PANAMA: LABOR INFORMATION FOR DOL'S FTA REPORTING

UNCLAS PANAMA 000269

SIPDIS

SIPDIS

DEPARTMENT OF STATE FOR DRL/ILCSR (GABRIELLA RIGG) AND
WHA/PPC (MIKE PUCCETTI)
DEPARTMENT OF LABOR FOR DOL/ILAB (THERESA ESQUIBEL)

E.O. 12958: N/A
TAGS: ELAB OTRA PM
SUBJECT: PANAMA: LABOR INFORMATION FOR DOL'S FTA REPORTING
REQUIREMENTS

REF: STATE 7326


1. (U) Per reftel instructions, updated information on labor
conditions in Panama follows. Responses are listed by the
order given in reftel.

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LEGAL FRAMEWORK
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2. (U) We know of no further developments to implement the
suggested changes made by the ILO Committee of Experts in

2005. According to the Panamanian Ministry of Labor
(MITRADEL),the minimum number of members needed to form a
union (40) was the result of a consensus that originated with
Law 44 of 1995. MITRADEL notes that employers had originally
requested a minimum of 50 members. MITRADEL also states that
worker groups consider the suggested minimum number (20)
would mean dispersing the unions. MITRADEL maintains that
any effort to change the current minimum number should come
from the employers and workers who formed the consensus.


3. (U) The 2005 legislation to create a new Labor Security
and Health Council continues to await action by the National
Assembly. According to MITRADEL, the legislation was
proposed when the country was in the midst of the national
social security reform debate, and it was not considered
appropriate to introduce another element into the discussion.
Subsequent issues (including the late 2006 deaths of more
than 50 Panamanians from contaminated GOP-produced medicines)
have affected the national healthcare system, further
postponing the progress of the legislation. A new commission
to oversee national health issues has been created to put
forth proposals for broad reform of Panama's healthcare
system. MITRADEL believes that this commission may consider
the Council legislation for further action.


4. (U) MITRADEL provided numerous files for Supreme Court
cases regarding labor. However, labor lawyers said that
there had been no significant changes to labor law. The most
relevant case involves the October 2006 Supreme Court ruling
that Article 75 of Law 8 of 1998 was unconstitutional. This
ruling held that the non-obligation of shipowners to sign
collective agreements violated the right to join a union and
the right to strike. According to maritime law experts, this
ruling protects the right to strike for workers at sea and on
navigable waterways.

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ADMINISTRATION OF LABOR LAW
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5. (U) Hourly minimum wage rates, as established by
Executive Decree 7 in March 2006, are as follows:

Economic Activity- Region 1, Region 2, Region 3

-Agriculture, Farming, Hunting- 0.89, 0.89, 0.89 (small
business),0.94, 0.94, 0.94 (large business)
-Fishing- 1.17, 1.17, 1.17
-Mining- 1.37, 1.16, 1.16
-Manufacturing industries- 1.27, 1.06, 0.93 (small business),
1.36, 1.13, 1.03 (large business)
-Baking, Breadmaking- 1.26, 1.06, 0.93 (small business),
1.34, 1.13, 1.03 (large business)
-Garment Manufacturing, Wood Manufacturing, Furnituremaking,
Food Production- 1.26, 1.06, 0.93 (small business),1.35,
1.13, 1.03 (large business)
-Electricity, Gas, Water- 1.38, 1.17, 1.05
-Construction- 1.68, 1.48, 1.33
-Wholesale and Commission Trade- 1.37, 1.12, 1.00
-Retail and Hotel Trade- 1.29, 1.07, 0.93 (small business),
1.37, 1.11, 1.00 (large business)
-Restaurants- 1.27, 1.06, 0.93 (small business),1.36, 1.11,
0.99 (large business)
-Transportation- 1.37, 1.16, 1.00
-Transportation by Water, Air, and Activities Complementary
to Water and Air Transportation- 1.39, 1.17, 1.02
-Stores, Warehouses, Couriers- 1.37, 1.16, 1.00
-Telecommunications and Network Maintenance- 1.38, 1.17, 1.02
-Financial intermediaries- 1.38, 1.35, 1.34
-Savings and Credit Cooperatives- 1.37, 1.34, 1.34
-Real Estate Activities- 1.38, 1.35, 1.34
-Renting, Leasing Activities- 1.37, 1.34, 1.33
-Business Activities- 1.39, 1.36, 1.35
-Community, Social, and Personal Services- 1.35, 1.13, 0.99
-Discotheques, Amusement Parks, Casinos- 1.36, 1.14, 0.99

-Monthly minimum wage for domestic service is $119 for
Panama, Colon, and San Miguelito, and $106 for the rest of
the country.

-Region 1 includes Panama, Colon, and San Miguelito. Region
2 includes Chitre, Las Tablas, Aguadulce, Nata, Penonome,
Santiago, Baru, Bugaba, David, Changuinola, Capira, Chepo,
Arraijan, La Chorrera, and Taboga. Region 3 is all other
parts of the country. Small businesses are those with ten or
fewer employees.

-The highest hourly minimum wage rates are given in the
construction sector, while the lowest hourly minimum wage
rates are given in the agriculture and farming sectors.


6. (U) MITRADEL did not provide information on average
hourly wages. However, based on press reports, the average
monthly minimum wage rate is now $285, an increase of 8
percent over the 2003 rate of $263.


7. (U) Executive Decree 13, dated April 28, 2006,
established for the first time a minimum wage for public
sector employees. These rates will go into effect July 1,

2007. Average monthly salaries, according to the Comptroller
General, were:

Year: Total/Central Government/Autonomous and
Semiautonomous/Municipal

-2003: 640.33/507.90/867.72/360.19
-2004: 646.35/508.64/881.87/361.26
-2005: 664.94/520.74/924.90/352.60


8. (U) MITRADEL currently has 67 labor inspectors at the
national level. MITRADEL carried out 8,398 labor inspections
in 2005 and 10,463 labor inspections in 2006.


9. (U) According to MITRADEL, it does not carry out labor
inspections on Panamanian-flagged carriers. Maritime
inspections are carried out by the Panama Maritime Authority.


10. (U) MITRADEL did not provide a specific answer on the
status of the maritime labor courts, answering that labor
tribunals fall under the judicial branch. Labor lawyers say
that there are two maritime courts in existence, but these
lawyers believe these courts do not handle labor cases.


11. (U) According to MITRADEL's Conciliation and Decision
Boards, in 2006 2,668 lawsuits were filed and 1,599 hearings
were held, with 623 sentences in favor of workers and 504 in
favor of employers. A total of 472 cases were reconciled
outside of court.


12. (U) MITRADEL said that the judicial system on labor
issues falls under the judicial branch. The Directorate
General of Labor and the Conciliation and Decisions Boards in
MITRADEL reported no complaints on delays in the judicial
system. Labor lawyers reported delays in the judicial system
have improved but are still running from 3-6 months.
According to the labor lawyers, MITRADEL has improved
alternate dispute resolution training and hired additional
personnel, and this has helped to decrease delays.


13. (U) MITRADEL's Department of Socioeconomic Integration
of Persons with Disabilities develops promotion and awareness
activities on a national level. The Department holds
interviews, meetings, plenary sessions, talks, training, and
other informational activities aimed at the private sector,
national authorities, organizations and other government
entities to promote progress toward the hiring of persons
with disabilities.


14. (U) In 2005, MITRADEL registered two new unions and no
new federations or confederations. In 2006, MITRADEL
registered two new unions and one new confederation.
Currently, there are 677 unions, 62 federations, and 11
confederations registered with MITRADEL.

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FREEDOM OF ASSOCIATION
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15. (U) Reliable statistics on the number and percent of the
country's workforce that is member to a union do not exist.
The government does not maintain such records. MITRADEL
estimates that the number of people employed in private
business, as of March 2006, is 534,219, of which 14 percent
are affiliated to union organizations. Union representatives

put the percentage at about 10 percent. Other estimates
range from 8 to 12 percent.


16. (U) According to MITRADEL, there were two unions in the
EPZs that were registered. However, these unions are now
inactive because the companies where the unions were located
have ceased operations.


17. (U) Statistics on the number of employees who are
members of employee associations do not exist. MITRADEL does
not register associations of employees.


18. (U) In 2005, some 14 strikes were declared, and one was
actually carried out. In 2006, some 25 strikes were
declared, and three were carried out. Workers carried out
strikes because they and the employers could not reach
agreement on specific points in the submitted List of
Petitions. Twenty workers participated in the 2005 strike,
which lasted four days, and 395 workers participated in the
2006 strikes, which lasted nine days.


19. (U) According to the Supreme Court ruling mentioned
above in paragraph 4, workers at sea do have the right to
strike. Maritime labor lawyers did not know of specific
documents given to workers informing them of their right to
strike. Because the ruling happened late in 2006, the labor
lawyers think that the unions were delayed in informing the
workers of this ruling, but will do so. They knew of no
maritime labor strikes.

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RIGHT TO ORGANIZE AND BARGAIN COLLECTIVELY
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20. (U) According to MITRADEL, 73 collective bargaining
agreements were signed in 2006, the same number as in 2005.
These agreements were from the private sector. There were no
collective agreements in the EPZs. There was one agreement
in 2006 in the call centers; there were none in 2005. There
were none in the Canal area.


21. (U) As mentioned above, reliable statistics are not
available, but estimates range from 8 to 12 percent on the
number of workers covered by an active union. Currently, the
two EPZ unions are no longer active.


22. (U) In 2005, MITRADEL provided mediation assistance in
122 cases, 25 of which resulted in a collective bargaining
agreement. MITRADEL provided mediation assistance in 115
cases in 2006, 24 of which resulted in a collective
bargaining agreement.


23. (U) In 2005, there were 16 direct agreements between
employers and a non-union group of employees. In 2006, there
were 24 such agreements.


24. (U) Law 9, Article 136 of 1994 grants public
administrative career employees the right to "integrate to
associations to promote and dignify the public employee." It
also prohibits the "favoring, hindering, or influencing in
any way, the affiliation or non-affiliation of public
employee associations."


25. (U) According to MITRADEL, such forms of anti-union
discrimination do not exist in Panama "at a significant
level." Labor union leaders and lawyers say that they do not
doubt that some such discrimination may occur, but they know
of no particular cases.

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PROHIBITION OF FORCED OR COMPULSORY LABOR
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26. (U) There have been no credible reports of forced labor
in Panama. Trafficking in persons continues to follow the
patterns cited in the 2005 Human Rights Report and the 2006
Trafficking in Persons Report. Reliable statistics for
trafficking do not exist; however, for 2006, as of December,
the Sex Crimes Unit of the Judicial Technical Police
investigated 5 cases of sexual trafficking, mostly involving
Colombian women, 24 cases of child pornography, 21 cases of
procurement for commercial sexual activities, 4 cases of sex
tourism, and 8 cases of child molestation. In January 2007,
Panama had its first trafficking in persons conviction.
ILO-IPEC has sponsored a number of awareness and capacity
building activities in Panama in 2006, including media
campaigns and the inclusion of anti-trafficking programs in
some public schools.


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ELIMINATION OF THE WORST FORMS OF CHILD LABOR
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27. (U) Reliable statistics on child labor continue to be
scarce. According to a 2005 study by the Comptroller
General's office, 10.5 percent of children ages 10-17 years
were employed in 2004 and 11.6 percent were employed in 2005.
In the same population group, 9.6 percent of non-indigenous
children were employed in 2004, compared with 19.8 percent of
indigenous. In 2005, 9,9 percent of non-indigenous and 27.6
percent of indigenous children were employed. From these
numbers, the study indicated that 47.6 percent were employed
in a family setting, 27.8 percent were formal employees, and
24.5 percent were self employed. In 2006, MITRADEL performed
369 inspections of businesses in Panama City to ensure
compliance with child labor regulations, plus 139 inspections
in the interior of the country. The GOP, along with the ILO
and the non-governmental organization Casa Esperanza funded
an anti-child labor awareness campaign. Casa Esperanza
operated 56 centers throughout the country to reduce child
labor, and through the DESTINO project operated 41
educational centers for children and youth.

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ACCEPTABLE CONDITIONS OF WORK
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28. (U) From September 2005 to August 2006, MITRADEL
registered 89 workplace accidents, 9 fatal accidents, 30
incapacitating accidents, and 6 cases of workplace-related
illnesses. The majority of accidents were in the
construction industry, according to MITRADEL.


29. (U) According to labor union leaders and lawyers, denial
of worker rights to indigenous people can happen in the cases
of migrant agricultural workers, who do not work under formal
contracts. They said that they do not know of cases of
denial of worker rights to indigenous people outside of such
circumstances.

Eaton