US embassy cable - 02TEGUCIGALPA3276

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 003276 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR DRL/IL, WHA/PPC, WHA/EPSC, AND WHA/CEN 
STATE PASS USTR 
DOL FOR ILAB 
USDA FOR FAS 
GUATEMALA FOR AGATT 
 
E.O. 12958: N/A 
TAGS: ELAB, EINV, EAGR, ETRD, PGOV, PHUM, HO 
SUBJECT: LABOR PROBLEMS AT CHIQUITA: MANAGEMENT BEGINS 
DISCUSSIONS WITH UNION TO DISMISS ALLEGEDLY ABSENTEE WORKERS 
 
REF: TEGUCIGALPA 1861 
 
1. (SBU) Summary:  Chiquita and its union have begun 
case-by-case discussions over the contentious issue of 
alleged absenteeism by a high percentage of its workforce. 
EmbOffs recently toured Chiquita's plantation and met with 
both management and labor.  EmbOffs urged them to continue 
dialogue.  Both sides are seeking a mutually agreeable 
solution to the problem using procedures set forth in the 
collective bargaining agreement.  End Summary. 
 
2. (U) Ambassador, EconOffs, and LabAtt visited Chiquita's 
Honduran subsidiary, Tela Railroad Company, November 26 
during Ambassador's first trip to San Pedro Sula.  EmbOffs 
met with several Chiquita representatives, including VP 
Fernando Sanchez (a former Foreign Service Officer) and GM 
Jose Luis Valverde, toured the plantation and packing 
facility, and met with several Union of Tela Railroad Company 
Workers (SITRATERCO) representatives including Secretary 
General Eduardo Rivas (SITRATERCO President Oscar Amaya was 
out of the country).  SITRATERCO is part of the United 
Confederation of Honduran Workers (CUTH), led by Israel 
Salinas.  The CUTH is one of three labor confederations in 
Honduras and does not have an international affiliation. 
 
Chiquita and Union both on Downward Trend in Honduras 
--------------------------------------------- -------- 
 
3. (SBU) The banana sector has long been a key aspect of U.S. 
investment in Honduras, a critical part of the economy, and 
the backbone of the organized labor movement.  This has all 
been on a downward trend hastened by Hurricane Mitch in 1998 
that destroyed Honduras' banana crops.   Chiquita has since 
replanted 67 percent of the land that was previously 
cultivated.  Production, which was once at 35 million 
boxes/year in the 1980s, is now at 12-14 million boxes/year, 
but since Mitch Chiquita has been able to boost productivity 
through investment and a higher yield from its smaller amount 
of land.  (Chiquita currently has 5,000 hectares under 
cultivation in Honduras.)  SITRATERCO once had approximately 
18,000 members, but now has only approximately 2,200 members 
as the workforce has shrunk dramatically over the years. 
Chiquita suffered a brief wildcat strike in June (reftel) 
which, combined with pest problems, kept 2002 production 
levels lower than Chiquita's goal.  One issue related to a 
pest problem, the application of pesticide-treated bags 
around bananas on the plants, was solved this summer after an 
independent panel ruled the practice safe and Chiquita raised 
the pay for workers involved in the process. 
 
4. (SBU) SITRATERCO workers receive on average USD 8/day 
(which is almost double the USD 4.5 minimum wage in the 
export sector) plus at least that much in benefits.  The 
company has plans to reduce expenses related to its benefits 
package by switching from company-owned housing to subsidized 
bank loans for employees to buy their own homes built by the 
company on land provided by Chiquita and the GOH.  The 
employees will pay approximately 25-30 percent of the actual 
cost of the house and land and can continue to make payments 
toward the title even if they stop working for Chiquita.  The 
houses are not on the plantation, thus ending the company 
town and reducing health risks from pesticide application 
near housing.  Chiquita is also considering transferring the 
company hospital (built in 1951) to the GOH's social security 
system, and grandfathering current employees who have 
generous health plans.  Chiquita has not yet discussed the 
hospital issue with the union and asked EmbOffs to remain 
silent on the issue. 
 
Both Sides Agree Absenteeism a Problem but Disagree on Size 
--------------------------------------------- -------------- 
 
5. (SBU) Chiquita is currently suffering problems over 
alleged absenteeism by a relatively large percentage (15 
percent) of its workforce.  Ambassador and PolCouns discussed 
the issue November 20 with Minister of Labor German 
Leitzelar, LabAtt spoke to both management and labor November 
21, and EmbOffs discussed the issue again during the November 
26 visit to Chiquita.  Chiquita recently ran a full-page ad 
in Honduran newspapers that detailed management's point of 
view.  Chiquita management says it has faced the issue of 
absenteeism for quite some time and could not afford to 
postpone dealing with it any longer.  Productivity is low and 
the Honduras operation has been losing money since 1994, said 
Sanchez.  Management has two lists of employees with alleged 
absenteeism problems: one list of 350-400 workers with a high 
level of absenteeism that do not/not have legitimate health 
problems, and another list of 350 workers with a high level 
of absenteeism that do have legitimate health problems. 
 
6. (SBU) The union conceded to EmbOffs that absenteeism was a 
problem but disputed the extent it had negatively impacted 
production, and claimed management was downplaying problems 
with the fruit and infrastructure.  (Chiquita management 
recently funded a trip for labor representatives to travel to 
Florida to meet with Chiquita customers and to hear 
complaints about the quality of the bananas coming from 
Honduras.)  The union also believes that some of the workers 
on the list either were on vacation, maternity leave, or 
extended recuperation time during their alleged absenteeism, 
and that others on the list no longer work for Chiquita. 
Both sides agreed that press coverage of the issue had been 
erroneous. 
 
7. (SBU) Rivas said that the union had received the lists 
from management November 21 and that a tripartite committee 
comprised of management, labor, and the medical office of the 
company had begun to meet November 25 to deal with the 
problem on a case-by-case basis.  According to both sides, 
management and labor have fifteen days to determine a final 
disposition in each case of workers with a high level of 
absenteeism and that do not/not have legitimate health 
problems.  Management has pledged that any workers laid off 
will receive their full severance pay in accordance with 
Honduran law.  Cases involving workers with a high level of 
absenteeism that do have legitimate health problems will take 
several months to resolve.  Sanchez said that workers with 
legitimate health problems will either be reintegrated into 
the workforce or will receive some sort of disability 
benefits.  Sanchez emphasized that this was not a ploy to 
reduce the workforce and that adult dependents of those laid 
off will have first shot at filling the vacant positions. 
EmbOffs encouraged the sides to talk to each other to resolve 
this issue directly (and not via the press) in a fair manner. 
 
8. (SBU) Sanchez called LabAtt November 27 to follow-up on 
EmbOffs visit to Chiquita.  LabAtt urged Chiquita management 
to continue to work with SITRATERCO according to the 
collective bargaining agreement to resolve the cases of 
alleged absenteeism.  Sanchez said he would keep the Embassy 
up to date on how the process went. 
 
Ambassador Urges Continued Dialogue 
----------------------------------- 
 
9. (SBU) Comment:  Ambassador and LabAtt underlined the 
importance of U.S. investment in the banana sector to 
Honduras' economic growth as well as the importance of trade 
unions in Honduras to both management and labor.  Ambassador 
reiterated that the Embassy's role was to promote the 
observation of core labor rights throughout Honduras and to 
help facilitate dialogue between labor and management. 
EmbOffs made clear that the Honduran Ministry of Labor had 
jurisdiction over labor-management problems in Honduras. 
Neither side has asked for the Embassy's intervention to help 
resolve the issue.  Post is guardedly optimistic that the two 
sides will be able to resolve the majority of the cases of 
alleged absenteeism through the established procedures. 
However, the fact that the potential number of employees to 
be dismissed is a significant percentage of the union's 
membership could make it more difficult.  This issue of 
medical care, however, could be an even more contentious 
issue in the future.  End Comment. 
 
PIERCE