Bilateral Labor Consultations on Margins of CAFTA

UNCLAS SECTION 01 OF 05 TEGUCIGALPA 001487

SIPDIS

SENSITIVE

STATE FOR DRL/IL, EB/TPP, WHA/PPC, AND WHA/CEN
STATE PASS USTR
STATE PASS AID FOR DCHA/DG, EGAT, AND LAC/CEN
DOL FOR ILAB
GUATEMALA FOR COMATT AND AGATT
PANAMA FOR CUSTOMS

E.O. 12958: N/A
TAGS: ELAB ETRD PHUM ECON EINV PGOV PREL KJUS HO
SUBJECT: Bilateral Labor Consultations on Margins of CAFTA
Talks in Honduras Emphasize Need for Further Progress

Ref: State 155098


1. (SBU) Summary. A joint delegation from the Departments
of Labor and State emphasized June 17-19 the need for the
GOH to increase its protection of labor rights and for the
private sector to augment its respect for labor rights, with
U.S.-Central America Free Trade Agreement (CAFTA) soon
opening the door to greater U.S.-Honduran trade and
investment. The visit focused attention on problems in the
Ministry of Labor's enforcement of labor laws and
regulations, possible reform of the labor code, difficulties
with exercising the rights to organize and bargain
collectively, and efforts to eliminate the worst forms of
child labor. The U.S. delegation pressed the MOL and the
private sector to be more aggressive in addressing the
problems that exist, even if longer-term structural changes
in the labor code are not politically possible in the short
term. End Summary.


2. (U) A USG delegation led by Jorge Perez-Lopez, Director
of the Office of International Economic Affairs in the
Bureau of International Labor Affairs (ILAB) at the
Department of Labor, and also including Arlen Wilson, Deputy
Director of the Office of International Labor Affairs in the
Bureau of Democracy, Human Rights and Labor (DRL/IL) at the
Department of State, and Carlos Romero, International
Economist at ILAB in DOL, held a series of bilateral labor
consultations June 17-19 in Tegucigalpa on the margins of
the fifth round of negotiations for the U.S.-Central America
Free Trade Agreement (CAFTA). LabAtt accompanied the
delegation to all meetings.

Ministry of Labor/Ministry of Commerce and Industry
-------------- --------------


3. (U) The USG delegation met June 17 with Vice Minister of
Labor (MOL) Angel Escobar and Vice Minister of Industry and
Trade Irving Guererro, as well as Honduran CAFTA labor
negotiator Jorge Ponce. Minister of Labor German Leitzelar
was in Geneva for the International Labor Organization (ILO)
meetings and was unable to take part in the meeting.


4. (SBU) VM Escobar, himself a former leader of the Honduran
beer company's employees' union, said that the MOL has good
relations with labor. Perez-Lopez inquired about the labor
rights situation in Honduras and asked about the still
pending revisions to the Labor Code. VM Escobar said that
the GOH had written a draft law in 1995 but it never came to
a vote in Congress and has been frozen ever since. The MOL
was now working again on drafting a revised Labor Code, with
approximately 15 percent of the draft law still under
tripartite (GOH, Labor, business) negotiation under the
mandate of the GOH's Economic and Social Council. He noted
that the GOH had recently reformed articles 43-45 covering
Honduran workers overseas and said the MOL hoped to make
more changes to specific articles if the whole law could not
be reformed. Romero raised the 1995 Memorandum of
Understanding between USTR and the MOL in the context of
improvements in worker rights that still needed to be made.
Key aspects of this MOU could be vehicles for change through
administrative action.


5. (SBU) VM Escobar noted a lack of funds and staff severely
hampered what the MOL was able to do. He said the MOL was
improving the level of coverage, including inspectors, in
the San Pedro Sula area where most economic activity
(including export processing manufacturing (maquilas)) is
concentrated. He noted that the problem of child labor had
been successfully eradicated in the maquila sector and said
that while there were some labor problems with maquilas,
they were generally not with U.S.-owned maquilas. In fact,
MOL and union officials have previously told EmbOffs that
U.S.-owned maquilas have taken a leadership role in making
positive changes on labor issues in the industry.


6. (SBU) Perez-Lopez noted that perception in the U.S. could
be as important as reality in Honduras and cautioned there
were still ongoing labor rights problems that needed to be
addressed as soon as possible, especially given the ongoing
negotiation of CAFTA that includes a chapter on protecting
labor rights. Specifically Perez-Lopez and Romero
mentioned:
-- the lack of reinstatement of workers unjustly fired for
labor activities (as well as the alleged use of blacklists
by maquila owners),
-- leaks to management of lists of union supporters forming
a union that leads to the subsequent unjust dismissal of
these employees, and
-- complaints raised in reports by the AFL-CIO and the
Department of State's Human Rights Report about general
difficulties with the right to organize and bargain
collectively, especially in the maquila sector.


7. (SBU) VM Escobar said the MOL works directly with maquila
owners and workers to resolve problems and the San Pedro
Sula office continued to inspect maquilas and conduct
alternative conflict resolution training. VM Escobar noted
that the lack of money for inspectors was a serious problem;
Perez-Lopez agreed this was a real problem and also noted
that low salaries for inspectors left them more susceptible
to corruption. Perez-Lopez explained that USG assistance on
labor issues could not be used for inspectors' salaries; VM
Escobar replied that neither could World Bank money, which
limited MOL options because of the tight overall government
budget.


8. (SBU) Escobar and Ponce clarified the issue of
solidarity/employee associations, saying that they had no
standing under Honduran law and that while an employer could
form one it would not prevent the establishment of a union.
MOL officials noted that there could only be one union per
company and that by law it took 30 employees to form a
union. Once a union is recognized and receives its
"personeria juridica" (legal standing) from the MOL, by law
the employer is obligated to negotiate a collective
bargaining agreement if the union presents a list of issues
to negotiate. (Note: In reality, getting a Honduran
employer to negotiate a collective bargaining agreement can
be a serious challenge in the current labor rights
environment in Honduras. End Note.)


9. (U) Perez-Lopez highlighted the USG's interest in
eliminating the worst forms of child labor and noted that
DOL was funding a number of ILO International Program to
Eradicate Child Labor (IPEC) projects in Honduras, including
in coffee and melon sectors, as well as in the commercial
sexual exploitation of children. (Romero and LabAtt also
had a breakfast meeting June 19 with ILO/IPEC Coordinator
Paulino Isidoro and IPEC melon project coordinator Martha
Chavez to discuss DOL-funded IPEC projects. Isidoro and
Chavez said they had seen a marked improvement in the
private sector's approach to the problem of child labor.
The IPEC program was now granted access to melon farms and
processing plants in the Department of Choluteca and even
sugar cane owners had admitted there was a problem with
child labor in their sector -- where no IPEC project exists
-- and had pledged to move toward eliminating it. Isidoro
noted that IPEC also had projects with child domestic
servants, child divers in the lobster industry, children
working in the tobacco industry, and children working in
garbage dumps in Tegucigalpa.) While Honduras has made
strides against child labor in general, Isidoro noted that
child labor remains a pervasive problem, particularly
(although by no means exclusively) in commercial
agriculture.

Labor Confederations: CGT and CTH
--------------


10. (U) The USG delegation hosted a meeting at the Embassy
June 17 with representatives of the General Workers' Central
(CGT),affiliated with the World Congress of Labor (WCL) and
led by Secretary General Daniel Duron, and the Confederation
of Honduran Workers (CTH),affiliated with the International
Congress of Free Trade Unions (ICFTU). The third Honduran
labor confederation, the United Confederation of Honduran
Workers (CUTH),led by SecGen Israel Salinas and applying
for affiliation with the ICFTU, was invited, but Salinas was
unable to attend the meeting and the other CUTH
representatives did not show up. Wilson, Romero, and LabAtt
also had lunch June 19 with CTH SecGen Dinora Aceituno, who
had been unable to attend the June 17 meeting.


11. (U) Duron said that the CGT appreciated that labor
issues would be a key part of CAFTA and said that the CGT
wanted real protection for labor rights in the agreement.
Noting that only eight to 10 percent of the economically
active Honduran workforce is unionized, Duron said that it
was difficult to exercise the right of association in
Honduras, particularly in the maquila sector, where he
claimed only two percent of workers were unionized and had
collective bargaining agreements. (Note: Minister of Labor
Leitzelar told a Congressional StaffDel May 27 that the low
rate of unionization in Honduras was due to a variety of
factors and not necessarily an indicator of a lack of
freedom of association. He said that of the 122,000 workers
in the maquila sector, 10 percent of female workers (11,000)
were unionized and two percent of male workers (2,500) were
unionized. LabAtt is seeking updated statistics from the
MOL on the number of unions with collective bargaining
agreements in the maquila sector. End Note.)


12. (U) Duron said that it was common for businesses to fire
union organizers and that reinstatement of unjustly fired
workers seldom, if ever, occurs. He noted that some
maquilas hired former MOL labor inspectors to work in their
human resources office. Duron also explained that it was
not easy to move from registering an intent to organize a
union to getting a union's "personeria juridica" from the
MOL. He outlined how maquilas used loyal employees to
"infiltrate" union organizers to provide information on them
to management that then led to the organizers being fired
unjustly. Duron said that solidarity/employee associations
were not a major problem, and cautioned that the labor
unions were skeptical about proposed "flexibilization" of
the labor code. Duron said unions were open to revision of
the labor code provided their previously hard-won labor
rights were preserved. He said any reform process had to
balance the equities of workers, as well as employers


13. (U) Duron said that with the GOH still unable to reach
agreement with the International Monetary fund and 35
percent unemployment (a MOL statistic),the Honduran economy
was in poor shape. His affiliates were worried that it
would be very difficult to compete with the U.S. in
manufacturing or agriculture. He criticized NAFTA and
claimed it had not reduced poverty in Mexico or the rate of
illegal Mexican immigration to the U.S.


14. (U) Aceituno's statements were similar to Duron's
comments. She cited the right of association and the right
to bargain collectively as the two most important labor
rights that were the most difficult to exercise in Honduras.
She complained about the unjust dismissal of union
organizers in maquilas and agreed that reinstatement was a
remedy in theory but not in practice, noting that the fine
for unjustly firing a worker was only 500 lempiras (less
than USD 29). (Note: Employers also have to pay severance
pay - see paragraph 17. End Note.) The delegation told
Duron and Aceituno they agreed that progress was needed on
the protection and respect of labor rights in Honduras.

Private Sector: COHEP, Maquila Association, and others
-------------- --------------


15. (U) The USG delegation met June 17 with over a dozen
representatives of the private sector, including leaders of
the Honduran Council on Private Enterprise (COHEP),the
Honduran Apparel Manufacturers Association (the Maquila
Association),the National Association of Industrialists
(ANDI),and the National Federation of Cattlemen and
Agriculture of Honduras (FENAC) at COHEP. Honduran
Ambassador to the U.S. Mario Canahuati and Maquila
Association President Jesus Canahuati (brothers) both
attended the meeting.


16. (U) Adolfo Facusse, ANDI President and a leading
businessman, emphasized that the majority of the workforce
was employed in the informal sector (52 percent according to
Minister of Labor Leitzelar). He noted that COHEP and the
three labor confederations had agreed to labor code
revisions in the mid-1990s, but that the GOH delayed
introducing the revised code to Congress for a vote and that
the consensus had since broken down. Reforming the labor
code remained a difficult political issue, despite the fact
that the current code was obsolete, according to the private
sector representatives. Maquila Association representatives
said they wanted to see the union registration process
expedited and agreed with the need to reform that aspect of
the labor code.


17. (U) Jesus Canahuati said that there were generally
harmonious labor/management relations in the maquila sector,
and noted the importance of bipartite (labor/management) and
tripartite (labor/management/GOH) discussions on labor
issues. Canahuati said that of 180 maquilas, 66 had unions,
of which 48 were functioning, and many had collective
bargaining agreements (he did not have a precise number).
He said that unjustly fired workers can receive pay
equivalent to one month for every year worked (maximum 15
months). Jacobo Kattan, a maquila executive, admitted that
blacklists had been used in the early years of the maquilas
(1989-91),but claimed that now it hardly happened.
Canahuati said that to the best of the Maquila Association's
knowledge, blacklists are not used. Canahuati said that the
maquila sector realized it had a large impact in Honduran
society and the economy. The Association was open to
investigate any complaints about its members, said
Canahuati. (Note: After the meeting LabAtt gave Canahuati
the names of two maquilas that had been the subject of
recent complaints and asked him to investigate. End Note.)


18. (U) COHEP President Jacobo Regalado said that COHEP was
working to combat child labor and noted the private sector
was working with the Ministry of Education to adjust the
school calendar so it did not conflict with the coffee
harvest, which in the past has led many parents to keep
their children out of school so they could help harvest
coffee beans. Facusse noted that the poor state of public
education and repeated teacher strikes contributed to the
problem of child labor. Canahuati stated that child labor
was not a problem in the maquila industry.


19. (U) LabAtt noted that the two most numerous labor issues
he dealt with were complaints about the right to organize
and bargain collectively in maquilas and the problem of
child labor in commercial agriculture. The USG delegation
emphasized the need for the private sector to make
improvements in both areas.

Former Minister of Labor Gautama Fonseca
--------------


20. (SBU) The USG delegation also had a breakfast meeting
June 18 with former Minister of Labor (and former Minister
of Public Security) Gautama Fonseca. Fonseca noted the
problem of corruption hampered MOL efforts and said that
corruption, along with economic problems, had weakened the
labor movement. He said that Minister of Labor Leitzelar
was a good minister but hampered by an under-funded and
understaffed ministry.

Comment
--------------


21. (SBU) Comment: Honduras enjoys a fair reputation on
labor rights because of important advances in labor rights
made over the years. Partially because of this, Honduras
has at times looked better than its Central American
neighbors (three of which face GSP petitions) with respect
to the provision of labor rights. However this perception
is only partially consistent with the reality of labor
rights in this country. There is still much work to be done
to meet international labor standards, as reflected in the
section on workers rights in the Human Rights Report.


22. (SBU) Comment continued. The Honduran maquila sector
feels it faces unfair criticism given the achievements it
has made in eliminating child labor in maquilas, improving
occupational safety and health, and meeting demanding labor
codes of conduct established by U.S. buyers/retailers.
Since it is practically the only sector of the Honduran
economy that is rebounding from a post-September 11 downturn
and the largest source of non-agricultural employment in the
country, maquilas naturally remain the focus of labor
unions' organizing efforts. Those efforts combined with
continued resistance by some employers to the establishment
of unions has meant maquilas continue to be the subject of
complaints from Honduran and U.S. labor organizations/NGOs
regarding problems with freedom of association and
collective bargaining. There are many steps the government,
private sector, and labor unions can undertake to improve on
these issues. (Even Minister Leitzelar has noted that there
are a variety of other factors that also affect the ability
to organize new unions, including a weak economy in general
and internal problems within unions.)


23. (SBU) Comment continued: The paltry budget and staff of
the Ministry of Labor is a real impediment to improved
enforcement of labor laws, but the MOL could do more with
what it has. The U.S. delegation pressed the MOL and the
private sector to be more aggressive in addressing the
problems that exist, even if longer-term structural changes
in the labor code are not politically possible in the short
term. With DOL-funded technical assistance (on occupational
safety and health, rights of association/collective
bargaining) and IPEC projects, the MOL is already greatly
benefiting from a USG commitment to improve respect for
labor rights in Honduras. It is now up to the GOH to
increase the MOL's capacity to protect labor rights and for
the private sector to address the remaining problems. End
Comment


24. (U) This cable was cleared by DOL (ILAB) and State
(DRL/IL).

Pierce