US embassy cable - 05TEGUCIGALPA767

UNCLAS SECTION 01 OF 03 TEGUCIGALPA 000767 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR DRL/IL, DRL/PHD, EB, WHA/PPC, AND WHA/CEN 
STATE PASS AID FOR LAC/CAM 
TREASURY FOR DDOUGLASS 
DOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB, PGOV, ECON, PHUM, PREL, SOCI, HO 
SUBJECT:  Honduran Public Sector Unions Continue Large Labor 
Protest Over Alleged Back Pay; GOH Stands Firm 
 
 
1. (SBU) Summary:  A public employees union labor action 
that began in mid-March is ongoing and increasingly 
problematic for the GOH.  Approximately 37,000 public 
employees from various government offices in Tegucigalpa are 
participating.  Public Workers, led by the public employees 
union ANDEPH, are demanding salary increases allegedly due 
since 2001.  The GOH has been firm that there is no back pay 
owed.  Protesters have taken over or threatened to take over 
government ministries, and conducted temporary roadblocks 
and multiple protests outside Congress, the Presidential 
Palace, and the Supreme Court.  A unified GOH stance against 
the protesters, in part necessitated by the tight fiscal 
disciplines imposed by the IMF means that, unlike the summer 
2004 concessions to the teachers, it is doubtful that the 
GOH will accede to what appear to be baseless demands by 
public sector unions.  End Summary. 
 
Public Sector Unions Claim 2000 Decree Applies to Them 
--------------------------------------------- --------- 
 
2. (U) A public employees union labor action that began in 
mid-March is ongoing and increasingly problematic for the 
GOH.  Approximately 37,000 public employees from various 
government offices in Tegucigalpa are participating.  Public 
Workers, led by the public employees union ANDEPH, are 
demanding salary increases allegedly due since 2001.  ANDEPH 
claims that back salaries owed total some 620 million 
lempiras (over USD 33 million, some 21,000.00 lempiras or 
USD 1,120 per employee) for 37,000 public workers. 
 
3. (U) Two different GOH decrees from fall 2000 (under the 
previous Flores Administration) are at play in this dispute. 
One is Decree 139-2000, approved in September 2000, when the 
GOH approved the increase of salaries for those public 
employees under the civil service law; raises ranged from 
750 to 2,000 lempiras (USD 50 to 134).  Decree 139-2000 
covered public employees only and did not include private 
sector employees.  Two months later, in November 2000, 
Decree 180-2000 was approved as a result of negotiations 
between unions and employers in the private sector when 
average salaries there were raised by 350 lempiras (USD 23). 
The decree only applied to private sector workers and the 
GOH participated in the negotiations in a mediator role. 
 
4. (U) Public workers argue that Decree 180-2000 should have 
been made effective for them since April 2001; they argue 
that the adjustment was for all employees in view of the 
poor state of the economy since Hurricane Mitch in 1998. 
Minister of Labor German Leitzelar argues that the 
government did not and could not have granted two public 
sector salary increases in a period of two months during the 
same year.  He has emphatically stated that Decree 180-2000 
does not apply to public sector employees but rather only to 
private sector employees.  However, ANDEPH leaders argue 
that their members are included in decree 180-2000. 
 
5. (U) Minister Leitzelar suggested that ANDEPH ask for a 
legal interpretation of the Decree 180-2000 by the Supreme 
Court or accept arbitration, but ANDEPH refused arbitration. 
Leitzelar said that if the Supreme Court were to rule in 
favor of ANDEPH, the GOH will have no other alternative but 
to accept the ruling.  However, with the protests showing no 
signs of abating and no Supreme Court action on the issue, 
Leitzelar may be forced to declare the strikes illegal 
before they bring the GOH to a standstill.  Due to the labor 
protests, Leitzelar had to cancel his participation in the 
Central American Labor Ministers trip to Washington, DC 
April 4-6 for the unveiling of the Inter-American 
Development Bank "white paper" on labor conditions in 
countries in the Central American Free Trade Agreement 
(CAFTA-DR). 
 
6. (U) The government's legal representative, Solicitor 
General Sergio Zavala Leiva, submitted a request to Minister 
Leitzelar, asking him to declare the ANDEPH strike illegal. 
Zavala argues that ANDEPH violated the internal framework of 
the labor law by refusing to sit down and negotiate the 
conflict.  The Labor Ministry must analyze the documentation 
presented by Zavala and decide whether or not to declare the 
strike illegal.  Zavala indicated that he hopes that a 
mediator will still be appointed to mediate the conflict. 
Some press reports allege that ANDEPH offered several 
million lempiras to certain people with influence in the 
government in order to force the GOH to grant the salary 
increase allegedly owed to their members since 2001. 
 
Protesters Take to the Streets (and Ministries) 
--------------------------------------------- -- 
 
7. (U) Protesters have taken over or threatened to take over 
government ministries, blocked roads, and conducted multiple 
protests outside Congress, the Presidential Palace, and the 
Supreme Court.  Some 3,000 public nurses from around the 
country have also joined the strike, complicating matters 
for the GOH.  Minister of Health Merlin Fernandez is calling 
for directors of hospitals in the country to prepare 
contingency plans so that patients continue to receive care. 
However, if the need arises, the GOH is prepared to call 
upon the military and the Red Cross to help treat patients. 
The growing backlog and lack of medical assistance at public 
hospitals is forcing hospital administrators to consider 
moving patients to private hospitals or hiring private 
medical/administrative workers in order to provide basic 
health care. 
 
8. (U) President Ricardo Maduro met with his cabinet on 
March 6, prior to leaving the country to attend Pope John 
Paul II's funeral, to discuss a draft emergency decree to 
staff public hospitals with contract workers who are not 
part of the strikes.  In addition, military medical and 
nursing personnel may be called if necessary and also 
personnel from private hospitals.  ANDEPH authorities 
reacted to the emergency decree with more threats and 
protests. 
 
9. (U) Supreme Court employees protested April 4 for several 
hours, but were compelled to end their protest by Article 
319 of the Constitution, which states that judicial branch 
employees may not go on strike.  Public teachers unions, 
notorious for multiple labor protests, have also threatened 
to join the protests.  Teachers hope to meet with the 
Education Minister shortly to press for re-negotiation of 
the Teacher's Statutes covering pay and benefits and 
agreements reached with the GOH last year on teacher's 
salaries.  Under its agreement with the IMF, the GOH must 
craft and implement a plan by 2007 to curb runaway growth in 
public sector wages, particularly for teachers and doctors. 
The unions claim that the IMF is trying to do away with 
previously won salary concessions from the GOH. 
 
10. (U) On April 5, a small number of national university 
(UNAH) students belonging to the so-called United 
Revolutionary Front damaged a car and burned tires during a 
takeover at the University protesting the increases in 
gasoline prices.  The actions caused bottlenecks and traffic 
jams for many hours.  On April 6, a number of students from 
Instituto Central Vicente Caceres protested with a takeover 
of the main highway to the North Coast and almost got into 
fights with taxi drivers and truck drivers who were trying 
to get to the other side of the capital.  Police were called 
in to restore order. 
 
11. (SBU) Minister of Finance William Chong Wong said April 
6 that there is no way for the government to apply Decree 
180-2000 to public employees.  To do so, he said, would 
break GOH commitments with the IMF and World Bank.  (Note: 
Successful adherence to these agreements led to Honduras' 
April 5 attainment of the Heavily Indebted Poor Countries 
(HIPC) Completion Point, permitting them to approach the 
Paris Club for debt forgiveness of up to USD one billion.  A 
loss of fiscal discipline (such as significant wage hikes 
for the public sector) could be disastrous for the GOH at 
this critical juncture, costing them hard-earned credibility 
and slowing or halting debt forgiveness talks with donors. 
End Note.) 
 
12. (U) On April 6 the GOH posted some 1,200 soldiers and 
police to prevent takeovers by protesters at most government 
offices, including the Ministries of Health, Labor, 
Education, the tax offices (DEI), the National University 
(UNAH), the public hospitals, and the main offices of the 
water authority (SANAA). 
 
United GOH Unlikely to Cave In 
------------------------------ 
 
13. (SBU) Comment:  The ongoing public employees wage 
protests, combined with protests against rising fuel and 
consumer goods prices, are problematic for the GOH. 
Negotiations also continue between transportation leaders 
and the GOH over fuel costs, including high fuel taxes. 
Despite these acute pressures, the GOH has thus far 
maintained a unified stance against the protesters, in part 
necessitated by the tight fiscal disciplines imposed by the 
IMF.  In Post's view, and in contrast to the summer 2004 
concessions to the teachers, it is doubtful that the GOH 
will accede to what appear to be baseless demands by public 
sector unions.  However, the protests could pose a threat to 
the National Party's hopes to win a second term in the 
presidency.  If its candidate, President of Congress Pepe 
Lobo, starts to slip in the polls, it will be interesting to 
see how the GOH will react.  In fact, Congress proposed 
April 7 establishing a commission of representatives from 
the GOH, Congress, and public employees unions to discuss 
the salary issue.  End Comment. 
 
Palmer