DRAWING ATTENTION TO THE NEED FOR LABOR REFORM: A

UNCLAS SECTION 01 OF 02 MAPUTO 000713

SIPDIS
SENSITIVE
STATE FOR AF/S
USDOL FOR ILAB - BYOUNG, MMITTELHAUSER
USDOC FOR AHILIGAS
JOHANNESBURG FOR RLO - BNEULING
PASS USAID FOR AA/AFR AND AFR/SA
E.O. 12958: N/A
TAGS: ELAB ECON MZ
SUBJECT: DRAWING ATTENTION TO THE NEED FOR LABOR REFORM: A
USG LABOR SEMINAR IN MOZAMBIQUE MARKS SUCCESS



1. (U) SUMMARY. Productive to current labor law revision
efforts, the USG launched a half-day labor seminar in
Mozambique on May 5. The seminar featured participants from
various sectors and included the fullday participation and
attention of Minister of Labor, Mario Lampiao Sevene.
Receiving more press attention than any other USG-funded
event this year, the seminar focused on key recommendations
for labor law reform. Labor law revision will reach
completion by 2005. USG priorities for this process include
the adoption of more liberalized labor policies that attract
more foreign investment and encourage economic development.
END SUMMARY.

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IMPRESSIVE GROUP OF ATTENDEES
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2.(U) On May 5, the USG hosted a 60-person labor seminar
focused on the need for labor law reform in Mozambique. The
USDOL-funded event, managed by USDOL and the Mission,
invited over 80 participants from the Ministry of Labor, the
Ministry of Industry and Commerce, the private sector,
unions, donors, academics, and other organizations such as
the International Labor Organization (ILO) and the
Solidarity Center, to take part in the half-day event.
Success was due in large part to the attendance and full
participation of the Minister of Labor, Mario Lampiao
Sevene, and a well-rounded and engaged audience of key
players from business and unions, as well as a huge press
presence. Coverage included spots on four national and
international TV networks and press articles from over seven
national publications. The seminar received overwhelming
attention and positive feedback from all sectors. The GRM
also announced that it has identified a working group for
revision of the current Mozambican Labor Law, to be
completed in 2005, a year earlier than previously planned.

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THEMES
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3.(U) In 2003, the USDOL selected four researchers to
analyze and report on three themes related to the Mozambican
labor system. USDOL has been very active in Mozambican
labor programs and has most recently contracted the Federal
Mediation and Conciliation Service (FMCS) to provide labor
dispute resolution training to a tripartite group of
government, union, and private sector representatives in
Mozambique. (Additionally, USDOL funds a $900,000 HIV/AIDS
prevention in the workplace program in Mozambique, Project
Hope.) The themes presented were: the current labor system
and recommendations for reform, a history of industrial-
based bargaining in Mozambique and recommendations to
improve its functioning, and a comparative analysis of labor
laws and regulations in Mozambique, Kenya, South Africa, and
Malaysia.

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LABOR ISSUES
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4.(U) The U.S. Ambassador to Mozambique opened the seminar
with remarks aimed to encourage the GRM, through the
Ministry of Labor, to reform the current labor system in
order to make Mozambique more competitive regionally,
thereby attracting greater foreign investment and reducing
poverty. Following the Ambassador's remarks, Minister of
Labor Mario Sevene gave a thoughtful speech on the current
status of labor issues, the GRM's drive to move forward and
effect change on specific labor legislation, the need for
the worker and private sector communities to work with the
Ministry to achieve this, and the timetable for the labor
law revision. After formal remarks were given, authors
presented their findings and key recommendations to the
audience. This was followed by a wide-ranging and
provocative discussion on labor issues: sick leave (which is
unlimited in Mozambique); severance pay (a worker with six
years and a day of service is entitled to one year's
severance pay); the right to strike (where the ambiguity of
the law deflects attention from real grievances to the
legality of the action); heavy corruption in labor
inspections (labor inspectors personally keep 25 percent of
fines levied, and have great discretion over the amount of a
given fine); the difficulty of hiring and firing of workers
(as a general rule, only restructuring of a company provides
the right to dismiss); and contracting of foreign labor
(also a highly discretionary bureaucratic process that fuels
corruption).

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WHAT'S WRONG
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5. (SBU) Although the Mozambican labor system is
theoretically pro-worker, many of its provisions are
ambiguous and complicated, raising the costs of employment
in the formal sector without providing any commensurate
benefits to either the employer or the worker. To make
matters worse, it is a major roadblock to foreign
investment, particularly the kind of labor-intensive
investment that would create new jobs. The law reflects
inward-looking socialist policies, not competitive with
other countries in the region. There is widespread
frustration in the private sector and donor communities that
the GRM is not moving quickly enough to promote reform that
will open Mozambique's economy and allow for economic
growth, an influx of small-to-medium sized firms, an overall
increase in employment, and increased production. Minister
Sevene's full-day presence at the seminar captured each
participant's attention, as the Minister rarely attends such
events in their entirety. We hope it signals, after
significant delays, the Ministry's commitment to making
positive labor law change happen by 2005.

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A GOOD STEP
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6. (U) Although many of the issues discussed during the day
have been on the table for some time, this seminar, by
bringing together powerful players from the government and
private sector, gave significant new impetus to lagging
reform efforts. It also reflected a growing understanding
from all involved on the need to stimulate employment, and
that radical reform has to come quickly if Mozambique is to
produce the jobs required for broad based, poverty-reducing
growth.
LA LIME