US embassy cable - 03TEGUCIGALPA1487

UNCLAS SECTION 01 OF 05 TEGUCIGALPA 001487 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR DRL/IL, EB/TPP, WHA/PPC, AND WHA/CEN 
STATE PASS USTR 
STATE PASS AID FOR DCHA/DG, EGAT, AND LAC/CEN 
DOL FOR ILAB 
GUATEMALA FOR COMATT AND AGATT 
PANAMA FOR CUSTOMS 
 
E.O. 12958:  N/A 
TAGS: ELAB, ETRD, PHUM, ECON, EINV, PGOV, PREL, KJUS, HO 
SUBJECT:  Bilateral Labor Consultations on Margins of CAFTA 
Talks in Honduras Emphasize Need for Further Progress 
 
Ref: State 155098 
 
1. (SBU) Summary.  A joint delegation from the Departments 
of Labor and State emphasized June 17-19 the need for the 
GOH to increase its protection of labor rights and for the 
private sector to augment its respect for labor rights, with 
U.S.-Central America Free Trade Agreement (CAFTA) soon 
opening the door to greater U.S.-Honduran trade and 
investment.  The visit focused attention on problems in the 
Ministry of Labor's enforcement of labor laws and 
regulations, possible reform of the labor code, difficulties 
with exercising the rights to organize and bargain 
collectively, and efforts to eliminate the worst forms of 
child labor.  The U.S. delegation pressed the MOL and the 
private sector to be more aggressive in addressing the 
problems that exist, even if longer-term structural changes 
in the labor code are not politically possible in the short 
term.  End Summary. 
 
2. (U) A USG delegation led by Jorge Perez-Lopez, Director 
of the Office of International Economic Affairs in the 
Bureau of International Labor Affairs (ILAB) at the 
Department of Labor, and also including Arlen Wilson, Deputy 
Director of the Office of International Labor Affairs in the 
Bureau of Democracy, Human Rights and Labor (DRL/IL) at the 
Department of State, and Carlos Romero, International 
Economist at ILAB in DOL, held a series of bilateral labor 
consultations June 17-19 in Tegucigalpa on the margins of 
the fifth round of negotiations for the U.S.-Central America 
Free Trade Agreement (CAFTA).  LabAtt accompanied the 
delegation to all meetings. 
 
Ministry of Labor/Ministry of Commerce and Industry 
--------------------------------------------- ------ 
 
3. (U) The USG delegation met June 17 with Vice Minister of 
Labor (MOL) Angel Escobar and Vice Minister of Industry and 
Trade Irving Guererro, as well as Honduran CAFTA labor 
negotiator Jorge Ponce.  Minister of Labor German Leitzelar 
was in Geneva for the International Labor Organization (ILO) 
meetings and was unable to take part in the meeting. 
 
4. (SBU) VM Escobar, himself a former leader of the Honduran 
beer company's employees' union, said that the MOL has good 
relations with labor.  Perez-Lopez inquired about the labor 
rights situation in Honduras and asked about the still 
pending revisions to the Labor Code.  VM Escobar said that 
the GOH had written a draft law in 1995 but it never came to 
a vote in Congress and has been frozen ever since.  The MOL 
was now working again on drafting a revised Labor Code, with 
approximately 15 percent of the draft law still under 
tripartite (GOH, Labor, business) negotiation under the 
mandate of the GOH's Economic and Social Council.  He noted 
that the GOH had recently reformed articles 43-45 covering 
Honduran workers overseas and said the MOL hoped to make 
more changes to specific articles if the whole law could not 
be reformed.  Romero raised the 1995 Memorandum of 
Understanding between USTR and the MOL in the context of 
improvements in worker rights that still needed to be made. 
Key aspects of this MOU could be vehicles for change through 
administrative action. 
 
5. (SBU) VM Escobar noted a lack of funds and staff severely 
hampered what the MOL was able to do.  He said the MOL was 
improving the level of coverage, including inspectors, in 
the San Pedro Sula area where most economic activity 
(including export processing manufacturing (maquilas)) is 
concentrated.  He noted that the problem of child labor had 
been successfully eradicated in the maquila sector and said 
that while there were some labor problems with maquilas, 
they were generally not with U.S.-owned maquilas.  In fact, 
MOL and union officials have previously told EmbOffs that 
U.S.-owned maquilas have taken a leadership role in making 
positive changes on labor issues in the industry. 
 
6. (SBU) Perez-Lopez noted that perception in the U.S. could 
be as important as reality in Honduras and cautioned there 
were still ongoing labor rights problems that needed to be 
addressed as soon as possible, especially given the ongoing 
negotiation of CAFTA that includes a chapter on protecting 
labor rights.  Specifically Perez-Lopez and Romero 
mentioned: 
-- the lack of reinstatement of workers unjustly fired for 
labor activities (as well as the alleged use of blacklists 
by maquila owners), 
-- leaks to management of lists of union supporters forming 
a union that leads to the subsequent unjust dismissal of 
these employees, and 
-- complaints raised in reports by the AFL-CIO and the 
Department of State's Human Rights Report about general 
difficulties with the right to organize and bargain 
collectively, especially in the maquila sector. 
 
7. (SBU) VM Escobar said the MOL works directly with maquila 
owners and workers to resolve problems and the San Pedro 
Sula office continued to inspect maquilas and conduct 
alternative conflict resolution training.  VM Escobar noted 
that the lack of money for inspectors was a serious problem; 
Perez-Lopez agreed this was a real problem and also noted 
that low salaries for inspectors left them more susceptible 
to corruption.  Perez-Lopez explained that USG assistance on 
labor issues could not be used for inspectors' salaries; VM 
Escobar replied that neither could World Bank money, which 
limited MOL options because of the tight overall government 
budget. 
 
8. (SBU) Escobar and Ponce clarified the issue of 
solidarity/employee associations, saying that they had no 
standing under Honduran law and that while an employer could 
form one it would not prevent the establishment of a union. 
MOL officials noted that there could only be one union per 
company and that by law it took 30 employees to form a 
union.  Once a union is recognized and receives its 
"personeria juridica" (legal standing) from the MOL, by law 
the employer is obligated to negotiate a collective 
bargaining agreement if the union presents a list of issues 
to negotiate.  (Note:  In reality, getting a Honduran 
employer to negotiate a collective bargaining agreement can 
be a serious challenge in the current labor rights 
environment in Honduras.  End Note.) 
 
9. (U) Perez-Lopez highlighted the USG's interest in 
eliminating the worst forms of child labor and noted that 
DOL was funding a number of ILO International Program to 
Eradicate Child Labor (IPEC) projects in Honduras, including 
in coffee and melon sectors, as well as in the commercial 
sexual exploitation of children.  (Romero and LabAtt also 
had a breakfast meeting June 19 with ILO/IPEC Coordinator 
Paulino Isidoro and IPEC melon project coordinator Martha 
Chavez to discuss DOL-funded IPEC projects.  Isidoro and 
Chavez said they had seen a marked improvement in the 
private sector's approach to the problem of child labor. 
The IPEC program was now granted access to melon farms and 
processing plants in the Department of Choluteca and even 
sugar cane owners had admitted there was a problem with 
child labor in their sector -- where no IPEC project exists 
-- and had pledged to move toward eliminating it.  Isidoro 
noted that IPEC also had projects with child domestic 
servants, child divers in the lobster industry, children 
working in the tobacco industry, and children working in 
garbage dumps in Tegucigalpa.)  While Honduras has made 
strides against child labor in general, Isidoro noted that 
child labor remains a pervasive problem, particularly 
(although by no means exclusively) in commercial 
agriculture. 
 
Labor Confederations: CGT and CTH 
--------------------------------- 
 
10. (U) The USG delegation hosted a meeting at the Embassy 
June 17 with representatives of the General Workers' Central 
(CGT), affiliated with the World Congress of Labor (WCL) and 
led by Secretary General Daniel Duron, and the Confederation 
of Honduran Workers (CTH), affiliated with the International 
Congress of Free Trade Unions (ICFTU).  The third Honduran 
labor confederation, the United Confederation of Honduran 
Workers (CUTH), led by SecGen Israel Salinas and applying 
for affiliation with the ICFTU, was invited, but Salinas was 
unable to attend the meeting and the other CUTH 
representatives did not show up.  Wilson, Romero, and LabAtt 
also had lunch June 19 with CTH SecGen Dinora Aceituno, who 
had been unable to attend the June 17 meeting. 
 
11. (U) Duron said that the CGT appreciated that labor 
issues would be a key part of CAFTA and said that the CGT 
wanted real protection for labor rights in the agreement. 
Noting that only eight to 10 percent of the economically 
active Honduran workforce is unionized, Duron said that it 
was difficult to exercise the right of association in 
Honduras, particularly in the maquila sector, where he 
claimed only two percent of workers were unionized and had 
collective bargaining agreements.  (Note:  Minister of Labor 
Leitzelar told a Congressional StaffDel May 27 that the low 
rate of unionization in Honduras was due to a variety of 
factors and not necessarily an indicator of a lack of 
freedom of association.  He said that of the 122,000 workers 
in the maquila sector, 10 percent of female workers (11,000) 
were unionized and two percent of male workers (2,500) were 
unionized.  LabAtt is seeking updated statistics from the 
MOL on the number of unions with collective bargaining 
agreements in the maquila sector.  End Note.) 
 
12. (U) Duron said that it was common for businesses to fire 
union organizers and that reinstatement of unjustly fired 
workers seldom, if ever, occurs.  He noted that some 
maquilas hired former MOL labor inspectors to work in their 
human resources office.  Duron also explained that it was 
not easy to move from registering an intent to organize a 
union to getting a union's "personeria juridica" from the 
MOL.  He outlined how maquilas used loyal employees to 
"infiltrate" union organizers to provide information on them 
to management that then led to the organizers being fired 
unjustly.  Duron said that solidarity/employee associations 
were not a major problem, and cautioned that the labor 
unions were skeptical about proposed "flexibilization" of 
the labor code.  Duron said unions were open to revision of 
the labor code provided their previously hard-won labor 
rights were preserved.  He said any reform process had to 
balance the equities of workers, as well as employers 
 
13. (U) Duron said that with the GOH still unable to reach 
agreement with the International Monetary fund and 35 
percent unemployment (a MOL statistic), the Honduran economy 
was in poor shape.  His affiliates were worried that it 
would be very difficult to compete with the U.S. in 
manufacturing or agriculture.  He criticized NAFTA and 
claimed it had not reduced poverty in Mexico or the rate of 
illegal Mexican immigration to the U.S. 
 
14. (U) Aceituno's statements were similar to Duron's 
comments.  She cited the right of association and the right 
to bargain collectively as the two most important labor 
rights that were the most difficult to exercise in Honduras. 
She complained about the unjust dismissal of union 
organizers in maquilas and agreed that reinstatement was a 
remedy in theory but not in practice, noting that the fine 
for unjustly firing a worker was only 500 lempiras (less 
than USD 29).  (Note:  Employers also have to pay severance 
pay - see paragraph 17.  End Note.)  The delegation told 
Duron and Aceituno they agreed that progress was needed on 
the protection and respect of labor rights in Honduras. 
 
Private Sector: COHEP, Maquila Association, and others 
--------------------------------------------- --------- 
 
15. (U) The USG delegation met June 17 with over a dozen 
representatives of the private sector, including leaders of 
the Honduran Council on Private Enterprise (COHEP), the 
Honduran Apparel Manufacturers Association (the Maquila 
Association), the National Association of Industrialists 
(ANDI), and the National Federation of Cattlemen and 
Agriculture of Honduras (FENAC) at COHEP.  Honduran 
Ambassador to the U.S. Mario Canahuati and Maquila 
Association President Jesus Canahuati (brothers) both 
attended the meeting. 
 
16. (U) Adolfo Facusse, ANDI President and a leading 
businessman, emphasized that the majority of the workforce 
was employed in the informal sector (52 percent according to 
Minister of Labor Leitzelar).  He noted that COHEP and the 
three labor confederations had agreed to labor code 
revisions in the mid-1990s, but that the GOH delayed 
introducing the revised code to Congress for a vote and that 
the consensus had since broken down.  Reforming the labor 
code remained a difficult political issue, despite the fact 
that the current code was obsolete, according to the private 
sector representatives.  Maquila Association representatives 
said they wanted to see the union registration process 
expedited and agreed with the need to reform that aspect of 
the labor code. 
 
17. (U) Jesus Canahuati said that there were generally 
harmonious labor/management relations in the maquila sector, 
and noted the importance of bipartite (labor/management) and 
tripartite (labor/management/GOH) discussions on labor 
issues.  Canahuati said that of 180 maquilas, 66 had unions, 
of which 48 were functioning, and many had collective 
bargaining agreements (he did not have a precise number). 
He said that unjustly fired workers can receive pay 
equivalent to one month for every year worked (maximum 15 
months).  Jacobo Kattan, a maquila executive, admitted that 
blacklists had been used in the early years of the maquilas 
(1989-91), but claimed that now it hardly happened. 
Canahuati said that to the best of the Maquila Association's 
knowledge, blacklists are not used.  Canahuati said that the 
maquila sector realized it had a large impact in Honduran 
society and the economy.  The Association was open to 
investigate any complaints about its members, said 
Canahuati.  (Note:  After the meeting LabAtt gave Canahuati 
the names of two maquilas that had been the subject of 
recent complaints and asked him to investigate.  End Note.) 
 
18. (U) COHEP President Jacobo Regalado said that COHEP was 
working to combat child labor and noted the private sector 
was working with the Ministry of Education to adjust the 
school calendar so it did not conflict with the coffee 
harvest, which in the past has led many parents to keep 
their children out of school so they could help harvest 
coffee beans.  Facusse noted that the poor state of public 
education and repeated teacher strikes contributed to the 
problem of child labor.  Canahuati stated that child labor 
was not a problem in the maquila industry. 
 
19. (U) LabAtt noted that the two most numerous labor issues 
he dealt with were complaints about the right to organize 
and bargain collectively in maquilas and the problem of 
child labor in commercial agriculture.  The USG delegation 
emphasized the need for the private sector to make 
improvements in both areas. 
 
Former Minister of Labor Gautama Fonseca 
---------------------------------------- 
 
20. (SBU) The USG delegation also had a breakfast meeting 
June 18 with former Minister of Labor (and former Minister 
of Public Security) Gautama Fonseca.  Fonseca noted the 
problem of corruption hampered MOL efforts and said that 
corruption, along with economic problems, had weakened the 
labor movement.  He said that Minister of Labor Leitzelar 
was a good minister but hampered by an under-funded and 
understaffed ministry. 
 
Comment 
------- 
 
21. (SBU) Comment:  Honduras enjoys a fair reputation on 
labor rights because of important advances in labor rights 
made over the years.  Partially because of this, Honduras 
has at times looked better than its Central American 
neighbors (three of which face GSP petitions) with respect 
to the provision of labor rights.  However this perception 
is only partially consistent with the reality of labor 
rights in this country.  There is still much work to be done 
to meet international labor standards, as reflected in the 
section on workers rights in the Human Rights Report. 
 
22. (SBU) Comment continued.  The Honduran maquila sector 
feels it faces unfair criticism given the achievements it 
has made in eliminating child labor in maquilas, improving 
occupational safety and health, and meeting demanding labor 
codes of conduct established by U.S. buyers/retailers. 
Since it is practically the only sector of the Honduran 
economy that is rebounding from a post-September 11 downturn 
and the largest source of non-agricultural employment in the 
country, maquilas naturally remain the focus of labor 
unions' organizing efforts.  Those efforts combined with 
continued resistance by some employers to the establishment 
of unions has meant maquilas continue to be the subject of 
complaints from Honduran and U.S. labor organizations/NGOs 
regarding problems with freedom of association and 
collective bargaining.  There are many steps the government, 
private sector, and labor unions can undertake to improve on 
these issues.  (Even Minister Leitzelar has noted that there 
are a variety of other factors that also affect the ability 
to organize new unions, including a weak economy in general 
and internal problems within unions.) 
 
23. (SBU) Comment continued:  The paltry budget and staff of 
the Ministry of Labor is a real impediment to improved 
enforcement of labor laws, but the MOL could do more with 
what it has.  The U.S. delegation pressed the MOL and the 
private sector to be more aggressive in addressing the 
problems that exist, even if longer-term structural changes 
in the labor code are not politically possible in the short 
term.  With DOL-funded technical assistance (on occupational 
safety and health, rights of association/collective 
bargaining) and IPEC projects, the MOL is already greatly 
benefiting from a USG commitment to improve respect for 
labor rights in Honduras.  It is now up to the GOH to 
increase the MOL's capacity to protect labor rights and for 
the private sector to address the remaining problems.  End 
Comment 
 
24. (U) This cable was cleared by DOL (ILAB) and State 
(DRL/IL). 
 
Pierce