CAMBODIA: GENERAL STRIKE CANCELLATION SETS THE

UNCLAS SECTION 01 OF 02 PHNOM PENH 001204 SIPDIS SENSITIVE SIPDIS STATE FOR EAP, EAP/MLS, DRL/IL--MARK MITTELHAUSER, AND EAP/TPP/ABT THOMAS LERSTEN LABOR FOR ILAB--JIM SHEA AND JONA LAI GENEVA FOR RMA STATE PLEASE PASS TO USTR--BARBARA WEISEL AND DAVID BISBEE E.O. 12958: N/A TAGS: ELAB ECON PGOV CB SUBJECT: CAMBODIA: GENERAL STRIKE CANCELLATION SETS THE STAGE FOR SECTORAL COLLECTIVE BARGAINING REF: A. PHNOM PENH 1202 ¶B. PHNOM PENH 1199 ¶1. (SBU) SUMMARY. The June 29 postponement of a general strike scheduled to start just a few days later paved the way for an announcement by garment manufacturers and eleven union federations that they will begin collective negotiations in August. They have agreed to discuss wages, strikes, arbitration, and implementation of the Labor Law. Despite this promising sign, success is far from certain as there is significant distrust not only between garment factory owners and unions but also among the various union federations. Nonetheless, the effort will almost certainly improve communication among actors in the garment sector and would yield substantial benefits if successful. END SUMMARY. Collective Negotiations Announced -------------- ¶2. (U) The announcement by the Free Trade Union (FTU) and the Cambodian Independent Teachers Association (CITA) that they will indefinitely postpone their general strike (Ref A) sets the stage for negotiations on a garment-sector-wide labor agreement. While post focused on averting a general strike threatened to start on July 3, the International Labor Organization (ILO) and the American Center for International Labor Solidarity (ACILS) have been working on a longer-term effort to bring garment manufacturers and the fractious labor movement together to negotiate a broader labor agreement. ¶3. (SBU) On June 29, the Garment Manufacturers Association of Cambodia (GMAC) and 11 union federations issued a joint press statement announcing their intention to enter into negotiations about wages, strikes, arbitration, and implementation of the Labor Law. The draft ILO/ACILS framework, which has not been made public, is a three year deal including an unspecified minimum wage increase, mandatory binding arbitration, and a moratorium on strikes and lock-outs for the life of the agreement. Unions, Factories, Ready to Trade Dirty Tricks for a Deal -------------- -------------- ¶4. (SBU) A dramatic rise in the incidence of individual strikes at garment factories, as well as the threatened general strike, are symptomatic of a deterioration in labor relations over the past few months. Unions are frustrated by factory owners' increased use of Cambodia's corrupt court system to penalize union activists via charges of destruction of property (often related to strikes),theft, and slander. Unions seem finally to have internalized the message from the embassy, the Cambodian government, and the garment industry that while unions have a right to strike, excessive illegal strikes will only hurt the garment industry and threaten workers' jobs. For their part, factory owners are fed up with illegal strikes that stop production on short notice and cause missed deadlines and excessive overtime. Each party now seems to be willing to consider turning away from its favorite dirty tricks (illegal strikes for unions, manipulating the court system for factory owners, and bribes on both sides) in exchange for agreeing to binding arbitration. ¶5. (SBU) Cambodia's Arbitration Council, which was funded by the US Department of Labor and established under the guidance of the ILO, is the only transparent dispute resolution body in a sea of judicial corruption. The Arbitration Council's decisions become non-binding if either party formally objects to the award within seven days of its issuance. However, both parties can agree in advance of the arbitration process to accept the Council's decision as a binding one, and many collective bargaining agreements, particularly in the tourism sector, contain this provision. GMAC Negotiation Success Allows Chea Mony To Be First Among Equals -------------- -------------- ¶6. (SBU) The embassy's work to help the FTU/CITA and GMAC come close enough to an agreement to avoid a general strike and ILO/ACILS' work to bring eleven different union PHNOM PENH 00001204 002 OF 002 federations together to negotiate with GMAC have been mutually reinforcing. FTU leader Chea Mony was clearly looking to the threatened general strike as a way to raise his political stature (Ref B),and was reluctant to trade the drama and publicity of tens of thousands of workers in the streets for the lower-key success of a negotiated agreement, particularly one that would be shared with ten other union leaders. Chea Mony told ILO Chief Technical Advisor on June 21 that he could not agree even in principle to the draft ILO/ACILS framework agreement. And it was only pressure from the embassy and the ILO that brought him back to the table for further multi-union discussions on June 29. ¶7. (SBU) In fact, it was the tremendous progress in negotiations between FTU/CITA and GMAC that gave Chea Mony a way to participate in the multi-union negotiation as the first among equals. Because the FTU and GMAC had nearly reached a deal on the minimum wage already (GMAC offered a USD 7 increase over three years while FTU counteroffered with a USD 8 increase over three years),Chea Mony will be able to informally but legitimately claim most of the credit for raising the minimum wage. At the same time, it will be up to the group of eleven union federations and GMAC to iron out the final details of the minimum wage deal in August, so all will be able to claim some degree of victory. ¶8. (SBU) COMMENT. Sector-wide collective bargaining is a very ambitious idea that will likely meet with slow progress and uncertain success. Factory-level collective bargaining agreements (CBA) are rare in Cambodia's garment industry, in place in only five of the country's nearly 300 garment factories. In addition, Cambodia's union federations are a wildly divergent bunch who will have a tough time reaching consensus. In addition to pro-government, pro-opposition, and politically neutral unions, some unions are essentially pro-management and all trade allegations of violence, harassment, and corruption. Nonetheless, the negotiating process is likely to build trust in an area where it is sorely lacking. A framework agreement, if reached, would be a tremendous boon to the stability of Cambodia's all-important garment sector and would herald a new era in Cambodian labor relations. END COMMENT. MUSSOMELI