MINING STRIKE ENDS BUT CHALLENGES REMAIN

UNCLAS LIMA 001805

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EMIN ELAB EINV ENRG PGOV ECON PE
SUBJECT: MINING STRIKE ENDS BUT CHALLENGES REMAIN


Sensitive But Unclassified, Please Handle Accordingly


1. (SBU) Summary: The recent strike by the National
Federation of Mining, Metallurgy, and Steel Workers ended
after the government promised to create a national
commission, headed by the Minister of Labor, to address
issues raised by the union. In public, union leaders
declared victory and noted that the GOP had already begun
plans to implement a Supreme Decree that tightens
restrictions on the use of sub-contractors in the mining
sector, a key union demand. In private, union officials and
MOL insiders admit that resolving long-standing and
complicated union complaints within the 60 days set by the
government is unlikely, in large part because the MOL lacks
the capacity to investigate and punish violations of labor
law. The GOP's inability to secure labor peace and regulate
one of the best-paid union sectors underscores the challenges
facing broader labor reforms and reflects the general
suspicion that most unions have of the Garcia Administration.
End Summary

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The Problem with Subcontracting
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2. (SBU) On April 30, the mining union announced an
indefinite strike and predicted more than 80,000 of the its
120,000 workers would take to the streets to demand a larger
share of end-of-year bonuses, increased funding for pensions,
and an end to plans to increase the retirement age. The
union's central demand, however, was for mining companies to
reduce the number of sub-contractors employed in core mining
activities. Union leaders claimed that between 40 to 70 per
cent of mine workers are sub-contractors who lack both the
labor benefits provided full-time workers and the right to
become union members. Union officials have long maintained
that extensive sub-contracting violates the spirit and letter
of the law, in particular Supreme Decree 003-2002-TR, which
prohibits subcontracting in the "principal activity" of a
mining concern. Spokesmen for mining companies dispute these
figures and insist the use of sub-contractors is in accord
with Peruvian law.


3. (SBU) The strike quickly fizzled. Less than one-fourth
of union members participated, and then only sporadically,
and the protests never garnered the national attention the
union sought. Commentators pointed out that the strike was
poorly timed -- it was announced over a three day weekend --
and the mining union lacks the political clout it had five
years ago. Union officials blamed the failure on ongoing
contract negotiations at several key mining sites, which drew
the attention of union members away from the strike. After
five days of desultory protests, the union grabbed the GOP's
offer of mediation.


4. (SBU) The GOP also undercut the rationale for the strike
by issuing Supreme Decree 008-2007-TR on April 27, which
further defines the principal and complementary activities of
mining companies. Principal activities are the productive
processes indispensable to the functioning and development of
the business; complementary activities are unconnected to the
core function and include security, marketing, and cleaning
services. Sub-contracting is permitted only in complementary
work. The AFL-CIO's Lima-based labor center called the
decree one of the most important changes in labor legislation
in the past five years.

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The Problem with Enforcement
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5. (SBU) Most observers doubt the government's ability to
enforce the law. One problem is the courts. Lima Labor
Court President Javier Aravalo told Poloff that it takes, on
average, five years for labor courts to resolve a union
complaint -- and sometimes much longer. Aravalo said the
Lima court knows how many cases are filed each year, but
lacks the technology to determine what kinds of cases are
filed or how the cases are resolved. A second problem is the
MOL's weak investigative capacity. Working-level contacts at
the MOL told Poloff that they do not know what percentage of
mining workers are sub-contractors, and the ministry lacks
sufficient inspectors to collect and track this data. The
same contacts said that, until recently, travel and per diem
expenses of government inspectors were paid by mining
companies.


6. (SBU) Union officials remain skeptical about how serious
the Garcia administration is about improving labor
conditions. Minister of Labor Pinilla announced in August
2006 that the MOL would double the number of labor inspectors
to 500 by December 2006, but as of April 2007, the Labor
Inspectorate had only 235 inspectors. On May 1, the
government launched the National Plan to Combat Forced Labor,
touted by Pinilla as a comprehensive effort to end forced
labor. Critics pointed out that the plan was a rehash of a
2005 report and contained no provisions to fund a nationwide
survey to document the extent of the problem. Organized
labor leaders claim the MOL retains an anti-union bias: in
2004, for example, the MOL declared 104 out of 107 strikes
illegal; in 2005, 63 out of 65; and in 2006, 65 out of 67.
In response to these criticisms, MOL officials say unions
frequently fail to complete the necessary paperwork on time.
The most recent mining strike also was declared illegal.

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Challenges Remain
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7. (SBU) Comment: The issues raised by the mining strike are
similar to those surrounding the proposed General Labor Law
(GLL). When the Labor Committee passed the GLL draft to the
plenary on May 8 (septel),many commentators criticized it as
attempting to legislate labor inflexibility. Minister
Pinilla characterized the text, including its attempt to
clarify language defining the use of sub-contractors in the
labor force, as "hopelessly muddled." Even if the plenary
resolves stubborn differences over the General Labor Law,
many observers -- and most union leaders -- doubt the GOP's
ability to enforce it. Skeptics believe President Garcia's
interest in labor legislation is tied to his wish to see the
Peru Free Trade Promotion Agreement approved by the U.S.
Congress, and will wane after that happens. Others
acknowledge the difficulties of re-constituting a system of
labor protections that has lain dormant for 15 years.
Whatever the case, future conflict arising out of labor
practices in the mining sector is almost inevitable. End
Comment
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