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.

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The Future of the General Labor Law
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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.

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An Ambitious Agenda
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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.
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