US embassy cable - 05GUATEMALA341

UNCLAS SECTION 01 OF 02 GUATEMALA 000341 
 
SIPDIS 
 
SENSITIVE 
 
USTR FOR CLATANOFF 
 
E.O. 12958: N/A 
TAGS: ELAB, ETRD, PREL, PGOV, EAID, GT 
SUBJECT: GUATEMALAN OPTIONS FOR LABOR STANDARDS ENFORCEMENT 
 
REF: A. GUATEMALA 280 
 
     B. GUATEMALA 56 
 
Sensitive but unclassified.  Please protect accordingly. 
 
1. (SBU) Summary:  The Government of Guatemala (GOG) has 
identified three approaches (not mutually exclusive) to 
reinstate the Labor Inspectorate's authority to impose fines 
on employers found to be in non-compliance with labor laws. 
The Minister of Labor -- in congruence with our 
recommendations -- will recommend that the President issue an 
executive order to restore that authority, followed by 
legislation to enshrine the intent of the order in the Labor 
Code.  While the Minister promised the Ambassador that the 
choice would come soon, we are working to ensure the 
President will forestall complicating litigation.  End 
summary. 
 
To resolve the question of sanction authority... 
--------------------------------------------- --- 
 
2. (U) As noted ref (A), Ministry of Labor (MOL) 
representatives submitted to the inter-agency Labor Relations 
Working Group (LRWG) on February 7 three complementary 
approaches to restore the Labor Inspectorate's sanction 
authority against companies not in compliance with Guatemalan 
labor law.  This authority had been removed by a 2004 
Constitutional Court ruling.  The three options are based on 
actions by the executive, legislature, and judiciary, 
respectively, and each potential course of action is 
described below.  These three potential courses of action 
were presented to the LRWG as separate options, but the 
Ministry of Labor representatives recommend that any 
executive decree should be institutionalized by legislation. 
 
3. (SBU) Congruent with our Ref (A) and (B) recommendations, 
the Minister of Labor told the Ambassador February 4 that he 
will advise President Berger to release an executive order 
that would restore sanction authority to the MOL, despite the 
failure of the LRWG to achieve a consensus.  The Minister 
will recommend that the executive order be followed by 
legislation to ensure that this authority and other advances 
in labor standards enforcement lost in the Court ruling are 
enshrined in the Labor Code in a constitutionally acceptable 
manner. 
 
4. (SBU) In addition to the official role of the Presidency 
in issuing executive orders and recommending legislation to 
Congress, MOL contacts note that he will also have to engage 
in a quiet lobbying campaign to prevent further legal 
challenges by the business community until legislation is 
formally adopted.  As described below in paras 6 and 7, MOL 
sources assure us that the President can issue such an 
executive order on the presumption of constitutionality. 
 
The Executive Course 
-------------------- 
 
5. (U) Although ref (A) discussed all of the Labor Code 
provisions struck down or amended by the Court decision, the 
majority of the Labor Code remained untouched.  Ref (A) noted 
that Article 271 retained the possibility of administrative 
sanctions by the Ministry of Labor.  More importantly, 
Article 415 -- which remains in force -- specifically 
authorizes the Labor Inspectorate to take direct action to 
address labor law infractions, in conformance with Article 
281, subsections L) and M), which also remain in force. 
 
6. (U) Article 281, subsections L) and M) authorize 
administrative sanctions by labor inspectors.  Subsection M) 
in particular describes the duties of labor inspectors and 
notes that non-compliance with labor inspectors' citations 
represent violations of labor law and that the Labor 
Inspectorate will sanction such violations under the 
authorization of Article 272, subsection G), which also 
remains in force.  Article 272, subsection G) represents the 
range of fines for labor code violations (between two and 
nine times the monthly minimum wage of non-agricultural 
workers for violating companies and between ten and twenty 
times the daily minimum wage of non-agricultural workers for 
violating employees). 
 
7. (U) Based on the authority described in paras 6 and 7, MOL 
contacts believe that the President has the authority to 
reauthorize the Labor Inspectorate to assess fines. 
 
The Legislative Course 
---------------------- 
 
8. (U) The Constitutional Court case highlighted the lack of 
clarity on many points in the Labor Code.  For this reason, 
the MOL will seek new legislation to restore sanction 
authority to the Ministry of Labor and to enact the pending 
2004 labor reform, based on ILO recommendations in regard to 
child labor, sexual harassment, discrimination, and domestic 
labor.  The 2004 reform package remains under review by the 
Tripartite Commission.  Once drafted, the new legislation 
would need consensus in the Tripartite Commission as well as 
in the LRWG before the executive would send it to Congress. 
 
The Judicial Course 
------------------- 
 
9. (SBU) Although the Constitutional Court ruling was based 
on the presumption that the Constitution reserves all 
sanction authority for the judiciary, Guatemalan lawyers tell 
us that, in fact, the Constitution explicitly states no such 
thing.  For this reason, Supreme Court staff attending the 
LRWG reportedly advocated the initiation of a judicial 
review.  While the Constitutional Court ruling is not itself 
eligible for review, interested parties could file a separate 
case regarding the activities of the Labor Inspectorate based 
on the same arguments used in paras 6 and 7, above. 
 
10. (SBU) Before the 2001 Labor Code reform, the Code indeed 
assigned the relevant sanction authority to the judiciary, 
based on agreements in the 1996 Peace Accords.  The 
inefficiencies of that system, however, led the International 
Labor Organization (ILO) to recommend the 2001 reform, 
specifically placing sanction authority with the Ministry of 
Labor.  Contacts in the MOL and in labor-related NGOs tell 
us, however, that they fear a judicial review might compound 
the Constitutional Court's decision should the reviewing 
Court make a ruling based solely on the agreements of the 
Peace Accords.  They suggest that such a ruling may set a 
precedent that the Labor Code could not be reformed at all. 
 
Comment 
------- 
 
11. (U) It appears that the GOG will opt for a combination of 
options one and two.  The Minister promised the Ambassador 
that executive action would, at a minimum, be taken, 
especially in view of CAFTA implications.  The MOL should be 
able to reauthorize the Labor Inspectorate's authority.  We 
will encourage the President's personal attention to 
demonstrate the Government's resolve on the issue and to 
forestall litigation by the business community. 
 
12. (U) Ministry of Labor sources appear most energized by 
the possibility of an executive order, but realize they 
should also draft legislation to enshrine the intent of the 
order in Guatemalan law.  Indeed, the GOG -- and in 
particular the MOL -- needs to address the slow pace of 
consultation and review regarding labor law legislation in 
general, in order to enact the pending 2004 reform package. 
MOL contacts assure us that they intend to develop such 
legislation regardless of which option becomes GOG policy. 
HAMILTON