NEGOTIATIONS CONTINUE OVER PORT OF SALALAH STRIKE

C O N F I D E N T I A L SECTION 01 OF 02 MUSCAT 000531 SIPDIS SIPDIS DEPARTMENT FOR NEA/ARP, NEA/PI FOR SFRANCESKI AND RKAPLAN, DRL FOR AANZALDUA USTR FOR JBUNTIN AND AROSENBERG DOL FOR JSHEA, BSHEPARD AND JRUDE E.O. 12958: DECL: 05/29/2017 TAGS: PGOV PHUM ELAB ETRD KMPI MU SUBJECT: NEGOTIATIONS CONTINUE OVER PORT OF SALALAH STRIKE REF: A. MUSCAT 473 ¶B. 05 MUSCAT 1874 ¶C. MUSCAT 387 Classified By: Ambassador Gary A. Grappo, reasons 1.4 b/d. ¶1. (SBU) Summary: Officials from the Port of Salalah are close to reaching an agreement with relevant government ministries and institutions over outstanding issues stemming from the recent strike at the port. Port management has taken steps to protect itself from future work stoppages and assure international shipping lines that its labor relations are under control. While an eventual agreement may meet some of the workers' demands, contacts see a role for the U.S. in helping to build mechanisms for communication between management and labor in order to avoid future strikes and labor unrest. End summary. ¶2. (C) Fifteen days after the reported resolution of the strike at Port of Salalah, contacts say that the port's management is continuing negotiations with the Omani government over the status and demands of almost 270 workers involved in the May 11-12 strike (ref A). A committee comprised of officials from the Port of Salalah, the Ministries of Manpower (MOM) and Transportation and Communication (MOTC),and Salalah's representatives to the Majlis as Shura (Shura) - the lower house of Oman's bicameral advisory body - is spearheading the negotiations and reportedly is close to reaching an agreement. Ahmed Akaak (protect),Director of Human Resources for Salalah Port Services, stated that as part of a final agreement, the port likely will accede to some of the workers' demands for increased wages and other benefits and allow most of the workers to return to their jobs. Citing the fact that the MOM declared the strike illegal, however, Akaak added that the port may demand the right to terminate six to nine of the strike leaders. ¶3. (C) Contacts stated that the port's management had entered negotiations prepared to fire all of the workers who had participated in the strike and refused to return to work. (Note: Post initially reported that 70-90 truck drivers and crane operators from the day shift formed the bulk of the strikers; port officials later asserted that an equal number of workers from each of the port's three shifts subsequently became involved. End note.) Contacts claimed that after two strikes in under two years (ref B),management felt that a strong response was necessary to prevent future work stoppages and to assure international shipping lines that the labor situation at the port was stable and under control. The port's Chief Operating Officer told poloff that Maersk, the company which accounts for 70% of the port's business and is expected to fill most of the port's extra capacity as it expands (ref C),had expressed deep concerns about increasing its commitments to the port in an environment of continuing labor uncertainty. ¶4. (C) Akaak stated that although the port's management now was willing to let most of the workers return to their jobs, it wanted to make clear that a "small group of workers would not be allowed to control the company." Akaak said that all employee contracts now specify that workers are not allowed to engage in "illegal strikes" as defined in Ministerial Decision 294. In addition, the port has sped up plans to train multiple employees to operate trucks and cranes so that the port will always have a cadre of trained personnel ready to keep the port operating near capacity. Finally, port officials say they are considering hiring more expatriate drivers and crane operators, and have asked the MOM to waive the 70% Omanization quota for those positions. ¶5. (SBU) Contacts state that many of the workers who engaged in the strike continue to insist that the port's management meet their full demands before they will return to work. Port workers, however, are not directly involved in the committee negotiations, but are represented by the Shura delegates from Salalah, who also are acting as mediators. Sa'id al-Shahry (protect),a partner in one of Muscat's major law firms and a Shura member, described the non-unionized workers as disorganized and unfamiliar with their rights and responsibilities under recently-enacted labor reforms. Shahry said that in his view, the committee's main priority is to resolve the strike in a way that minimizes the negative effects on all parties -- the workers, port, and the community of Salalah, which relies on the port for over 80% of its private sector jobs. MUSCAT 00000531 002 OF 002 ¶6. (SBU) In a conversation with the Ambassador during his recent trip to Salalah, Shahry stated that once the committee finishes its work, the long-term challenge will be to create recognized and effective lines of communication between management and workers so that strikes like this one can be averted. He remarked that the U.S. could play a constructive role in helping to educate and inform both workers and management about their rights and responsibilities, as well as the need for continuing dialogue over conditions of work. ¶7. (C) Comment and Recommendation: The strike and subsequent negotiations in Salalah highlight a number of issues that government, business and labor should address as labor relations in Oman evolve. Contacts say that the MOM was unprepared to mediate the strike, and that its officials lacked basic skills in dispute resolution. In the absence of a strong mediator, and without effective and informed union leadership to organize the workers, the parties were forced to rely on ad hoc measures and institutions unfamiliar with labor issues to try to resolve the strike. Moreover, as Shahry pointed out, the strike might have been averted if management and labor had held regular discussions about labor conditions. USG engagement and assistance to build the capacity of MOM mediators and unions, and to help develop mechanisms for effective workplace communication, would go a long way in avoiding future labor unrest and ensuring the success of labor reforms enacted as part of the U.S.-Oman Free Trade Agreement. End comment. GRAPPO