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