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Cablegate: Labor Unrest in Nile Delta Subsides After Demands

VZCZCXYZ0000
OO RUEHWEB

DE RUEHEG #2983 2811505
ZNR UUUUU ZZH
O 081505Z OCT 07
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7114
INFO RUEHC/DEPT OF LABOR WASHDC

UNCLAS CAIRO 002983

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ELA (NAFZIGER) AND DRL/IL (ANZALDUA)
LABOR FOR ILAB (SHEA)

E.O. 12958: N/A
TAGS: ELAB ECON PGOV PINR EG
SUBJECT: LABOR UNREST IN NILE DELTA SUBSIDES AFTER DEMANDS
ARE MET

REF: CAIRO 2887

1. (U) Striking workers at Egypt,s largest public-sector
textile factory resumed work October 1, after successfully
extracting concessions from GOE representatives. Over 24,000
workers from the Ghazl el Mehalla factory in the Nile delta
city of Mehalla el Kubra walked off the job on September 23
in protest over unpaid bonuses, wage stagnation, and job
security fears. The protest, which was not approved by the
government-controlled Egyptian Trade Union Federation (ETUF)
and therefore illegal, followed wildcat strikes at the
factory in late 2006 that led to a string of similar protests
throughout Egypt. Similarly, this successful strike has
sparked two additional walk-offs.

2. (U) Messages of solidarity with the Ghazl el Mehalla
workers poured in from major international trade unions,
including South Africa Congress of South African Trade Unions
(COSATU), the International Textile, Garment and Leather
Workers, Federation (ITGWLF), and the International
Confederation of Arab Trade Unions (ICATU) among others. The
International Trade Union Confederation (ITUC) also sent a
letter to President Mubarak in support of the workers and
condemning the detention of five strike leaders by security
forces (reftel). Workers at some other Egyptian
public-sector firms joined in illegal solidarity strikes as
well.

3. (U) The striking workers, whose salaries average around LE
400 (USD 71) per month, negotiated their settlement with a
GOE-assembled team lead by ETUF head Hussein Megawer that
included factory holding company chairman Mohsen El Gilany,
local union committee head Said el Gohary, and local MP from
Mehalla el Kubra Azab Darag. The negotiations yielded the
following agreements:

-- The company will immediately pay, as an advance, ninety
days of the annual profit shares and bonuses to the workers.

-- The strike days will be considered paid holidays, whose
costs will be incurred by the Holding Company

-- An annual increase of 7% of the basic salary.

-- A cooperative society is to be established, funded by the
Holding Company, to provide for the transportation of
workers. Strike leaders also formed a committee to continue
negotiations with the Holding Company over increasing the
allowances for food and industrial safety.
-- The company shall not penalize and worker who took part in
the strike.

-- The company will remove board chairman Mahmoud el-Gebaly
and several of his assistants, whom the workers deem corrupt,
from their positions.

4. (U) The negotiated settlement is seen as a major victory
for the strikers and has already led to two similar actions
at other factories this week, both of which have been
resolved. With 12 percent inflation over the past year, and
a 37 percent rise in the price of fresh vegetables, workers
at Ghazl el Mehella, who earn between LE 300 and LE 450/month
($52-$78) are increasingly strapped. Press reports indicate
that the firm was profitable last year, with estimates of
profits put between LE 170m-217m ($29m-38m) in the past
fiscal year. Although there is no minimum wage under
Egyptian law, salaries at this level are inadequate for
workers with families. Many are working a second job to make
ends meet, further contributing to oft-cited productivity
problems at these state-owned factories. Until Egypt is able
to develop representative union structures that allow for
freedom of association and proper collective bargaining,
inflation pressures and fears of privatization will lead
public sector workers elsewhere to follow the Ghazl el
Mehalla model to seek their own concessions through illegal
strike actions.
RICCIARDONE

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