.  The GSP petition further 
asserts that five categories of public sector employees are 
not allowed the freedom to associate.  Mahinda Madihahewa, 
Secretary of the Ministry of Labor Relations, promised that 
these statutes will be reviewed by the National Labor 
Advisory Commission (NLAC). 
 
The Role of the Government 
--------------------------------------- 
 
¶16. (SBU)  The primary reason AFL-CIO was asked to file the 
petition was the perception by the signatory trade unions 
that the Government of Sri Lanka was not addressing  their 
issues.  The Progress Union, FTGSE, and the Solidarity Center 
all believe that the government does not want to see the 
Freedom of Association and Collective Bargaining agreements 
enforced.  They think that the Rs 20, 000 (approximately USD 
187) fine for violations of the Industrial Disputes Act is 
too low.  Union leaders also complain about the lack of 
action on workers dispute cases.  They say there are too many 
loopholes in the laws that are supposed to protect workers, 
and that the laws themselves are not strictly enforced. 
 
¶17. (SBU)  EconOff raised these issues with representatives 
of the Ministry of Labor.  Ministry officials expressed 
frustration at the complaints, saying that all of the issues 
were being dealt with.  They also asked why the unions had 
not come directly to them with their complaints rather than 
going to the United States and the ILO.  When told that the 
union leaders felt they had no other option but to seek 
outside aid, Mahinda Madihahewa, Secretary of the Ministry of 
Labor, said that this was not the case.  Union leaders were 
free to attend the NLAC meetings held once a month; In 
addition, the Ministry set up 20 Provincial Labor Advisory 
Councils in 2007 so that workers did not have to come to 
Colombo to file complaints.  The Ministry is also starting a 
program for public sector dispute settlement that will first 
be launched in the Ministry of Transport. 
 
¶18. (SBU)  The Ministry also took issue  with the allegation 
that the courts were not hearing unfair labor practices 
cases.  They said that, often, the trade unions do not come 
forward with evidence to support the dispute.  The Ministry 
 
COLOMBO 00000795  004 OF 005 
 
 
did mention that the fine for unfair labor practices was 
being increased to Rs 100,000 (approximately USD 892). 
 
¶19. (SBU)  EconOff raised the issue of the individual cases 
cited in the petition with the Ministry.  Officials offered 
to go through each case and provide a status update.  They 
said that most of the cases were in the court system awaiting 
resolution.  The responses mirrored those given to AUSTR 
Delaney during his meeting in November and February (Ref A 
and B). 
 
What Does the ILO Think? 
------------------------------------ 
 
¶20. (SBU)  The regional office of the ILO was not consulted 
on the GSP petition prior to its submission. The regional 
office meets with the major trade unions every six months. 
Tine Staermose, director of the regional ILO office, thought 
that Sri Lanka was working towards affording internationally 
recognized workers rights and felt that the petition did not 
reflect the realities on the ground. 
 
¶21.  (U) ILO activities in Sri Lanka are guided by the Decent 
Work Country Program (DWCP).  The goal of DWCP is to make 
decent work a central objective of national development 
policies and strategies. 
Sri Lanka was the first South Asian country to develop a 
National Plan of Action for Decent Work.  This plan is 
augmented by the National Framework for Social Dialogue, a 
framework that identifies the role of the Government, 
employers, and workers in the DWCP.  The Framework was signed 
by nine trade unions. 
 
Comment 
---------------- 
 
¶22. (SBU)  The issue of labor rights in Sri Lanka is a 
complex one.  It cannot be denied that there are shortcomings 
in both how the labor laws are written and how they are 
enforced.  However, this is not the standard set by the GSP 
statute, which requires that, in order to be eligible for GSP 
status, a country (begin quote) must have taken or is taking 
steps to afford workers in that country internationally 
recognized worker rights.(end quote)  By that measure, it is 
possible to unequivocally say that Sri Lanka is meeting the 
requirements under the statute.  The regional ILO office 
concurs with this assessment.  Most of the major trade unions 
in the country also agree with this assessment.  Post 
recommends that the GSP petition should not be accepted. 
 
¶23. (SBU)  The trade unions that signed the GSP petition do 
raise valid points.  The court system is slow and cumbersome. 
 The Ministry of Labor does not have the full capacity to 
settle employee-employer disputes.  It takes too long for 
trade unions to be officially recognized, especially in the 
EPZs. The Ministry of Labor should do more inspections of 
factories and respond to trade union demands on a timely 
basis.   But progress is being made.  The NLAC met last week 
to discuss the issue of allowing public workers to federate 
with or join private sector unions.  The Ministry of Labor is 
drafting a law that would create a government unemployment 
benefit scheme, the first of its kind in the country and in 
the region. 
 
¶24.  (SBU)  The incidents cited in the GSP petition  are not 
representative of the actual labor conditions in Sri Lanka. 
EconOff, during the course of many meetings, found a vibrant 
and active discussion on the state of workers, rights in the 
country.  Strikes and other trade union actions are not 
uncommon.  On July 7, doctors attached to state hospitals 
staged a one day strike which was settled after intervention 
by the President. 
 
¶25. (SBU)  Labor rights and workers conditions in Sri Lanka 
are   important issues that merit further discussion and 
advocacy.  It should be on the agenda of the upcoming Trade 
and Investment Framework Agreement (TIFA) talks.  Post will 
continue to dialogue with all of the relevant parties in 
country and encourage action.  Efforts should be made to 
 
COLOMBO 00000795  005 OF 005 
 
 
bring all sides of the discussion to the table so that issues 
can be addressed at the proper level.  All parties have 
expressed a willingness to do so. 
MOORE