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UNCLAS SECTION 01 OF 02 TBILISI 001733 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ELAB PGOV GG
SUBJECT: GEORGIA: LABOR CODE UNDER REVIEW 
 
¶1.  (SBU)  Summary:  Irakli Petriashvili, President of the 
Georgian Trade Union Confederation (GTUC), met with Econoff 
to discuss ongoing talks between the GOG, GTUC, and employer 
association representatives regarding the ongoing review of 
Georgia's labor code.  Petriashvili sad that his initiative 
was intended to simplify and liberalize the labor code to 
facilitate collective bargaining and make it easier to form 
an independent union.  Petriashvili was encouraged by the 
continued response of both Prime Minister Nika Gilauri and 
Minister for Labor, Health and Social Affairs Alexander 
Kvitashvili regarding his proposed changes to the labor code. 
 Petriashvili was hopeful that a new draft could be agreed 
upon and passed by October to coincide with an ILO visit of 
experts.  The larger business community (including many of 
the companies represented in the American Chamber of 
Commerce) appear to have few concerns about the proposed 
legislation although a few players with strong neo-liberal 
economic ideological views are mustering some resistance to 
the changes.  End Summary. 
 
¶2.  (SBU)  Comment:  While it may not grab headlines, the 
meeting with the PM and twice monthly (and sometimes more 
frequent) talks with other government officials represent 
positive engagement by the GOG on labor issues that affect a 
majority of Georgians.  Petriashvili is cautiously optimistic 
that an acceptable compromise is within reach despite the 
GoG's strong neo-liberal economic leanings.  The labor 
amendments appear to be standard and largely uncontroversial. 
 The major factor at play regarding the amendments is the 
GoG's desire to maintain its current standing with GSP Plus 
and strengthen political ties to the EU while continuing its 
neo-liberal handling of the economy.  Trying to mesh these 
contradictory if not ultimately incompatible goals may prove 
to be difficult.  The GoG is facing a larger policy choice 
and will have to decide at some point if giving up a bit of 
its neo-liberal economic orthodoxy is worth the political and 
other benefits that EU integration offers.  End Comment. 
 
Background on the Labor Code 
 
¶3.  (U)  Georgia has ratified eight ILO core Conventions 
related to the ILO Declaration on Fundamental Principles and 
Rights at Work, as well as ILO Conventions on Social Policy, 
Employment Policy and Labor relations.  In 2006, Georgia 
adopted a new Labor Code and thereby abolished the Law on 
Collective Contracts and Agreements of 1997, and the law on 
Collective Labor Disputes of 1998.  The ILO Committee of 
Experts on the Application of Conventions and Recommendations 
(CEACR) highlighted the fact that the new Labor Code did not 
protect some aspects of freedom of association, which, in its 
view, leaves fundamental rights of workers and employers 
insufficiently protected under the national law, and put the 
Labor Code in conflict with various ILO Conventions that were 
formally ratified by the GoG.  These aspects include, among 
others, the rights of workers and employers to freely 
establish and join organizations of their choice and the 
right of such organizations to function without government or 
employer interference.  Regarding ILO Convention 98 (the 
effective recognition of the right to collective bargaining), 
the CEACR highlighted that the Labor Code provisions on 
anti-union discrimination, employer's interference and 
collective bargaining do not constitute sufficient protection 
of the fundamental rights enshrined in the convention. 
 
Steps Forward 
 
¶4.  (SBU)  In 2008, the ILO returned to Tbilisi to work 
closely with the Ministry of Labor, Health and Social Affairs 
Qclosely with the Ministry of Labor, Health and Social Affairs 
as well as labor and employer union leaders in an effort to 
reconcile the provisions of the 2006 Labor Code with the 
ratified ILO Conventions. Jerry Zellhoefer (the AFL CIO's 
European representative and U.S. delegate to the ILO) and 
Petriashvili met with ILO Deputy Director, Kari Tapiola and 
representatives from the GoG in June to discuss modifications 
to the Labor Code to ensure compliance with ILO standards. 
Petriashvili characterized it as a good meeting, and the GOG 
agreed to move forward on improving legislation. 
Petriashvili says he is committed to a constructive dialogue. 
 As such, he has instructed the AFL CIO not to file a GSP 
petition to protest against unfair labor practices saying he 
wanted to wait and see how the process developed before 
pursuing any adversarial tactics.  Petriashvili said he 
preferred to continue to engage the GOG to come to some 
mutually agreeable resolution. 
 
PM Gets Involved 
 
¶5.  (SBU)  Last month, Prime Minister Gilauri requested a 
meeting with Petriashvili because of his role as President of 
the GTUC.  Alexander Kvitashvili, Minister of Labor, Health 
and Social Affairs, who chairs the ongoing talks, also 
attended the meeting.  Petriashvili said Gilauri was 
interested in large part because labor reform is a key issue 
 
TBILISI 00001733  002 OF 002 
 
 
in developing a more integrated relationship with the EU 
under the Eastern Partnership Agreement.  Nevertheless, the 
Prime Minister assured Petriashvili that the GOG understands 
the importance of the role of labor unions and improving the 
labor code.  He was supportive of the GTUC's package of 35 
changes to the Labor Code.  Furthermore, the Prime Minister 
proposed regular ongoing meetings with Petriashvili. 
Petriashvili told Econoff that the Prime Minister 
demonstrated to him that he understood the value of the 
participation of labor unions in improving the Labor Code. 
Petriashvili said the meeting was very positive and 
constructive. 
 
Talks Hit a Bump but Still Ongoing 
 
¶6.  (SBU)  The talks have not moved forward without 
interruption -- including a slow down when it was determined 
that a large portion of the business community was unaware of 
the negotiations.  Large employers had not been participating 
and asked to be involved in the discussions.  (Embassy Note: 
An employers association has been an ongoing participant. 
The representative is deemed ineffective by numerous embassy 
contacts.  Large scale employers, including seveal Amcham 
members, rejected this format and requested to have their own 
representative included in any talks.  As a result, large 
employers now have a representative at the meetings.  End 
Note.)  Petriashvili said that while the GOG has agreed to 
support the labor code changes in public, he suspects the GOG 
can influence the large employers' representatives. 
According to Petriashvili, the major objection to the 
proposed changes to the Labor Code revolves around employee 
compensation for job loss - no one wants to pay it.  However, 
with ILO CEACR's yearly review due in October, Petriashvili 
hoped that the issues would be resolved in time for the visit 
so as not to potentially compromise Georgia's GSP status. 
 
¶7.  (SBU)  A number of Amcham members and other business 
contacts have told Econoff that the labor provisions are 
largely unobjectionable.  One Amcham member who is an 
attorney and has attended the tripartite meetings as an 
observer told Econoff that he personally saw nothing wrong 
with the code.  He noted that he had a few concerns about 
ambiguities that needed clarification.  He told Econoff that 
a small yet connected group of businessmen (both inside and 
outside of Amcham) opposed the amendments largely on 
ideological grounds.  The member said these businessmen had 
support from some among the GoG and its advisors who opposed 
any further labor restrictions on business as a matter of 
principle.  In the member's opinion, however, most if not all 
western businessmen felt that a few concessions to labor were 
a small price to pay to maintain GSP plus and allow for 
further economic and political integration with the EU.  He 
said that most of the businessmen he knew did not support 
actively opposing the proposed changes. 
LOGSDON