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Cablegate: Cambodia: General Strike Cancellation Sets The

VZCZCXRO5948
PP RUEHCHI RUEHDT RUEHHM RUEHJO RUEHNH
DE RUEHPF #1204/01 1811053
ZNR UUUUU ZZH
P 301053Z JUN 06
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 6966
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHXI/LABOR COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUEHGV/USMISSION GENEVA PRIORITY 1508

UNCLAS SECTION 01 OF 02 PHNOM PENH 001204

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EAP, EAP/MLS, DRL/IL--MARK MITTELHAUSER, AND
EAP/TPP/ABT THOMAS LERSTEN
LABOR FOR ILAB--JIM SHEA AND JONA LAI
GENEVA FOR RMA
STATE PLEASE PASS TO USTR--BARBARA WEISEL AND DAVID BISBEE

E.O. 12958: N/A
TAGS: ELAB ECON PGOV CB
SUBJECT: CAMBODIA: GENERAL STRIKE CANCELLATION SETS THE
STAGE FOR SECTORAL COLLECTIVE BARGAINING

REF: A. PHNOM PENH 1202

B. PHNOM PENH 1199

1. (SBU) SUMMARY. The June 29 postponement of a general
strike scheduled to start just a few days later paved the way
for an announcement by garment manufacturers and eleven union
federations that they will begin collective negotiations in
August. They have agreed to discuss wages, strikes,
arbitration, and implementation of the Labor Law. Despite
this promising sign, success is far from certain as there is
significant distrust not only between garment factory owners
and unions but also among the various union federations.
Nonetheless, the effort will almost certainly improve
communication among actors in the garment sector and would
yield substantial benefits if successful. END SUMMARY.

Collective Negotiations Announced
---------------------------------

2. (U) The announcement by the Free Trade Union (FTU) and
the Cambodian Independent Teachers Association (CITA) that
they will indefinitely postpone their general strike (Ref A)
sets the stage for negotiations on a garment-sector-wide
labor agreement. While post focused on averting a general
strike threatened to start on July 3, the International Labor
Organization (ILO) and the American Center for International
Labor Solidarity (ACILS) have been working on a longer-term
effort to bring garment manufacturers and the fractious labor
movement together to negotiate a broader labor agreement.

3. (SBU) On June 29, the Garment Manufacturers Association
of Cambodia (GMAC) and 11 union federations issued a joint
press statement announcing their intention to enter into
negotiations about wages, strikes, arbitration, and
implementation of the Labor Law. The draft ILO/ACILS
framework, which has not been made public, is a three year
deal including an unspecified minimum wage increase,
mandatory binding arbitration, and a moratorium on strikes
and lock-outs for the life of the agreement.

Unions, Factories, Ready to Trade Dirty Tricks for a Deal
--------------------------------------------- ------------

4. (SBU) A dramatic rise in the incidence of individual
strikes at garment factories, as well as the threatened
general strike, are symptomatic of a deterioration in labor
relations over the past few months. Unions are frustrated by
factory owners' increased use of Cambodia's corrupt court
system to penalize union activists via charges of destruction
of property (often related to strikes), theft, and slander.
Unions seem finally to have internalized the message from the
embassy, the Cambodian government, and the garment industry
that while unions have a right to strike, excessive illegal
strikes will only hurt the garment industry and threaten
workers' jobs. For their part, factory owners are fed up
with illegal strikes that stop production on short notice and
cause missed deadlines and excessive overtime. Each party
now seems to be willing to consider turning away from its
favorite dirty tricks (illegal strikes for unions,
manipulating the court system for factory owners, and bribes
on both sides) in exchange for agreeing to binding
arbitration.

5. (SBU) Cambodia's Arbitration Council, which was funded by
the US Department of Labor and established under the guidance
of the ILO, is the only transparent dispute resolution body
in a sea of judicial corruption. The Arbitration Council's
decisions become non-binding if either party formally objects
to the award within seven days of its issuance. However,
both parties can agree in advance of the arbitration process
to accept the Council's decision as a binding one, and many
collective bargaining agreements, particularly in the tourism
sector, contain this provision.

GMAC Negotiation Success Allows Chea Mony To Be First Among
Equals
--------------------------------------------- --------------

6. (SBU) The embassy's work to help the FTU/CITA and GMAC
come close enough to an agreement to avoid a general strike
and ILO/ACILS' work to bring eleven different union

PHNOM PENH 00001204 002 OF 002


federations together to negotiate with GMAC have been
mutually reinforcing. FTU leader Chea Mony was clearly
looking to the threatened general strike as a way to raise
his political stature (Ref B), and was reluctant to trade the
drama and publicity of tens of thousands of workers in the
streets for the lower-key success of a negotiated agreement,
particularly one that would be shared with ten other union
leaders. Chea Mony told ILO Chief Technical Advisor on June
21 that he could not agree even in principle to the draft
ILO/ACILS framework agreement. And it was only pressure from
the embassy and the ILO that brought him back to the table
for further multi-union discussions on June 29.

7. (SBU) In fact, it was the tremendous progress in
negotiations between FTU/CITA and GMAC that gave Chea Mony a
way to participate in the multi-union negotiation as the
first among equals. Because the FTU and GMAC had nearly
reached a deal on the minimum wage already (GMAC offered a
USD 7 increase over three years while FTU counteroffered with
a USD 8 increase over three years), Chea Mony will be able to
informally but legitimately claim most of the credit for
raising the minimum wage. At the same time, it will be up to
the group of eleven union federations and GMAC to iron out
the final details of the minimum wage deal in August, so all
will be able to claim some degree of victory.

8. (SBU) COMMENT. Sector-wide collective bargaining is a
very ambitious idea that will likely meet with slow progress
and uncertain success. Factory-level collective bargaining
agreements (CBA) are rare in Cambodia's garment industry, in
place in only five of the country's nearly 300 garment
factories. In addition, Cambodia's union federations are a
wildly divergent bunch who will have a tough time reaching
consensus. In addition to pro-government, pro-opposition,
and politically neutral unions, some unions are essentially
pro-management and all trade allegations of violence,
harassment, and corruption. Nonetheless, the negotiating
process is likely to build trust in an area where it is
sorely lacking. A framework agreement, if reached, would be
a tremendous boon to the stability of Cambodia's
all-important garment sector and would herald a new era in
Cambodian labor relations. END COMMENT.
MUSSOMELI

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