JAMAICA: AUGUST LABOR REVIEW, PUBLIC SECTOR UNREST GROWS

UNCLAS SECTION 01 OF 03 KINGSTON 000648

SIPDIS
SENSITIVE

STATE FOR WHA/CAR (JMACK-WILSON) (BALVARADO) (VDEPIRRO) (WSMITH)
WHA/EPSC (MROONEY) (FCORNEILLE)
EEB/ESC/IEC/EPC (MCMANUS)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW
INR/RES (RWARNER)

E.O. 12958: N/A
TAGS: ELAB PGOV ECON EIND EFIN SCUL SOCI ASEC JM XL
SUBJECT: JAMAICA: AUGUST LABOR REVIEW, PUBLIC SECTOR UNREST GROWS

REF: A. KINGSTON 581

B. KINGSTON 504

C. KINGSTON 631

D. KINGSTON 638

D. KINGSTON 471

Summary and Conclusion:


1. (U) -- Prime Minister (PM) Bruce Golding reiterates promise not
to cut public sector jobs despite Government of Jamaica (GOJ)'s
worsening financial prospects.
-- National Workers Union (NWU) President Vincent Morrison expresses
skepticism toward PM's promise, expects GOJ austerity measures to
lead to public sector job losses.
-- Public sector workers to begin receiving enhanced fringe benefits
in September.
-- Caribbean Cement Company unable to meet monthly payroll on time;
hotel workers union claims "union busting."


2. (SBU) As Jamaica's economy continues to be buffeted by the
effects of the global economic slowdown, the potential for labor
unrest becomes more and more likely. The GOJ is attempting to
navigate the crisis through budgetary cuts and, potentially, an IMF
loan while avoiding widespread public sector job cuts that might
spark social unrest. However, public and private sector workers
might nevertheless come to feel that labor actions represent their
only avenue of redress in an economy that seems to be spiraling out
of control. End Summary and Conclusion.

Golding Promises To Maintain Public Sector Jobs
-------------- ---


3. (U) In his remarks before a newspaper editorial forum on August
25, the PM sought to alleviate fears that his August 20, 2009,
mandate that GOJ ministries cut 2009/2010 budgetary expenditures by
20 percent would result in public sector job losses. Faced with the
island's most daunting economic crisis since the 1930s and a
deteriorating balance of payments situation that is likely to force
a return to the International Monetary Fund (IMF) for the first time
since the 1990s (Reftel A),the PM affirmed that the GOJ's revenue
shortfalls - over USD 113 million since April - had forced it to
temporarily defer payment on some USD 90 million in goods and
services contracts with private businesses. The GOJ ministries are
to have their proposed expenditure cuts in to the PM by August
28,2009, with the revamped budget expected to be presented to
Parliament in early September.


4. (U) Golding described the public sector guarantee as a
"trade-off," given that his Jamaica Labour Party-led (JLP) GOJ had
reneged on a promised seven percent public sector wage increase
earlier in the year. Nevertheless, the PM still pledged to reduce
the 117,000 strong civil service - the wage bill for which consumes
almost 11 percent of Gross Domestic Product (GDP) - through early
retirement or voluntary redundancy programs. The PM acknowledged
that the two year-old JLP GOJ had failed to prevent the annual
public sector wage bill from increasing by over USD 460 million
since 2007. Maintaining that "[g]overnment is not simply there to
employ 117,000 people," Golding set as a medium term goal the
reduction of public sector employment to around nine percent of GDP
through voluntary cuts and economic growth.


5. (U) At an August 26 press conference at Jamaica House, Golding
and Finance Minister Audley Shaw appeared defensive in responding to
criticism from labor union leaders representing police and teachers.
"There are senior police officers whose salaries exceed that of
some of my ministers," Golding noted, while Shaw pointed out that
teachers had seen a 65 percent increase in their salaries since

2007.

Labor Unions Wary of GOJ Promises
--------------


6. (U) Golding's reassurances were met with skepticism by trade
unions representing civil servants. Morrison, whose NWU is
affiliated with the opposition People's National Party (PNP),
insisted that, given the magnitude of the proposed expenditure cuts,
Golding's GOJ would have no choice but to lay off government
employees. "We have heard the Prime Minister say no job cuts,"
Morrison told the Jamaica Observer newspaper, "but the Prime
Minister has said many things in the past and they don't hold."
Despite Golding's statements, Morrison alleged that GOJ ministries
were "collecting information pertaining to employees' years of
service, attendance, and a number of other questions which seem like

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staff cuts in the public sector is imminent."


7. (U) Implying that public sector job growth under the JLP was the
result of political cronyism and an overabundance of consultants,
Morrison called on the GOJ to use the proposed IMF funding for
public works projects rather than to stabilize Jamaica's balance of
payments as a means of bolstering employment and stimulating the
economy.


8. (U) Similarly, Sergeant Raymond Wilson, Chairman of the Police
Federation representing rank-and-file members of the Jamaica
Constabulary Force (JCF) reiterated that the police union was
refusing to accept the wage freeze as presented.

GOJ Bracing For Protests
--------------


9. (U) Meanwhile, Arthur Williams, the Minister of State in the
Ministry of Finance and the Public Service (MOFPS),told an August
24, 2009, meeting of the Jamaica Confederation of Trade Unions
(JCTU) that public sector employees would begin receiving increased
fringe benefits such as clothing and vehicle allowances in their
September paychecks (NOTE: Traditionally, a major portion of
Jamaican remuneration packages have consisted of fringe benefits and
allowances. Reftel B. END NOTE),but that the public sector wage
freeze that went into effect March 31, 2009, would remain in place
due to the GOJ's financial straits. Williams pledged that arrears
for the period April, 2008, to August, 2009, would be postponed
until the first quarter of the 2010-2011 financial year.


10. (U) In response, the Union of Schools, Agricultural and Allied
Workers (USAAW) announced its intent to issue a 10-day ultimatum to
the MOFPS demanding that past commitments be honored. The union
represents administrative and maintenance staff at several public
schools and community colleges, as well as railway workers and
municipal employees. The Jamaica Teachers Association (JTA) had
previously intimated that it was considering a strike that might
delay the September 7 beginning of the school year in response to
the GOJ's failure to make good on promises of back pay (Reftel C).

Cement Employees Paid Late, Hotel Workers Claim Union Busting
-------------- --------------


11. (U) The private sector Caribbean Cement Company (CCC) notified
its employees on August 24, 2009, that it would be unable to make
its monthly payroll on time, promising instead to try to pay its
workers no later than August 28, 2009. In announcing the delay, CCC
management blamed cash flow problems resulting from "sustained
contraction in the economy" and poor sales due to import competition
and slowdowns in the construction sector, but insisted that it
remained committed to the welfare of its employees.


12. (U) However, Navel Clarke, General Secretary of the Union of
Clerical, Administrative and Supervisory Employees (UCASE) that
represents over 80 CCC employees, was not convinced of CCC
management's sincerity. "On a matter of principle, the company
should have given the workers more notice," Clarke noted, although
it appeared unlikely that the union would propose a strike over the
issue.


13. (U) Meanwhile, 320 employees of Montego Bay's Iberostar Rose
Hall hotel were laid off on August 27 when management decided to
temporarily shutter the resort due to occupancy levels that had
fallen to sixteen percent. Although the Spanish-owned Iberostar
announced no plans to close its other Jamaican resorts, Lambert
Brown, president of the University and Allied Worker's Union (UAWU)
that represents many of the resort's employees, nevertheless decried
the move as union busting. "Had it not been," Brown claimed, "they
would have come to discuss the issue with us."

Conclusion
--------------


14. (SBU) As Jamaica's economy continues to be buffeted by the
effects of the global economic slowdown, the potential for labor
unrest becomes more and more likely. The GOJ is attempting to
navigate the crisis through budgetary cuts and, potentially, an IMF

KINGSTON 00000648 003 OF 003


loan while avoiding widespread public sector job cuts that might
spark social unrest. Given massive job losses in other sectors in
recent years - 50 percent in the sugar industry, 60 percent in
bauxite mining (Reftel D),and 90 percent in construction - as well
as fears for the tourism industry and the likelihood that the
impending privatization of Air Jamaica will result in layoffs as
well (Reftel E),the GOJ is hesitant to do anything that might lead
to a rise in unemployment. However, public and private sector
workers - pressured by inflation, frustrated by wage freezes, and
impatient over delayed arrears - might nevertheless come to feel
that labor actions represent their only avenue of redress in an
economy that seems to be spiraling out of control. End Comment.

Parnell