SMALL STEP FOR GUATEMALAN LABOR STANDARDS

C O N F I D E N T I A L SECTION 01 OF 02 GUATEMALA 000577

SIPDIS

E.O. 12958: DECL: 03/04/2015
TAGS: ELAB ETRD PREL PGOV EAID GT
SUBJECT: SMALL STEP FOR GUATEMALAN LABOR STANDARDS
ENFORCEMENT

REF: A. GUATEMALA 341


B. GUATEMALA 280

C. A/USTR PADILLA - OLSON E-MAIL

Classified By: Ambassador Hamilton, Reason: 1.4 (D)


1. (U) Summary: Labor Courts have begun to impose fines on
employers found by the Labor Inspectorate to be in
non-compliance with the Labor Code. This shows a measure of
political will, but without increasing resources to the labor
courts, this process does not represent a functioning system
of Labor Code enforcement. We continue to engage all levels
of the government and private sector to achieve a solution
that will return administrative sanction authority to the
Labor Inspectorate. We believe that A/USTR Padilla's offer
to contact the business organization CACIF would be helpful.
End summary.

A kind of authority restored
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2. (U) The authority of the Guatemalan Labor Inspectorate
(IGT) to assess fines on workplaces not in compliance with
the Labor Code has been partially restored. Although
inspectors still cannot directly (or unilaterally) impose
fines on non-compliant employers, they can now present
reports of infractions to Labor Court judges for punitive
measures.


3. (U) During the week of February 28, the Fifth Labor Court
imposed fines on eight employers for Labor Code violations
committed during 2004. These violations included illegal
firings and failure to pay mandatory benefits. The fines
ranged from quetzales 2,052 to 3,570 (USD 266 to 464),based
on multiples of the average monthly minimum wage. By
contrast, in the first three quarters of 2004, the IGT
imposed 2,499 fines.


4. (U) The umbrella business organization CACIF successfully
challenged the IGT's sanction authority before the
Constitutional Court in August 2004. CACIF's position since
then has been that the IGT could act on behalf of the
judiciary, but that fines should not be imposed
administratively. CACIF leaders argue that this activity
resolves the absence of sanction authority and that Guatemala
now has a functioning Labor Code enforcement system.


5. (C) This activity deviates from the Ministry of Labor's
plan (ref A) to recommend that President Berger issue an
executive order to restore sanction authority directly to the
IGT. That order, drafted by Ministry of Labor staff, remains
on the desk of Minister of Labor Gallardo, who returns today
from the regional Ministers of Labor meeting in Costa Rica.
Gallardo told the Ambassador February 4 that he would
recommend that the President issue that executive order.


6. (C) Vice Minister Mario Gordillo, acting in Gallardo's
place, told us March 2 that they withdrew the order from the
Presidential Secretariat in order to follow a judicial
solution. Gordillo echoed the CACIF leadership's arguments
that a Labor Code enforcement system is in place. The
Ministry of Labor's Legal Advisor told us March 3 that when
he argued in favor of direct administrative authority via an
executive order, Gordillo threatened to fire him if he did
not cease communicating with us.


7. (C) According to the Legal Advisor, Gordillo said that
CACIF had assured him that the U.S. Government was "bluffing"
and that CAFTA was too important to us to let this issue be a
true obstacle. Thus, Gordillo reportedly said, the judicial
activity was sufficient. The Ambassador advised Vice
President Stein March 3 and Foreign Minister Briz on March 4
that a functioning Labor Code enforcement system was indeed
of real importance to the USG and urged for their collective
action.

Comment
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8. (U) There are 28 labor courts. The eight fines approved
this week are just baby steps toward resuming the rate of
over 60 fines per week assessed by the labor inspectors prior
to the August 2004 ruling. We would have been pleased by
this judicial approach had it been introduced several months
ago as an emergency stopgap measure while legislation was
drafted and approved. To restore the level of Labor Code
enforcement evident in the rate of fines imposed before
August 2004, however, it is inadequate. It represents a
cumbersome additional step in the enforcement mechanism as a
judge must hear the case and then issue a several-page legal
decision. The judicial system cannot handle thousands of
cases per year without a major increase in resources.


9. (C) We continue to engage CACIF on this issue, in hopes
that they can reconcile their short-term goals with CAFTA
passage. We would welcome contact between A/USTR Padilla and
CACIF, as Padilla offered in the ref (C) e-mail. On the
other side of the issue, Guatemala's major labor
organizations have been silent on this issue, although they
have been active in opposition to CAFTA. Indeed, the head of
UASP, the largest such organization, was unaware of the issue
until we briefed him March 3.
HAMILTON