US embassy cable - 04MAPUTO713

UNCLAS SECTION 01 OF 02 MAPUTO 000713 
 
SIPDIS 
SENSITIVE 
STATE FOR AF/S 
USDOL FOR ILAB - BYOUNG, MMITTELHAUSER 
USDOC FOR AHILIGAS 
JOHANNESBURG FOR RLO - BNEULING 
PASS USAID FOR AA/AFR AND AFR/SA 
E.O. 12958: N/A 
TAGS: ELAB, ECON, MZ 
SUBJECT: DRAWING ATTENTION TO THE NEED FOR LABOR REFORM: A 
USG LABOR SEMINAR IN MOZAMBIQUE MARKS SUCCESS 
 
 
1. (U) SUMMARY. Productive to current labor law revision 
efforts, the USG launched a half-day labor seminar in 
Mozambique on May 5. The seminar featured participants from 
various sectors and included the fullday participation and 
attention of Minister of Labor, Mario Lampiao Sevene. 
Receiving more press attention than any other USG-funded 
event this year, the seminar focused on key recommendations 
for labor law reform. Labor law revision will reach 
completion by 2005. USG priorities for this process include 
the adoption of more liberalized labor policies that attract 
more foreign investment and encourage economic development. 
END SUMMARY. 
 
---------------------------- 
IMPRESSIVE GROUP OF ATTENDEES 
----------------------------- 
2.(U) On May 5, the USG hosted a 60-person labor seminar 
focused on the need for labor law reform in Mozambique. The 
USDOL-funded event, managed by USDOL and the Mission, 
invited over 80 participants from the Ministry of Labor, the 
Ministry of Industry and Commerce, the private sector, 
unions, donors, academics, and other organizations such as 
the International Labor Organization (ILO) and the 
Solidarity Center, to take part in the half-day event. 
Success was due in large part to the attendance and full 
participation of the Minister of Labor, Mario Lampiao 
Sevene, and a well-rounded and engaged audience of key 
players from business and unions, as well as a huge press 
presence. Coverage included spots on four national and 
international TV networks and press articles from over seven 
national publications. The seminar received overwhelming 
attention and positive feedback from all sectors. The GRM 
also announced that it has identified a working group for 
revision of the current Mozambican Labor Law, to be 
completed in 2005, a year earlier than previously planned. 
 
------ 
THEMES 
------ 
3.(U) In 2003, the USDOL selected four researchers to 
analyze and report on three themes related to the Mozambican 
labor system. USDOL has been very active in Mozambican 
labor programs and has most recently contracted the Federal 
Mediation and Conciliation Service (FMCS) to provide labor 
dispute resolution training to a tripartite group of 
government, union, and private sector representatives in 
Mozambique. (Additionally, USDOL funds a $900,000 HIV/AIDS 
prevention in the workplace program in Mozambique, Project 
Hope.) The themes presented were: the current labor system 
and recommendations for reform, a history of industrial- 
based bargaining in Mozambique and recommendations to 
improve its functioning, and a comparative analysis of labor 
laws and regulations in Mozambique, Kenya, South Africa, and 
Malaysia. 
 
------------ 
LABOR ISSUES 
------------ 
4.(U) The U.S. Ambassador to Mozambique opened the seminar 
with remarks aimed to encourage the GRM, through the 
Ministry of Labor, to reform the current labor system in 
order to make Mozambique more competitive regionally, 
thereby attracting greater foreign investment and reducing 
poverty. Following the Ambassador's remarks, Minister of 
Labor Mario Sevene gave a thoughtful speech on the current 
status of labor issues, the GRM's drive to move forward and 
effect change on specific labor legislation, the need for 
the worker and private sector communities to work with the 
Ministry to achieve this, and the timetable for the labor 
law revision. After formal remarks were given, authors 
presented their findings and key recommendations to the 
audience. This was followed by a wide-ranging and 
provocative discussion on labor issues: sick leave (which is 
unlimited in Mozambique); severance pay (a worker with six 
years and a day of service is entitled to one year's 
severance pay); the right to strike (where the ambiguity of 
the law deflects attention from real grievances to the 
legality of the action); heavy corruption in labor 
inspections (labor inspectors personally keep 25 percent of 
fines levied, and have great discretion over the amount of a 
given fine); the difficulty of hiring and firing of workers 
(as a general rule, only restructuring of a company provides 
the right to dismiss); and contracting of foreign labor 
(also a highly discretionary bureaucratic process that fuels 
corruption). 
 
------------ 
WHAT'S WRONG 
------------ 
5. (SBU) Although the Mozambican labor system is 
theoretically pro-worker, many of its provisions are 
ambiguous and complicated, raising the costs of employment 
in the formal sector without providing any commensurate 
benefits to either the employer or the worker. To make 
matters worse, it is a major roadblock to foreign 
investment, particularly the kind of labor-intensive 
investment that would create new jobs. The law reflects 
inward-looking socialist policies, not competitive with 
other countries in the region. There is widespread 
frustration in the private sector and donor communities that 
the GRM is not moving quickly enough to promote reform that 
will open Mozambique's economy and allow for economic 
growth, an influx of small-to-medium sized firms, an overall 
increase in employment, and increased production. Minister 
Sevene's full-day presence at the seminar captured each 
participant's attention, as the Minister rarely attends such 
events in their entirety. We hope it signals, after 
significant delays, the Ministry's commitment to making 
positive labor law change happen by 2005. 
 
----------- 
A GOOD STEP 
----------- 
6. (U) Although many of the issues discussed during the day 
have been on the table for some time, this seminar, by 
bringing together powerful players from the government and 
private sector, gave significant new impetus to lagging 
reform efforts. It also reflected a growing understanding 
from all involved on the need to stimulate employment, and 
that radical reform has to come quickly if Mozambique is to 
produce the jobs required for broad based, poverty-reducing 
growth. 
LA LIME