Identifier
Created
Classification
Origin
06KINGSTON633
2006-03-30 16:03:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kingston
Cable title:  

JAMAICA BRACING FOR STORMY INDUSTRIAL RELATIONS

Tags:  ECON EFIN JM 
pdf how-to read a cable
VZCZCXYZ0010
RR RUEHWEB

DE RUEHKG #0633/01 0891603
ZNR UUUUU ZZH
R 301603Z MAR 06
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 2521
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHGE/AMEMBASSY GEORGETOWN 2343
RUEHSJ/AMEMBASSY SAN JOSE 1807
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS KINGSTON 000633 

SIPDIS

SENSITIVE

SIPDIS

STATE FOR WHA/CAR (WBENT),WHA/EPSC (JSLATTERY)

SANTO DOMINGO FOR FCS AND FAS

TREASURY FOR L LAMONICA

E.O. 12958: NA
TAGS: ECON EFIN JM
SUBJECT: JAMAICA BRACING FOR STORMY INDUSTRIAL RELATIONS
IN 2006


UNCLAS KINGSTON 000633

SIPDIS

SENSITIVE

SIPDIS

STATE FOR WHA/CAR (WBENT),WHA/EPSC (JSLATTERY)

SANTO DOMINGO FOR FCS AND FAS

TREASURY FOR L LAMONICA

E.O. 12958: NA
TAGS: ECON EFIN JM
SUBJECT: JAMAICA BRACING FOR STORMY INDUSTRIAL RELATIONS
IN 2006



1. (U) Summary: Jamaica is bracing itself for one of its
most tumultuous years regarding industrial relations.
With approximately 48 unresolved wage disputes carrying
over from 2005 and with many contracts expiring in March,
work stoppages may prove common in 2006. Already seen in
the bauxite sector, this phenomenon could spread to other
sectors of the economy as workers seek compensation for
three consecutive years of double-digit inflation and a
memorandum of understanding (MOU),which froze public
sector salaries in 2004. While trade unionists have
predicted that 2006 will be a challenging year, Portia
Simpson-Miller's elevation to Prime Minister could calm
the industrial relations climate, at least for a time. As
a former Minister of Labor, some union leaders have
already welcomed her election. Her popularity, however,
will be contingent on her perceived sympathy to the
workers' cause. End summary.

--------------
Background
--------------


2. (U) Current disputes and work stoppages in Jamaica
suggest that 2006 is shaping up to be one of the most
turbulent in recent times. 48 unresolved disputes carried
over from 2005, and there is the pending expiration of a
number of collective wage agreements. Higher-than-
predicted inflation - with prices rising an average of 12
percent during the last three years - and the imminent
expiry of the GOJ's MOU with public sector workers will
only add fuel to the situation. As early as January, Vice
President of the National Workers Union (NWU) and chief
negotiator in the bauxite sector, Norman DaCosta,
predicted that with many contracts expiring and workers in
a militant mood, stoppages and strike action could become
a recurring feature in 2006, a sentiment echoed by many of
his trade union colleagues.

--------------
Bauxite Sector
--------------


3. (U) DaCosta's prediction appears prescient, as bauxite
companies and unions have been locked in tense and
sometimes heated negotiations. The foundation for a
difficult 2006 was set from the moment bauxite companies
reported record production and revenues for 2005. DaCosta
immediately expressed disappointment at the protracted

labor negotiations with bauxite companies when the
industry was doing well. "The ability of the sector to
pay is not in question, yet workers are earning less than
they did in 1998 in US dollar terms," he asserted. DaCosta
told emboff that the most recent adjustment at Alumina
Partners (ALPART) amounted to USD 80 million or an average
of USD 64,000 per worker. However, he was quick to
clarify that this was not an increase, but an adjustment
to 1998 salaries in US dollar terms. DaCosta further
noted that the industry was more than able to pay given
the unprecedented demand and prices for its product.



4. (U) In late 2005, a 72-hour strike notice was served on
the management of Jamaica Aluminum Company (JAMALCO).
Strike action was temporarily averted through the
intervention of Minister of Labor Horace Dalley. On
January 16, however, the union took action, and threatened
to request solidarity from other plants in the sector if
workers' demands were not met. The dispute was forwarded
to the Ministry of Labor (MOL) for mediation and settled
on March 12. On February 5, ALPART workers followed suit,
despite an order from the Industrial Disputes Tribunal
(IDT) for the employees to return to work. DaCosta opined
that defying the IDT order was best for the workers and
ultimately best for the nation. The defiant workers
eventually returned to work on February 9 after agreeing
to a 32 percent increase in salaries and benefits
amounting to USD 80 million.


5. (U) The tension in the sector escalated even further
when DaCosta became embroiled in a dispute with West
Indies Alumina Company (WINDALCO). The tension escalated

on February 28 following an allegation by the company that
DaCosta had exposed the handle of his firearm during a
stormy meeting. The company requested the intervention of
the MOL, claiming that it was no longer prepared to meet
with DaCosta. The Ministry convened a meeting between the
disputing parties, but it ended in a stalemate after the
company's demand to have DaCosta removed as the lead
negotiator was rejected. The dispute was resolved only
after Prime Minister-designate Portia Simpson-Miller
intervened. The record 33-hour meeting, chaired by
Simpson-Miller, ended with a settlement similar to that
with ALPART. When asked about the role of Simpson-Miller
in the negotiations, DaCosta told emboff he was impressed
by her mediation skills and in-depth knowledge of the
global aluminum industry. He said the settlement had set
the stage for a return to normality in the sector,
although three companies have yet to conclude agreements.
"If her approach is any indication of how she will handle
the post of Prime Minister, it augurs well for the
country," DaCosta said. However, both parties have yet
to sign the agreement, as the trade union is requesting an
addendum to protect the union delegates from planned
redundancies at the company.

--------------
Utilities
--------------


6. (U) The Mirant-owned Jamaica Public Service Company,
which reported profits of USD 23.1 million for 2005, was
only able to avert large scale strike action among a cross-
section of its workforce after it agreed to the unions'
demand for a signing bonus and a 36 percent increase over
three years. Technical employees at the company had held
a brief strike, but returned to work following the
persuasion of their union, which subsequently requested
the intervention of the MOL. Cool Petroleum, which
recently bought out the business of Shell International,
is also involved in what is shaping up to be a major
battle with the country's two largest trade unions, the
National Workers Union (NWU) and the Bustamante Industrial
Trades Union (BITU). Both unions are accusing Cool of
refusing to recognize their representation of the workers
despite Cool's decision to continue their employment. The
unions have called the company's action "union busting"
and have written to the Ministry of Labor requesting
intervention. Finally, the Jamaica Association of Local
Government Officers has also announced that negotiations
for a new contract with the GOJ-owned National Water
Commission might be problematic, as the union strives to
ensure that their workers get what they deserve.

--------------
New Public Sector MOU, But No Wage Freeze
--------------


7. (SBU) Public sector workers are also gearing up to
battle the GOJ, following the expiration of the MOU on
March 31. These workers are anticipating a significant
adjustment in their salaries after accepting a wage freeze
during the period of high inflation from 2004 until the
present. Unions have already indicated their
unwillingness to consider a wage component as part of a
new MOU. Acting Head of the Fiscal Policy Management Unit
at the Ministry of Finance, Courtney Williams, told emboff
that while there is no contemplation of a wage freeze,
there could be a wage cap. He said increases are expected
to be in line with inflation (about 25 percent compounded
over the two-year contract period). When asked about the
impact of this adjustment on the budget and the
possibility of job losses, Williams stated that while the
increase would be large in nominal terms, the wage bill
would remain relatively stable as a percentage of GDP.
Regarding job cuts, Williams suggested that impending
retirements and attrition should start the rationalization
process. Nevertheless, Williams was quick to point out
that the unions were cognizant of the inevitability of
downsizing and were therefore pushing for increased
training as part of any new MOU.


8. (U) DaCosta, who refers to the MOU as a "Memorandum of

Misunderstanding," told emboff that dialogue is essential,
but that each partner must be prepared to bring something
to the table. He opined that the last MOU should not have
included a wage freeze as it runs contrary to market
philosophy. DaCosta recognizes that public sector
rationalization is required, but notes that the union
movement and the GOJ squandered a golden opportunity in
2004 to finally cut the service and create a more
efficient public sector. Likewise, in the private sector
there has been general wage restraint over the two-year
period. With public sector workers set to receive a major
adjustment, private sector workers may also agitate for
significant increases amidst rising profits. Williams
told emboff that he expects private sector agreements to
be in the region of 25 to 30 percent over the two-year
period and any major deviation from this target could lead
to disturbances.

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


9. (U) With expectations running high following the
generous settlements at high-paying bauxite and utility
companies, the foundation might well have been laid for
further turbulence during the remainder of 2006. In fact,
with so many contracts expiring in 2006 and with inflation
fresh in the minds of workers and unions, some
negotiations might spill over into 2007. In particular,
private sector workers who accepted minor adjustments
during two years of relatively high inflation will seek to
recover their lost purchasing power. The standoff could
become even more intense given that these workers have
seen company profits jump during the period. The GOJ is
trying to avert any disturbance in the public sector by
negotiating a new MOU with a relatively generous wage
component, but underpaid civil servants might not be
impressed. This could lead to industrial action unless
Simpson-Miller can intervene successfully. With
expectations so high - particularly from trade union
leaders who have already welcomed her election as a
positive for workers - any deviation from this expectation
could dent her popularity. End comment.

JOHNSON