GSP/AGOA LABOR COMPLAINT ON UGANDA

UNCLAS NAIROBI 005184 SIPDIS SENSITIVE SIPDIS DEPT ALSO FOR AF/RSA, EB/TPP/MTA, AND DRL/IL DEPT ALSO PASS TO USTR FOR BILL JACKSON DEPT ALSO PASS TO LABOR FOR KELLY BRYANT AND JIM SHEA E.O. 12958: N/A TAGS: ELAB AGOA ECON ETRD PHUM PGOV UG SUBJECT: GSP/AGOA LABOR COMPLAINT ON UGANDA REF: A) Kampala 1652, B) State 107221, C) Kampala 1715 SENSITIVE BUT UNCLASSIFIED. FOR U.S. GOVERNMENT USE ONLY. ¶1. (SBU) Summary: Ugandan officials, unions, and some employers are anxious to address the worker rights issues raised in the GSP complaint against Uganda to protect AGOA trade benefits. President Museveni and the Cabinet sent four labor reform bills to Parliament and the GOU referred plant management's refusal to recognize unions to the Director of Public Prosecution (DPP). Three garment producers, including sole AGOA exporter Apparels Tri-Star, finally signed a union recognition agreement. Final passage of the new labor laws should strengthen labor enforcement mechanisms. Continued contacts by senior Department and USTR officials would help sustain GOU attention and efforts during the run-up to the February/March elections. End summary. Most People Get It -------------- ¶2. (U) Regional Labor Attache Randy Fleitman visited Kampala November 14-16 to consult with Embassy Kampala and discuss the status of worker rights issues raised in the AFL-CIO GSP petition with Labor Ministry officials, Presidential AGOA assistants, union leaders, employers, and plant managers. Violent protests against the arrest of an opposition leader forced cancellation of some meetings. All interlocutors agreed that the petition had focused the highest levels of the GOU to address labor reform issues. All agreed the GOU and President Museveni were determined to preserve Uganda's GSP/AGOA trade benefits, and were taking some action, but the results may be slow to reach fruition. ¶3. (U) The union and employers had not prepared any submission for USTR's November 30 public hearing, but the GOU delegation to the hearing included Minister of State for Justice and Constitutional Affairs Adolf Mwesige, Labor Commissioner David Ogaram, and representatives from the Federation of Ugandan Employers National Organization of Trade Unions. Labor Attache encouraged them to provide written submissions to USTR as soon as possible. All interlocutors agreed on the importance of job security, increasing productivity, attracting more investment, training for unions, and the importance of conciliation, mediation and arbitration (CMA) to building good industrial relations once unions are recognized and collective bargaining agreement negotiations begin. The only objections came from textile manufacturers, arguing that their employer associations protected worker's rights. These manufacturers, however, signed a recognition agreement with the union on November 23. Labor Ministry Welcomes Reform Bills -------------- ¶4. (SBU) Ministry of Labor, Gender and Social Development's Labor Commissioner Dr. David Ogaram, Labor Director Claudius Olweny, Assistant Commissioner Andira Ojja, Assistant Commissioner Ruba Kalyegira and other senior Labor officials explained that the labor law reform process started back in 1990 and included ILO, World Bank and private missions and consultancies, but made little progress until the petition was filed and DepSec Zoellick focused President Museveni's attention on it at their meeting in June 2005 in Kigali. They understood that the Cabinet, chaired by President Museveni, approved all four labor reform bills on September 26 and sent them to the Attorney General, who completed the legal scrub in record time at the request of the Prime Minister. The Cabinet approved the revised drafts o/a October 4, and the Ministry of Labor submitted them to the Parliament for first reading o/a October 26. Ogaram stressed the importance of the Ministry of Finance's change of position to support the bills. The bills update legal provisions regulating unions, employment, safety and health, and labor disputes and are now with the Committee on Social Services for review. ¶5. (SBU) Ogaram provided hard copies of the bills, and explained they were the result of ILO drafts and a tri- partite compromise by Ugandan stakeholders including workers, the private sector, NGOs and interest groups like the handicapped. He believed the ILO was satisfied with the bills. Ogaram said the reform bills reduce the minimum union membership for establishment from 1,000 to 20, remove entirely the 51% minimum participation for establishing a union at a workplace, allow more than one labor union confederation in Uganda, and set timeframes for union recognition, collective bargaining and strikes. The reforms would raise the Industrial Court's status to that of High Court, making its decisions appealable only to the Court of Appeal. The ILO has provided financial and program support for a two-day workshop for the Ministry and all stakeholders to brief the Committee members on the bills. Ogaram hoped he could get even one day of the Members' time before November 30, but was concerned that the ruling party's National Convention and the ensuing campaign for the February or March elections would make it difficult. Ogaram did not expect substantive issues to come up, but the Employers Federation indicated at a subsequent meeting that it may try to reopen some previous compromises. ¶6. (SBU) Ogaram said that the bills were fairly detailed, but would still need implementing regulations. The Ministry had already started working on them. The regulations would need to be approved by the Minister and the Cabinet, but not Parliament. The officials estimated that it would take three to six months after the bills are passed to complete and approve the implementing regulations, but warned this timeframe was very uncertain. Ogaram also said that the GOU recognized the need to restructure the Labor Ministry to implement the reform laws effectively, but he cautioned that the Ministry always had difficulty getting GOU resources or assistance from donors. The Ministry will need support to educate unions and employers on the reforms, and would like to see tripartite training in conciliation, mediation and arbitration (CMA). ¶7. (SBU) Despite the GOU's written, direct order to Tri- Star, Phenix, Southern Range/Nytil Picfare in August to recognize the unions within the next month, none of the firms named in the petition had yet done so, and their responses were not satisfactory. Ogaram said that the Ministry had informed both the managements and the unions that it would send the matter to the DPP if the unions were not recognized. He said that the Ministry had sent the letter to the DPP o/a October 31, but had not informed the unions nor managers because it was an internal matter. President's AGOA Office Well-Versed -------------- ¶8. (SBU) Mr. Hashim Waswa had to stand in suddenly for his boss, President Museveni's personal AGOA Assistant Susan Muhwezi. He recognized the importance of addressing the petition's issues and was confident President Museveni had made clear to garment plant managers that they had to recognize unions. He did not confirm this was done at a face-to-face meeting, as asserted by the Ministry and unions. He hoped for fast parliamentary approval of the bills, but could not predict a passage date given the upcoming election. Union Leaders Frustrated but Welcome President's Support -------------- -------------- ¶9. Chairman Chris Kahirita and Director Robert Matikhu of the breakaway Central Organization of Free Trade Unions (COFTU) said union recognition by garment plant management is the number one priority. They welcomed the reform bills, but warned they would be useless unless the GOU would implement them to force "unionization." Kahirita was still waiting to see the texts to determine how much union input they incorporated. He claimed the Ministry of Labor was easily corrupted by bribes from plant managers, and that it had consistently diluted or weakened the President's and Susan Muhwezi's clear message to recognize unions. He doubted the Ministry had followed through on its threat to refer the non-compliance to the DPP for action. Kahirita recognized the importance of increasing productivity and using arbitration to minimize industrial friction and remain attractive to investors. ¶10. (SBU) Textile, Garment, Leather and Allied Workers Union Chairman Cosmos Ekue and Secretary General Catherine Aneno confirmed that unionization was their top issue. The union sent draft recognition agreements to all the garment producers in July. On September 30, responding as the Chairman of the Uganda textiles and garments Manufacturers Association (TEMAU),Phenix Logistics Manager Kashiwada wrote that TEMAU would exclusively discuss all issues related to industrial relations with the union and the Ministry on its members behalf. Negotiations did not begin in earnest until August 2005, and the three manufacturers cited in the petition finally signed a recognition agreement with the union on November 23. The Agreement states that TEMAU will negotiate the collective bargaining agreement with the union, but that enterprise-specific issues will be negotiated at the factory level. ¶11. (SBU) Aneno also expressed suspicion of the Ministry of Labor and alleged it was corrupted by bribes from plant managers. She was not convinced the Ministry had sent the managers' refusal to unionize to the DPP. She welcomed the reform bills and President Museveni's support for them, but was seeking meetings with the President and his AGOA assistant to ask them to press the managers to recognize the union. While the petition had focused the President's attention on labor issues, Aneno feared the GOU would lose interest after the February/March elections. ( Employers Federation Fears Investor Uncertainty -------------- -- ¶12. (SBU) Federation of Uganda Employers Executive Director Rosemary Ssenabulaya (a former union leader) expressed hope that Tri-Star would join the Federation and TEMAU. She claimed that employers in other sectors in Uganda (banking, tea) negotiated collective bargaining agreements with unions through sector organizations. She noted this would require less negotiating resources from both sides, set minimum wages/benefits, and create uniform conditions in the sector. She said that firms would be free to pay above an industry minimum, but admitted that most employers would not do so. She said there were local CMA professionals who could provide such training services, perhaps through reviving Uganda's moribund tripartite agency, the Labor Advisory Board. Ssenabulaya also noted she had recently helped a firm design a comprehensive human resources manual to train its managers and supervisors on worker welfare and safety and health issues. ¶13. (SBU) Ssenabulaya said the Federation and TEMAU had discussed tentative plans for union recognition that would include education for workers on the benefits of unions vs. employee associations and tri-partite training for union leaders and shop stewards on negotiating, industrial relations, and CMA. Labor Attache noted that it would be important to give union leaders equal access to workers to present their views during such an education period, and expressed reservations about the effectiveness of employee associations in protecting worker rights. ¶14. (SBU) Ssenabulaya said the Federation welcomed the new labor bills as needed to clarify the uncertainty about Uganda's labor laws that had made it more difficult to attract investors. The Federation might raise its objections to some of the bills' provisions on dismissal, severance and safety and health, but Ssenabulaya thought the GOU's desire to see the bills enacted by the end of 2005 would make any changes difficult to obtain. She regarded the Ministry of Labor as competent but understaffed and short of resources. She thought centralizing the inspection function might help it implement the reforms. Tri-Star Manager Unreconstructed -------------- ¶15. (SBU) Managing Director Vellupillai Kananathan gave an extended tour of the Tri-Star plant to Labor Attache and Kampala EconOff. He also invited some reporters to do an impromptu press conference at which the Labor Attache described the GSP petition process, the importance to Uganda of addressing the issues, and the potential benefits to Ugandan exporters. Kananathan showed no interest in recognizing the union, denied all union allegations of mistreatment, and claimed that Tri-Star had an employees association that effectively represented the workers, even to the point of obtaining wage increases. He described his plans to seek support from U.S. firms and even the Ex-Im Bank for investment in a fabric producing plant to meet AGOA's 2007 requirement for locally-sourced inputs, but seemed oblivious to the difficulty the petition or a potential consumer boycott could create for such plans. Despite such clear resistance, Tri-Star unexpectedly signed a union recognition agreement on November 23. Comment and Analysis -------------- ¶16. (SBU) The GOU's support for the passage of new labor laws represents a serious effort to address concerns raised in the AFL-CIO petition. It is also a good sign that the most obstinate employers, including Tri-Star, have signed a union recognition agreement. Plans to persuade workers to join employee associations may generate further friction with and complaints from the union. The Labor Ministry and the Industrial Court lack the resources to enforce Uganda's labor laws, current or new. Therefore, while the draft reform bills may someday bring Uganda's labor laws into conformity with ILO standards, the GOU will need to maintain its political commitment to protect worker rights through enforcement. Bellamy