CAMBODIA: AMBASSADOR URGES RESTRAINT IN GARMENT

UNCLAS SECTION 01 OF 03 PHNOM PENH 001174 SIPDIS SENSITIVE SIPDIS STATE FOR EAP/MLS, EB/TPP/ABT--THOMAS LERSTEN, DRL/IL--MARK MITTELHAUSER GENEVA FOR RMA LABOR FOR ILAB--JIM SHEA, JONA LAI COMMERCE FOR ITA/OTEXA MARIA D'ANDREA E.O. 12958: N/A TAGS: ELAB KTEX ECON CB SUBJECT: CAMBODIA: AMBASSADOR URGES RESTRAINT IN GARMENT SECTOR; JULY 3 GENERAL STRIKE LOOMS REF: A. PHNOM PENH 1124 ¶B. PHNOM PENH 1165 ¶1. (SBU) SUMMARY: In a June 22 meeting, the Ambassador praised the role of labor unions, but also urged eleven union leaders to exercise restraint in conducting strikes, noting that a recent spike in garment sector strikes is threatening Cambodia's economic development. While strikes are valid as a last resort, unions should first engage in good faith negotiations and should conduct their strikes legally and not use them as a pretext for collecting bribes. Union leaders responded by acknowledging corruption within the union movement, but saying that government corruption and factory management impunity were far bigger issues. Union leaders Rong Chhun and Chea Mony, who have threatened to hold a general strike on July 3, were frustrated by the government's lack of response to their demands, but differed in whether a strike could be avoided. END SUMMARY. ¶2. (U) On June 22, Ambassador hosted a roundtable discussion for 11 union federation leaders to discuss the recent rise in garment sector strikes and the general strike threatened to start on July 3 (Ref A). The leaders of the two unions threatening to lead the general strike--Chea Mony of the Free Trade Union (FTU) and Rong Chhun of the Cambodian Independent Teachers Association (CITA)--were present for the three-hour discussion. Ath Thorn, president of the Cambodian Coalition of Apparel Workers Democratic Union (CCAWDU),and Yun Rithy, president of the Khmer Youth Federation Trade Union (KYFTU), leaders of the two unions responsible for many of the recent garment strikes, also attended along with seven other union leaders. Ambassador: Don't Kill the Goose that Lays the Golden Egg -------------- -------------- ¶3. (U) The Ambassador began by praising the unions' role in creating a vibrant economy and particularly in helping Cambodia to survive the post-Multifiber Agreement era. Cambodia's garment factories can't beat Vietnam or China on price or efficiency, he remarked, but they succeed because of their reputation for workers' rights. ¶4. (SBU) However, garment buyers have become increasingly wary of Cambodia's unstable labor situation, the Ambassador warned. Some have already started canceling orders because they are concerned that labor disputes at garment factories could lead to late shipments and/or hurt their reputations for social responsibility. If there is a general strike on July 3 that increases garment buyers' anxiety, it will be disastrous for Cambodia. The Ambassador acknowledged that strikes are sometimes valid, but he exhorted unions to use them only as a last resort, and criticized unions who use strikes as an extortion tactic. Chea Mony: Government Needs to Respond -------------- ¶5. (SBU) FTU leader Chea Mony expressed disappointment with what he characterized as US pressure not to strike, and said that in a democracy, there must be discussions among different groups. FTU is frustrated, he said, because despite sending three letters to the government expressing its demands for higher wages, a shorter workweek, and lower gasoline prices, the government has never responded directly to the union, only indirectly through the press. Chea Mony declared that a July 3 strike would be inevitable if the government took no action to resolve the issue, and asked for US Embassy help in getting the government engaged. In contrast to Chea Mony's firm stance, several other union leaders said that they had no plans to participate in the July 3 strike and encouraged FTU and CITA to negotiate with the garment sector. Union Leaders: Government Corruption, Intimidating Factory Behavior at Play -------------- -------------- ¶6. (SBU) A wide variety of union leaders acknowledged that there was some corruption within the union movement, but blamed the government for large-scale corruption that raises PHNOM PENH 00001174 002 OF 003 production costs and hurts the industry. Garment factory owners could raise wages to USD 100 per month if they didn't have to pay bribes to government officials, tourism sector union leader Ly Korm claimed. Several labor leaders claimed that while some factory-level union leaders have solicited bribes in return for resigning, others have been pressured or intimidated into accepting pay-off packages for leaving their jobs. Moreover, when employers commit illegal activities, they are never held responsible. Garment union federation president Morm Nhim said that any complaints sent by unions to the government are "put in the ashtray." Several leaders alleged that factory owners and managers are never held responsible by the court system because they have powerful friends. ¶7. (U) Unions leaders were also clearly frustrated by what they had seen on the televised Private Sector Forum the day before (Ref B),when Garment Manufacturers Association of Cambodia (GMAC) Chairman Van Sou Ieng expressed his concern over the increase in garment sector strikes and asked the Prime Minister to unilaterally set a 130% pay rate for nightshift work, after failure to make progress on the issue over several years. Unionists resented business' comparatively good access to the Prime Minister that the event highlighted. Moreover, they regretted that they had not been allowed to attend the event, much less comment on the proceedings. ¶8. (SBU) The Ambassador responded by acknowledging that corruption was a serious issue within the government, but reminded union leaders that corruption has many different forms. Within a labor context, he noted, being motivated by personal financial gain or political power--or for any reason other than to fight for workers--is corruption. While American garment buyers are partially motivated by Cambodia's worker rights record, they are also businesspeople who are interested in profit and stability. If American garment buyers leave Cambodia, this will punish not only corrupt government officials, but factory owners, union leaders, and workers as well. The Ambassador pledged to continue working on the issue and to meet with the GMAC, the Minister of Labor, and the Minister of Commerce. Emboffs: Don't Cry Wolf -------------- ¶9. (U) When the Ambassador left for another commitment after more than 1 1/2 hours of discussion with union leaders, Poleconoff, USAID Economic Growth Officer, and Labor Assistant stayed to continue talking with labor leaders. They encouraged union leaders to be selective in their use of internet and email campaigns. Like the boy who cried wolf, unions' excessive messages about labor disputes will hurt their credibility and will also create an overly negative image of the Cambodian garment industry. They also encouraged the unions to work informally with GMAC in ILO-facilitated negotiations and underlined the importance of complying with Arbitration Council return to work orders. Is a Strike Inevitable? -------------- ¶10. (SBU) As they were leaving, Poleconoff talked separately to Rong Chhun and Chea Mony and received remarkably different answers about the prospects for avoiding a general strike. Chea Mony stated without hesitation that a strike was "inevitable," while Rong Chhun said that there was still enough time for fruitful negotiations. ¶11. (SBU) COMMENT: While acknowledging some of their own shortcomings, unions largely used this meeting as an opportunity to point fingers at government and factory failings. In truth, there is plenty of blame to share. Corruption within unions is more common than leaders want to admit, and union leaders often find holding illegal strikes to be a successful way to gain the attention of factory management, obtain some gains for workers, and increase their own standing in workers' eyes. Moreover, Chea Mony clearly harbors both labor and political ambitions, and sees holding a strike as a way to demonstrate his ability to put large numbers of workers in the streets. The Ambassador's message PHNOM PENH 00001174 003 OF 003 of restraint certainly reached many of the union leaders, though whether it had an impact on general strike leaders Chea Mony and Rong Chhun, or on the rather rash and unpredictable Ath Thorn, is hard to gauge. It almost certainly failed to persuade Yun Rithy, whom many see as an extortionist in unionist clothing who will be convinced only by CPP pressure or violence. MUSSOMELI