UNION STRIKE IN CAVITE CLOSES WALMART SUPPLIER

UNCLAS MANILA 001949 SIPDIS SIPDIS SENSITIVE STATE FOR EAP/MTS, DRL LABOR FOR ILAB E.O. 12958: N/A TAGS: ELAB PHUM EINV RP SUBJECT: UNION STRIKE IN CAVITE CLOSES WALMART SUPPLIER REF: 06 MANILA 4558 ¶1. (U) Summary: In face of an ongoing strike by "United Workers of Chong Won Fashion" in the Cavite Economic Zone (CEZ),Walmart has canceled its orders with the Korean-owned firm, which has shut down operations altogether. The labor difficulties in Cavite have not scared off foreign investors, and other Korean and Chinese investors in particular will likely continue to open up shop in the Philippines. End Summary. -------------- DWINDLING STRIKERS AFTER A LONG HAUL -------------- ¶2. (U) Fired union members of Chong Won Fashion, which recently changed its name to C. Woo, Inc., continue to strike outside the premises of the factory in the CEZ. However, the number of strikers present at the site has dwindled to between only two and five strikers per day. Many of the discharged union workers have since found other sources of employment due to the prolonged nature of the strike, which started on September 25, 2006. ¶3. (U) Management of the CEZ has barred all union strikers from entering the zone, forcing the few remaining striking workers to build shacks, which serve as temporary homes, inside the CEZ. These strikers depend on colleagues and friends outside the zone to deliver food and other basic necessities, using fake identification badges to gain entrance to the zone. They are subject to imprisonment if caught by the CEZ security force, which has happened, but usually only for overnight. ¶4. (U) The union originally requested certification in 2002, but the company responded by terminating more than half of the union members and the majority of the union's officers. The firing included senior workers, some of whom had worked for Chong Won since its opening in 1990. The union eventually received certification in July 2005, when the Department of Labor and Employment (DOLE) issued a judgment certifying it as sole and exclusive bargaining representative of the workers at the factory. ¶5. (U) Despite the union's numerous letters of intent to management in order to start collective bargaining negotiation, Chong Won refused to negotiate, and appealed the DOLE certification decision. A resolution by the National Labor Relations Commission canceled the union's certification on February 6, 2007. The union has filed an appeal and awaits a decision. -------------- WALMART CANCELS FUTURE ORDERS -------------- ¶6. (SBU) Walmart, which indirectly purchases Chong Won's products through One Step Up, a Korean supplier, signed a Memorandum of Understanding with One Step Up in March 2007 stipulating, among other conditions, that Chong Won would reinstate all striking workers and negotiate a collective bargaining agreement with the union members. According to Edwina Reunilla, Walmart's representative in the Philippines, Chong Won refused to abide by Walmart's memorandum with the supplier. Consequently, as of April 2007, Walmart ceased all orders originating with Chong Won. According to CEZ Administrator Cecille Velena, Chong Won subsequently closed its operations indefinitely. -------------- COMMENT -------------- ¶7. (SBU) Labor unions have represented a declining percentage of Philippine workers for many years, in large part due to their inability to deliver on promises. Chong Won's approach in dealing with its unionized workers is not atypical of how some companies in the Philippines deal with labor disputes. Companies, especially those hiring low-skill workers, can often end operations, opening again elsewhere, rather than work with union groups. Thus, despite some media attention here, the Chong Won case has probably not scared off foreign investors. Other investors, particularly Koreans and Chinese, likely will continue to open up shop in the Philippines, especially in the relatively "safe" zones under the Philippine Economic Zone Authority. KENNEY