US embassy cable - 05GUATEMALA577

C O N F I D E N T I A L SECTION 01 OF 02 GUATEMALA 000577 
 
SIPDIS 
 
E.O. 12958: DECL: 03/04/2015 
TAGS: ELAB, ETRD, PREL, PGOV, EAID, GT 
SUBJECT: SMALL STEP FOR GUATEMALAN LABOR STANDARDS 
ENFORCEMENT 
 
REF: A. GUATEMALA 341 
 
     B. GUATEMALA 280 
     C. A/USTR PADILLA - OLSON E-MAIL 
 
Classified By: Ambassador Hamilton, Reason: 1.4 (D) 
 
1. (U) Summary:  Labor Courts have begun to impose fines on 
employers found by the Labor Inspectorate to be in 
non-compliance with the Labor Code.  This shows a measure of 
political will, but without increasing resources to the labor 
courts, this process does not represent a functioning system 
of Labor Code enforcement.  We continue to engage all levels 
of the government and private sector to achieve a solution 
that will return administrative sanction authority to the 
Labor Inspectorate.  We believe that A/USTR Padilla's offer 
to contact the business organization CACIF would be helpful. 
End summary. 
 
A kind of authority restored 
---------------------------- 
 
2. (U) The authority of the Guatemalan Labor Inspectorate 
(IGT) to assess fines on workplaces not in compliance with 
the Labor Code has been partially restored.  Although 
inspectors still cannot directly (or unilaterally) impose 
fines on non-compliant employers, they can now present 
reports of infractions to Labor Court judges for punitive 
measures. 
 
3. (U) During the week of February 28, the Fifth Labor Court 
imposed fines on eight employers for Labor Code violations 
committed during 2004.  These violations included illegal 
firings and failure to pay mandatory benefits.  The fines 
ranged from quetzales 2,052 to 3,570 (USD 266 to 464), based 
on multiples of the average monthly minimum wage.  By 
contrast, in the first three quarters of 2004, the IGT 
imposed 2,499 fines. 
 
4. (U) The umbrella business organization CACIF successfully 
challenged the IGT's sanction authority before the 
Constitutional Court in August 2004.  CACIF's position since 
then has been that the IGT could act on behalf of the 
judiciary, but that fines should not be imposed 
administratively.  CACIF leaders argue that this activity 
resolves the absence of sanction authority and that Guatemala 
now has a functioning Labor Code enforcement system. 
 
5. (C) This activity deviates from the Ministry of Labor's 
plan (ref A) to recommend that President Berger issue an 
executive order to restore sanction authority directly to the 
IGT.  That order, drafted by Ministry of Labor staff, remains 
on the desk of Minister of Labor Gallardo, who returns today 
from the regional Ministers of Labor meeting in Costa Rica. 
Gallardo told the Ambassador February 4 that he would 
recommend that the President issue that executive order. 
 
6. (C) Vice Minister Mario Gordillo, acting in Gallardo's 
place, told us March 2 that they withdrew the order from the 
Presidential Secretariat in order to follow a judicial 
solution.  Gordillo echoed the CACIF leadership's arguments 
that a Labor Code enforcement system is in place.  The 
Ministry of Labor's Legal Advisor told us March 3 that when 
he argued in favor of direct administrative authority via an 
executive order, Gordillo threatened to fire him if he did 
not cease communicating with us. 
 
7. (C) According to the Legal Advisor, Gordillo said that 
CACIF had assured him that the U.S. Government was "bluffing" 
and that CAFTA was too important to us to let this issue be a 
true obstacle.  Thus, Gordillo reportedly said, the judicial 
activity was sufficient.  The Ambassador advised Vice 
President Stein March 3 and Foreign Minister Briz on March 4 
that a functioning Labor Code enforcement system was indeed 
of real importance to the USG and urged for their collective 
action. 
 
Comment 
------- 
 
8. (U) There are 28 labor courts.  The eight fines approved 
this week are just baby steps toward resuming the rate of 
over 60 fines per week assessed by the labor inspectors prior 
to the August 2004 ruling.   We would have been pleased by 
this judicial approach had it been introduced several months 
ago as an emergency stopgap measure while legislation was 
drafted and approved.  To restore the level of Labor Code 
enforcement evident in the rate of fines imposed before 
August 2004, however, it is inadequate.  It represents a 
cumbersome additional step in the enforcement mechanism as a 
judge must hear the case and then issue a several-page legal 
decision.  The judicial system cannot handle thousands of 
cases per year without a major increase in resources. 
 
9. (C) We continue to engage CACIF on this issue, in hopes 
that they can reconcile their short-term goals with CAFTA 
passage.  We would welcome contact between A/USTR Padilla and 
CACIF, as Padilla offered in the ref (C) e-mail.  On the 
other side of the issue,  Guatemala's major labor 
organizations have been silent on this issue, although they 
have been active in opposition to CAFTA.  Indeed, the head of 
UASP, the largest such organization, was unaware of the issue 
until we briefed him March 3. 
HAMILTON