CONGRESS LABOR COMMITTEE BULLISH ON LABOR LAW

UNCLAS LIMA 004547 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ELAB ETRD PE PGOV SUBJECT: CONGRESS LABOR COMMITTEE BULLISH ON LABOR LAW ¶1. (SBU) Summary: UPP congressman Aldo Estrada, president of the congressional committee on labor, told poloffs November 21 that revisions to the proposed General Labor Law should be completed and passed to the plenary by December 22--where it could be approved early in next year's session. He noted that 66 articles remained under discussion, most dealing with the thorny topics of arbitrary dismissal, salaries, subcontracting, and collective bargaining rights. He said the labor bill enjoyed broad support across party lines, and he suggested securing passage of the Peru Trade Promotion Act (PTPA) had motivated his committee to move quickly. Observers familiar with the process consider Estrada's schedule optimistic and his portrayal of inter-party harmony overstated, but believe some kind of labor legislation, even without the enthusiastic support of organized labor or business, likely by early next year. End Summary. -------------- The Future of the General Labor Law -------------- ¶2. (U) Poloffs met November 21 with congressman Aldo Estrada, president of congress's labor committee and head of the Union for Peru (UPP) congressional bloc and congressman Luis Negreiros Criado, representative of the ruling APRA party and member of the labor committee. Both were bullish about the committee's prospects for approving the labor bill by December 22, and both predicted passage in the congressional plenary by late February or early March. A simple majority is needed for approval in both the committee and the congress. ¶3. (SBU) Estrada said his committee had reached agreement on 365 out of 431 articles, and substantive disagreements existed on only 15 of the remaining 66 articles. The 15 articles cover a variety of topics; the most important are arbitrary dismissal, salaries, subcontracting, and collective bargaining rights. Estrada said protections against arbitrary dismissal had been strengthened, making it impossible, for example, to dismiss workers because of race or pregnancy, but allowing employers to fire workers for cause, such as showing up to work drunk. Negreiros said the bill reduced but did not eliminate subcontracting, a compromise designed to please labor, which had sought an outright ban, and to placate business, which had sought to leave existing laws unchanged. Estrada expected the final version of the labor bill would ease restrictions on union organizing and better define the parameters for sector-wide collective bargaining, although details were still being worked out. ¶4. (SBU) Both Estrada and Negreiros said all of Peru's major parties agree on the need to consolidate the tangle of labor legislation into a general labor law, and said there were no significant partisan differences with respect to that law. (Comment: Observers disagree. See below. End Comment.) They added that labor and business groups recognized that substantial progress had been made, and were willing to give congress space to work out the remaining details, given that agreement exists on the great majority of articles, both inside and outside the congress. ¶5. (SBU) Both Estrada and Negreiros hinted that their committee's work on the General Labor Law was motivated in part to facilitate passage of the PTPA in the U.S. Congress, and suggested that the speed with which the Peruvian Congress completes its work on the bill could hinge on the U.S. Congress's approach to the PTPA. In this connection, Estrada noted that the debate over creating some type of labor bill had been going on for more than five years, and the concrete prospects of a new law only began to take shape after PTPA became a possibility. Both emphasized that a free trade agreement with the United States would encourage continued democratic consolidation in Peru, rebut the economic model offered by Hugo Chavez, and show the United States remains engaged in the Andean region. -------------- An Ambitious Agenda -------------- ¶6. (SBU) Labor union representatives caution that Estrada has set an ambitious agenda and point out that progress on the labor bill stopped completely in August when the congress asked the National Labor Commission to broker discussions between labor and business groups. No major party has been willing to take the lead in securing passage of the law, and labor reps suspect that once the bill reaches the plenary, Fujimoristas and the National Unity party will oppose it. ¶7. (SBU) For their part, business groups are concerned with articles in the General Labor Law that would limit the ways in which employers can hire workers. The private sector has pointed out that Peruvian workers already enjoy some of the strongest legal protections in Latin America, and additional legislation could harm job creation and reduce Peru's ability to compete in international markets. Business groups also worry that the GOP may be tempted to make labor protections even stronger--and reduce flexibility in hiring and firing--in order to please U.S. congressional critics. ¶8. (SBU) Comment: Estrada may be overly optimistic about how quickly his committee can complete its work and about the breadth of support the labor bill enjoys, but even labor groups expect some kind of law will be passed early next year. Labor rights are a hotly contested topic in Peruvian politics, and the GOP deserves credit for moving forward with a labor bill that had languished for years and for fostering compromises that make passage more likely now than ever before. The General Labor Law may be imperfect, but it represents a significant step forward in consolidating and updating existing legislation. End Comment. STRUBLE