VZCZCXYZ0000
RR RUEHWEB

DE RUEHGT #1102/01 2921957
ZNR UUUUU ZZH
R 191956Z OCT 09
FM AMEMBASSY GUATEMALA
TO RUEHC/SECSTATE WASHDC 0212
INFO WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS GUATEMALA 001102 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ELAB PGOV PHUM KDEM KJUS ECON GT
SUBJECT: USG DELEGATION ADDRESSES CAFTA LABOR SUBMISSION 
 
REF: REF: A) GUATEMALA 788 B) GUATEMALA 647 
 
¶1. (SBU) SUMMARY:  In a series of meetings in Guatemala the week of 
September 29, civil society and union leaders presented a visiting 
USG inter-agency delegation with a generally bleak assessment of 
the country's labor environment.  They asserted that the government 
has made little headway in addressing the country's systemic labor 
problems in the ten months since the United States Department of 
Labor issued its report in response to a submission made by U.S. 
and Guatemalan labor unions under procedures provided for in the 
Dominican Republic-Central America-United States Free Trade 
Agreement (CAFTA-DR).  They further claimed that employers continue 
to routinely violate worker rights with impunity; workers have 
little understanding of those rights in the first place and fear 
losing their jobs if they do try to exercise them; the Ministry of 
Labor lacks the manpower and authority to do its job effectively 
and is not taken seriously by the business community; labor 
inspectors are poorly-trained, and frequently corrupt, and; the 
judicial system is extremely slow and tends to favor the employers. 
 
 
 
 
¶2. (SBU) Given these perceptions, some union leaders expressed 
their frustration that the United States has not taken stronger 
actions in response to the submission, including seeking dispute 
settlement consultations under Chapter 16 of the CAFTA-DR. 
Government officials, meanwhile, profess that they are taking their 
commitment under the CAFTA-DR very seriously, and provided updates 
on efforts undertaken to address the issues raised in the report, 
including the development of a long term action plan.  End Summary. 
 
 
 
------------------- 
 
Delegation mission: 
 
------------------- 
 
 
 
¶3. (SBU) A seven-member interagency delegation from the USTR and 
the Departments of Labor and State returned to Guatemala the week 
of September 29 to follow-up on a visit it made in July regarding 
the CAFTA labor submission (Ref A).  The team had several goals: 
to gather further data on whether the issues raised in the DOL 
report represented systemic failures by the Government of Guatemala 
(GOG) to effectively enforce its labor laws under the CAFTA-DR; to 
identify possible measures the GOG could take to address remaining 
shortcomings; to remind the GOG of the importance the United States 
attaches to the unions' submission, and; to urge it to act quickly 
to resolve the specific cases cited in the DOL report as well as to 
develop a long-term work plan to address systemic problems 
highlighted in the report. 
 
 
 
--------------------------------------------- ------------------ 
 
Worker grievances dominated by salary, contract, safety issues: 
 
--------------------------------------------- ------------------ 
 
 
 
¶4. (SBU) Personnel from three small worker right centers - the only 
ones in the country - provided the delegation with a useful 
snapshot of typical Guatemalan worker grievances.  Two of the 
centers are located in the eastern coastal state of Izabal, known 
for its banana, sugar, and African palm oil plantations.  The 
centers - one in Puerto Barrios and the other in El Estor - were 
opened in April with CAFTA-DR funds provided through the Department 
of Labor's "Campo a Campo" project.  Their principal goal is to 
help workers in agricultural communities understand and exercise 
their labor rights. 
 
 
 
¶5. (SBU) In a six-month period from April to September, the two 
Izabal centers provided advice and legal support in 645 cases.  Of 
these cases, four principal types of complaints emerged, alleging: 
 
 
 
-- the failure of employers to pay the minimum wage of Q52 a day (a 
 
little over $6); 
 
 
 
-- the failure of employers to honor contract terms, or legally 
mandated entitlements; 
 
 
 
-- dismissal without proper cause; 
 
 
 
-- occupational health and safety issues. 
 
 
 
¶6. (SBU) Data gathered by a third worker rights center in the 
western highland city of Chimaltenango revealed similar issues 
confronted by workers.  The worker rights center is managed by the 
Center for Study and Support for Local Development (CEADEL) as part 
of USDOL's "Todos y Todas Trabajamos" project.  In the past year, 
CEADEL handled 544 cases, many of them related to Guatemala's 
garment industry, which is centered in the city.  Forty percent of 
these cases were associated with dismissal without proper cause, 
including firings when workers become pregnant.  Another 34 percent 
were associated with the illegal suspension of contracts, while 
eight percent were related to the failure to pay an agreed salary. 
 
 
 
¶7. (SBU) CEADEL officials told the delegation that many of the 
cases in which it provides legal support are collective in nature. 
CEADEL claimed that the fact that the textile industry has managed 
to prevent unions from establishing a foothold in Guatemala's 
garment industry makes responding to these cases in a collective 
manner very difficult.  Fear of reprisal and lack of confidence in 
the judicial system discourages many workers from registering labor 
complaints.  In addition, according to CEADEL's data, only about 
ten percent of garment workers have been registered in the national 
social security system by their employers as required by law. 
 
 
 
--------------------------------------------- --------------- 
 
Civil society and unions agree:  Ministry of Labor is broken 
 
--------------------------------------------- --------------- 
 
 
 
¶8. (SBU) Several of the delegation's civil society and union 
interlocutors alleged that employers are brazen about violating 
worker rights because they have no fear of government sanction. 
The Ministry of Labor (MOL) was a universal target of their 
criticism.  To begin with, the 250 labor inspectors in the Ministry 
are insufficient to cover a country with a population of 14 
million.  Additionally, they claimed, the inspectors are poorly 
paid and lack sufficient training. 
 
 
 
¶9. (SBU) According to the union officials, although the country's 
labor code requires inspectors to act pro-actively to avoid labor 
violations, the reality is that few ever show any initiative.  They 
alleged that when inspectors do undertake efforts to promote 
conciliation in labor disputes, the negotiations are nearly always 
done on terms favorable to the employer.  There are cases where 
workers have evidence of what they are owed in back pay or bonuses, 
and despite this evidence, the inspectors have negotiated a 
settlement between the workers and their employers for an amount 
below what the workers are entitled to under the law.  In another 
instance, CEADEL reported that its labor lawyer was barred by the 
MOL from representing workers in mediation efforts on the grounds 
that these negotiations were taking place on private (factory) 
property.  They acknowledged that the MOL decision to exclude 
CEADEL from the mediation was within the strict interpretation of 
the law, but that in some cases, CEADEL had reached agreement with 
the parties to be present. 
 
 
 
¶10. (SBU) The most frequent accusation about labor inspectors that 
the delegation heard, however, had to do with corruption. 
Inspectors were accused of warning employers in advance of their 
visits and, in some cases, of having ties to the employers.  Those 
inspectors suspended for unprofessional conduct or malfeasance are 
 
reinstated at a later date, according to CEADEL. 
 
 
 
¶11. (SBU) Most of the non-private sector contacts with whom the 
delegation met also heavily criticized a court decision several 
years ago which ruled that the Ministry of Labor did not have the 
constitutional authority to levy fines on those employers who do 
not comply with the labor code.  Stripping this authority from the 
MOL significantly reduced its ability to ensure compliance with 
labor laws. 
 
 
 
--------------------------------------------- -------------- 
 
Litigating through the court system - "not worth the effort" 
 
--------------------------------------------- -------------- 
 
 
 
¶12. (SBU) Many of the delegation's interlocutors also complained 
bitterly about the futility of pressing cases through the labor 
courts, which they assert are riddled with inefficiency and 
corruption.  There are many challenges that discourage the average 
agricultural or textile worker from filing a case in the first 
place.  One is overcoming the fear of repression or blacklisting, 
as described earlier.  Others are related to logistics and expense: 
a banana plantation worker in Izabal, for example, might have to 
travel two or three hours to file a case at the court in Puerto 
Barrios.  That same trip by bus might cost him nearly Q40, most of 
a day's wage, in addition to another day's wages lost for missing 
work. 
 
 
 
¶13. (SBU) Once a case is filed and moves forward in the court 
system, employers can file motions for injunctions ("amparos"), 
many of which are characterized as frivolous, to delay or stop the 
process.  The delay tactics often convince workers, particularly 
those with limited means, to give up their legal case or to 
negotiate a settlement for less than what they are entitled to 
under the law.  One union leader told the delegation that it is 
more effective to file grievances directly with the international 
parent company.  For example, by dealing directly with the 
Coca-Cola Corporation in Atlanta, one union was able to get Coke 
franchises in Guatemala to standardize their labor practices. 
Another union leader asserted that Guatemala's labor courts are 
excessively bureaucratic and litigating through them is simply "not 
worth the effort." 
 
 
 
--------------------------------------------- --------------- 
 
Chapter 16 Dispute Settlement Consultations - Why the delay? 
 
--------------------------------------------- --------------- 
 
 
 
¶14. (SBU) The general consensus among the delegation's 
non-governmental contacts is that CAFTA-DR has not improved labor 
conditions in Guatemala since the trade agreement went into effect 
in 2006.  In an emotional intervention, the Secretary General of 
FESTRAS, the federation of unions in the food service industry and 
related sectors, reproached the United States for not having moved 
forward yet with dispute settlement consultations under Chapter 16. 
The time for action has arrived, he said.  We need the United 
States to show political will, to move forward with next steps, and 
produce results.  We feel a lot of frustration. 
 
 
 
----------------- 
 
What can be done? 
 
----------------- 
 
 
 
¶15. (SBU) Despite their grim overall assessment of Guatemala's 
labor environment, the civil society and union contacts with whom 
the delegation met did not hesitate to make recommendations on what 
could be done to improve it.  The most common suggestion offered 
was to pass legislation that would restore the MOL the authority to 
 
levy meaningful fines on employers who violate the labor code. 
Another common recommendation was to devote more resources to the 
MOL - to increase the number of labor inspectors and give them 
better salaries and training. 
 
 
 
¶16. (SBU) Other common suggestions that emerged were to: 
 
 
 
-- structurally reform the labor code; 
 
 
 
-- provide better training to judges on implementing the labor 
code; 
 
 
 
-- streamline the excessively bureaucratic appeals process; 
 
 
 
-- require factories to inform the MOL and workers when they plan 
to close; 
 
 
 
-- convince the Ministry of Economy to more vigorously exercise its 
authority to withdraw tax exemption and trade privileges from those 
companies that courts find are in violation of the labor code; 
 
 
 
-- involve civil society organizations and unions in the 
deliberations in the government's multi-institutional committee on 
labor issues; 
 
 
 
-- enforce court rulings, and; 
 
 
 
-- get the government to exercise political will to address 
systemic labor problems. 
 
 
 
--------------------------------------------- -------- 
 
GoG Reaction:  We are working to address the problems 
 
--------------------------------------------- -------- 
 
 
 
¶17. (SBU) The government authorities with whom the delegation met 
had a decidedly different view of the progress the GOG was making 
in addressing the country's labor challenges.  MFA Vice Minister 
Lars Pira asserted that the government was taking DOL's labor 
report very seriously.  The main problem, he confided, was not one 
between employer and employee but rather the fact that the 
judiciary does not function properly.  Pira downplayed the extent 
of the country's labor problems, pleading for the United States not 
to allow "the poor performance of a couple of companies to damage 
CAFTA-DR." 
 
 
 
¶18. (SBU) Labor Vice Minister Illescas assured the delegation that 
the GOG was working hard to address the specific issues raised in 
the report as well as to develop a detailed work plan to respond to 
the country's broader labor challenges, as he promised would be 
done the last time the team visited in July.  Delivery of the plan 
had been delayed, however, by unexpected changes in the government. 
He reported that the Multi-Institutional Commission on Labor Issues 
had met September 28, and had approved the draft action plan for 
addressing systemic problems.  The delegation welcomed that news, 
but urged the Vice Minister to incorporate additional details and 
target timelines in the action plan. 
 
 
 
¶19. (SBU) Economy Vice Minister Oscar Velasquez acknowledged that 
the Ministry of Economy has the authority to suspend tax exemption 
and trade benefits if companies are found in violation of the labor 
 
code.  He indicated that the Ministries of Economy and Labor were 
working together to share information on companies that were in 
violation of labor laws and to better coordinate the use of the 
provision to suspend a company's tax exemption.  He and the Labor 
Vice Minister maintained that the GoG was prepared to use this 
authority with more frequency than in the past.  When asked by the 
delegation why the government does not publicize the availability 
of this remedy for labor law violations, Labor Inspector General 
Giovanni Soto suggested that warning the companies in advance would 
permit employers to game the system by outsourcing their work to 
companies that will not be punished. 
 
 
 
¶20. (SBU) In response, the delegation emphasized the importance the 
USG attaches to the DOL report and reminded its GOG contacts of the 
significant domestic pressure that is being exerted in the United 
States to make sure CAFTA-DR works the way it was intended.  The 
delegation also restated the importance of developing a detailed 
work plan, one that includes effective remedies to address 
Guatemala's systemic labor problems, as well as clear phases and 
dates for their implementation.  One possible work plan item, the 
team suggested, might be a commitment to restore the MOL's 
authority to impose meaningful fines on misbehaving employers. 
Another element might be a commitment on the part of the Ministry 
of Economy to exercise the authority it already has with respect to 
granting tax benefits and trade privileges.  Such sanctions would 
only be effective if consistently applied, the delegation 
suggested.  Finally, the delegation noted that the failure to 
adequately respond to the specific issues in the DOL report and to 
the country's broader systemic labor challenges risks damaging 
Guatemala's reputation as a trading partner, particularly in key 
sectors like textiles and agriculture. 
 
 
 
-------- 
 
Comment: 
 
-------- 
 
 
 
¶21. (SBU) Most of the complaints the delegation heard during its 
visit were general in nature, and few of the civil society and 
union leaders with whom the team met were prepared at the time to 
offer additional, well-documented cases of the government's failure 
to enforce domestic labor law.  Although some unions did provide 
documentation about cases that might demonstrate that the GOG has 
failed to enforce domestic labor law, most unions and civil society 
organizations offered to send additional information on specific 
cases at a later date.  The meetings, however, did confirm that 
Guatemala's culture of impunity pervades the country's labor 
environment.  In the absence of functioning government 
bureaucracies and courts, and with no real fear of penalties for 
non-compliance, the overall impression the delegation came away 
with is that the GOG needs to take more concrete steps to ensure 
that the issues identified in the DOL report are addressed. 
 
 
 
¶22. (SBU) Perhaps the most encouraging signs the delegation 
witnessed were in the work being performed by the three small 
worker rights centers in Izabal and Chimaltenango.  The case data 
they briefed to the delegation indicated that they are having a 
measurable impact in educating workers on their labor rights and in 
helping them to win cases in labor courts.  As CEADEL's lawyer told 
the team, "We are making work for the inspectors.  They no longer 
always seek to resolve cases in favor of the employer.  I have seen 
changes and we are making progress."  With tiny budgets and staffs, 
however, the reach of the three centers does not extend much beyond 
the two departments in which they are located.  The centers are 
funded in part by USG CAFTA-DR labor capacity building funds 
administered by the Department of Labor.  The significant positive 
impact the centers have had in the regions they cover suggests that 
additional such centers could be beneficial in addressing the 
access of workers to labor justice.  End comment. 
 
 
 
¶23. (U) The delegation has cleared this cable. 
ROBINSON