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Cablegate: Sri Lanka: Austr Delaney Discusses Labor and the Afl-Cio

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RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHNE/AMEMBASSY NEW DELHI 2424
RUEHKA/AMEMBASSY DHAKA 1159
RUEHIL/AMEMBASSY ISLAMABAD 8158
RUEHKT/AMEMBASSY KATHMANDU 6374
RUEHCG/AMCONSUL CHENNAI 8807
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION

UNCLAS SECTION 01 OF 04 COLOMBO 001073

SENSITIVE

SIPDIS

STATE FOR SCA/INS, SCA/RA, DRL KOHL GILL
STATE PASS USTR FOR MICHAEL DELANEY AND ADINA ADLER
DOL/ILAB FOR TINA MCCARTER

E.O 12958: N/A
TAGS: ELAB ECON ETRD EINV EAID PGOV KMCA CE
SUBJECT: SRI LANKA: AUSTR DELANEY DISCUSSES LABOR AND THE AFL-CIO
PETITION

REF: COLOMBO 1063

1. (U) Summary: During a November 11-14 visit, Assistant U.S.
Trade Representative (AUSTR) Michael Delaney met with key Sri Lankan
government officials and local trade union representatives to
discuss the June 2008 AFL-CIO petition to USTR that alleges Sri
Lanka's labor laws do not comply with internationally recognized
worker's rights. Trade union representatives asserted that they do
not want Sri Lanka to lose the U.S. Generalized System of
Preferences (GSP) and that the petition is meant to pressure the
government to comply with ILO standards. Meanwhile, Minister of
Labor Relations and Manpower Athauda Seneviratne told AUSTR Delaney
that the government is working hard with the ILO and that many of
allegations made by the trade unions in the petitions are "false and
fabricated." While it is clear that more needs to be done to
improve workers' rights (particularly in the EPZs), current
conditions are comparatively good by South Asian standards and the
Ministry of Labor is demonstrably committed to addressing specific
issues when they arise. We do not believe the petition accurately
depicts general labor conditions in Sri Lanka. End Summary.

Trade Unions: We Want GSP to Remain
--------------------------------------

2. (SBU) In June 2008 the AFL-CIO submitted a petition to USTR
requesting the removal of Sri Lanka from the list of eligible
beneficiary developing countries pursuant to 19 USC 2462(d) of the
Generalized System of Preferences (GSP). On November 14, AUSTR
Delaney met with representatives from four large Sri Lankan trade
unions (TU) to hear their concerns, learn more about the labor cases
cited in AFL-CIO petition, and explore how the USG and specifically
USTR could assist their efforts in working with the GSL on labor
issues. At the outset of the meeting, Palitha Athukorale, Chief
Organizer of the main opposition United National Party's (UNP) trade
union Jathika Sevaka Sangamaya (JSS), noted that the title of the
AFL-CIO petition is misleading. He stated the actual objective of
the petition is to make Sri Lanka comply with core labor standards,
not to remove it from the GSP program. He noted that although Sri
Lanka's labor standards are higher than others in South Asia, the
government could and should improve its implementation of core labor
standards. As such, the trade union representatives agreed that the
GSP petition should be used as an instrument to pressure the
government to ensure private sector compliance. Anton Markus, Joint
Secretary of the Free Trade Zones and General Services Employees
Union (FTZ&GSEU) and a key drafter of the AFL-CIO petition,
concurred, stating "we want to make sure Sri Lanka gets the GSP and
we support the government efforts to keep the GSP."

3. (SBU) Meanwhile, Leslie Devendra, Secretary General of the
ruling Sri Lanka Freedom Party-aligned Sri Lanka Nidaas Sewaka
Sangamaya (SLNS), said the petitioners had never canvassed SLNS for
their opinion and argued that the cases cited in the petition are
not sufficient reasons to request GSP removal as the examples are
primarily located in the FTZs. Athukorale privately told ECON FSN
that he did not subscribe to the petition in his capacity in the
UNP/JSS. He had contributed to the petition in his personal
capacity as the head of Progress Union, a minor trade union working
in the FTZs. He stated that if he had known the petition would seek
to remove GSP status, he would have disassociated from it
altogether.

"The Judiciary and Public Are Against Us"
-----------------------------------------

4. (U) AUSTR Delaney asked the representatives about the petition's
allegation of increased judicial intervention in labor matters, and
whether the rule of law is an effective basis for the employer and
employee relationship. He emphasized that labor issues can best be
resolved by having independent and transparent negotiations with
industry, and encouraged the trade unions to continue to facilitate
interactions between members, industry partners, and the government.
Devendra complained that irresponsible TU actions have changed the
mindset of the judiciary and, as a result, "we have the judiciary
against us." He described recent incidents where extreme
politically left TUs disrupted essential services, such as the
medical and teaching professions, by striking. Because of such
actions, the public has little sympathy for strikers, and the

COLOMBO 00001073 002 OF 004


judiciary generally supports the public. Marcus added that the
public sector has no proper mechanism to resolve public sector
disputes and strikes. (Note: The Ministry of Labor (MOL) only has
the legal authority to work with the private sector. ILO currently
is working on a proposal that would allow for the establishment of a
dispute settlement framework for the public sector.) AUSTR Delaney
urged the representatives to first negotiate and litigate internally
and to use its domestic courts and the MOL to assist them in
resolving disputes.

5. AUSTR Delaney noted that it appears, from the cases cited in the
petition, that FTZs lag behind the rest of the country in labor
compliance. Gerald Lodwick of the National Workers' Congress (NWC),
which includes members who work at Export Processing Zones (EPZ),
"generally agreed" that progress in labor compliance is slower in
EPZs.

Labor Ministry Counters AFL-CIO's Allegations
---------------------------------------------

6. (U) In a separate meeting on November 14, AUSTR Delaney met with
Labor Minister Athauda Seneviratne and other high level MOL
officials. The Minister underscored that although the MOL thought
that some of the report's allegations were unsubstantiated and
fabricated, the MOL was "open-minded and open for discussion" on the
petition. The Minister also pointed out that there were several
large trade unions that did not support the AFL-CIO petition and
that of the eight that subscribed to the petition, five were public
sector trade unions that did not represent private sector workers.
The Minister complained that the subscribers to the petition should
have discussed their concerns with the MOL prior to submitting the
report; Seneviratne wondered aloud why Delaney had held separate
meetings with the trade union leaders and his office, arguing that a
joint meeting would have been better. MOL officials then detailed
to AUSTR Delaney their following counter-arguments to the petition:


a. Many of the cases cited in the petition are almost settled and/or
currently at the courts. Several cases, however, are not
labor-related and thus cannot be reviewed by the MOL, including
allegations of assassinations and child soldier recruitment.

b. Trade union cancellation: With approximately 18% of the
country's workforce unionized, Sri Lanka currently has more than
1,600 TUs, with 1,300 in the public sector and the rest in the
private sector. No TU has filed action against cancellation for
several years. (Note: TUs can lose their ability to operate if
they, for example, fail to file necessary paperwork with the
government for several years.)

c. The denial of TU rights to judicial, armed forces, police, prison
and agricultural corps: The Ministry noted that in Sri Lanka, as in
much of Asia, certain categories of officers are not allowed to form
unions. They may form an association, but it cannot be registered
as a union.

d. Collective bargaining: In response to the petition's request to
reduce the requirement for TUs to represent 20% rather than 40% of
the workforce when engaged in collective bargaining with the
employer, the MOL asserted that not only have major TUs agreed to
the 40% requirement, but many unions suggest an increase to a 50-60%
requirement that "would foster stronger TUs."

e. ILO conventions 87 on Freedom of Association/98 on Right to
organize and collective bargaining are inadmissible: The Ministry
argued that the conventions ratified by the GSL have been
established and recognized as law. Referring to the Supreme Court's
action to break the 2006 strike at the Port of Colombo, MOL
officials said that the workers struck in the guise of a go-slow
which is illegal under Sri Lankan law. Further, the striking
workers were acting violently and did not allow others to report to
work. Lastly, the officials said that the ILO Freedom of
Association Committee recognized that the case was resolved in June
2008.

f. In regards to the fine against unfair labor practices:
Officials said they are currently reviewing whether to increase the

COLOMBO 00001073 003 OF 004


fine against unfair labor practices, which is currently set at Sri
Lankan Rupees 20,000 (approximately US $181). Concerning overtime
hours, officials said that the law limits a general work day to nine
hours (including an hour for lunch) and twelve hours when coupled
with overtime.

g. Responding to the complaint that the Ministry has not filed any
cases against unfair labor practices, officials said that it has
been difficult to obtain sufficient evidence to file cases but that
they are currently reviewing several files they hope to pursue.
They did not comment on these specific cases.

h. Access to EPZ's: MOL officials told AUSTR Delaney that they have
direct access to EPZs and can conduct inspections at any time. They
stated that salaries within EPZs are above the minimum wages set by
the Wages Boards for industries (such as apparel) and are higher
than the average salary for similar work outside the zones.
Employee Councils, consisting of worker representatives, exist
side-by-side with TUs in EPZs. Although these councils are not
registered as trade unions, there is no barrier for their
registration as a TU if they follow the terms defined by the Trade
Union Ordinance.

Minister ensures compliance to labor rights
-------------------------------------------

7. (U) The Minister underscored to AUSTR Delaney the GSL's and MOL's
efforts to protect labor rights by first highlighting that the GSL
ratified 40 ILO conventions, including eight core conventions. The
Minister proudly noted that in 2006, the MOL implemented the ILO
"Decent Work" program in Sri Lanka, the first of its kind in Asia.
In regard to its relations with TUs, the Minister described how he
is in constant dialogue with the unions as chairman of the National
Labor Advisory Council (NLAC), a tripartite body under the MOL
comprised of the government officials, employers and unions. The
MOL also conducts monthly meetings with TUs throughout the country
(except for the North, due to the conflict) via its social dialogue
divisions and maintains a compliance unit and a multi-disciplinary
inspectorate to monitor labor and health standards. The Minister
noted that there are currently no industries officially gazetted as
essential services, where strikes are banned. AUSTR Delaney thanked
the MOL for its detailed review of the petition and urged the
ministry and specifically its Labor Commissioner to continue working
closely with trade unions and employers and to collect and publicly
update resolved labor disputes.

Comment
----------

8. (SBU) Sri Lanka has, if not the highest, some of the best labor
standards in South Asia. The government is nevertheless actively
involved in working to improve local labor practices. The MOL plays
a successful role in dispute resolution. In 2007, it received 5,849
complaints; 5,683 cases were settled and 32 were referred for
compulsory arbitration. To improve its ability to conduct
inspections, the MOL hired 60 additional labor inspectors to date in
2008 above its 2007 total of 682, and is in the process of hiring 85
more. In 2007, MOL reports that its officials inspected more than
46,000 work places. Following ILO recommendations in 2003, the
government's Board of Investment issued guidelines to all BOI
companies on labor standards and employment relations, amplifying
MOL policies. The BOI also revised its guidelines on the formation
and conduct of employee councils, ensuring their independence.
These various BOI guidelines require companies to respect the right
of the workers to join trade unions and bargain collectively, and to
refrain from unfair labor practices. Employee councils were
extended collective bargaining rights by the ILO in 2003.

9. (SBU) In assessing the petition's claims, a relevant (and
complicating) factor is that trade unions in Sri Lanka are highly
politicized actors in a frequently chaotic political climate, i.e.,
their activities are not always confined to a classic trade unionist
agenda focused on improvement of work conditions. That fact
inevitably affects their relationship with the government.
Nevertheless, the Ministry (which is led by a former trade unionist)
appears genuinely open to working with trade unions to resolve any
concerns. (Note: The one exception to this is specifically Anton

COLOMBO 00001073 004 OF 004


Markus; government officials, as well as many other trade union
leaders and employers, find him "impossible.") The Minister meets
with representatives formally on a monthly basis, and on an ad hoc
basis as needed or when requested. Officials within the MOL are in
frequent contact with TUs, formally and informally, and work to find
acceptable resolution to disputes when they arise. The Ministry is
also currently training judges in an effort to ensure they are aware
of, and can adequately uphold, local labor laws. More generally,
workers can associate freely, and can generally strike without
concerns of retribution or interference. In instances where
retribution or interference has occurred, cases move (albeit slowly
in some instances) through the mandated systems for resolution

10. (SBU) There is more to be done. Post welcomes guidance and
recommended changes for the GSL to make to enhance local adherence
to internationally-recognized labor norms. Nevertheless, Post
firmly believes that the AFL-CIO petition for the removal of GSP
should be rejected for further review by USTR. The petition is not
representative of the overall labor situation in country.
Additionally, the local political situation -- in light of the EC's
investigation of human rights concerns in conjunction with Sri
Lanka's application for a renewal of GSP+ benefits -- demonstrates
that the USG will be more successful at fostering change through
discussion absent the acceptance of this petition.

11. (U) This cable has been cleared by AUSTR Delaney.

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