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Cablegate: Foreign Worker and Labor Problems in Qiz Factory

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RR RUEHWEB

DE RUEHEG #0195/01 0421606
ZNY CCCCC ZZH
R 111606Z FEB 10
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 0225
INFO RUEHEG/AMEMBASSY CAIRO
RUEHTV/AMEMBASSY TEL AVIV 0002

C O N F I D E N T I A L CAIRO 000195

SENSITIVE
SIPDIS
DEPT FOR NEA/ELA, DRL/ILCSR
DEPT PASS TO USTR/SFRANCESKI AND GSTRICKLER

E.O. 12958: DECL: 2020/02/11
TAGS: ECON ELAB ETRD EG PGOV
SUBJECT: FOREIGN WORKER AND LABOR PROBLEMS IN QIZ FACTORY

REF: 09CAIRO0561; 08CAIRO2528

CLASSIFIED BY: Donald Blome, Minister-Counselor, DOS, ECPO; REASON:
1.4(B), (D)

1. (C) Key Points:

-The manager of a ready-made garments factory participating in the
Qualifying Industrial Zones (QIZ) program told EconOff that his
company has been holding the passports of foreign workers and that
it fired an Egyptian employee for organizing a strike.

-This is first case of passports of foreign workers being held by a
QIZ-participating employer that EmbOffs have encountered in regular
visits to QIZ factories.

-Embassy Cairo has raised the issue with the GOE. The Ministry of
Trade and Industry has pledged to investigate the matter, and will
inform us soon of their planned response to the case.

-Despite this case, NGO's engaged in labor advocacy tell us that
working conditions and labor standards are generally better in QIZ
factories than in other private and public-sector factories.

2. (C) EconOff recently met with Oussama Abboud, the Managing
Director for the Kazareen Textile Company, an Egyptian garment
exporter participating in the Qualifying Industrial Zones (QIZ)
program. Kazareen reports $50 million in annual sales, with its
biggest contracts coming from Wal-Mart and the New York-based
Warnaco Group, the parent company for such brands as Calvin Klein,
Speedo, and Chaps.

--------------------------------------------- ----------------------
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Passports of Foreign Workers Held, Strike Broken

--------------------------------------------- ----------------------
-----

3. (C) Abboud said that he legally brought in approximately 60
Bangladeshi workers to work in his factory in 2008, joining some
1,700 Egyptians on Kazareen's overall staff. (Note: Egyptian labor
regulations limit the non-Egyptian workforce to 10%). Abboud
bluntly told EconOff that Kazareen management held onto to the
passports of the Bangladeshis. He complained that some of the
Bangladeshi workers came to Egypt to use it as a "gateway" to
illegally immigrate to Europe, and that about half of his
Bangladeshi workers have since left Egypt for Italy via boat from
Libya. The workers left Egypt without their passports, since they
could not get them back from Kazareen.

4. (C) Abboud also said that he overcame a day-long work stoppage
in April 2009 by firing the strike's leader, who had attempted to
organize the workforce. With the dismissal of the strike leader,
all of the other strikers returned to work, and there have been no
further efforts to organize.

-----------------------------------------

GOE Response to the Case

----------------------------------------

5. (C) EmbOffs raised the USG's concern about the holding of
foreign workers' passports to two different GOE ministries. The
Ministry of Manpower and Emigration (MOMM), which handles labor


issues, denied that such a phenomenon exists in Egypt. However, the
Ministry of Trade and Industry (MOTI), which handles the QIZ
program, has pledged to investigate the case and respond.

6. (C) In a January 21 meeting with EmbOffs, Assistant Minister of
Manpower and Emigration Mervat Wahby said that MOMM has never
discovered any cases of foreign worker's passports being held in
Egypt. Wahby noted that her ministry has 600 labor inspectors who
monitor factory conditions in Egypt's 29 governorates.

7. (C) EconOff raised the issue of the alleged labor problems at
the Kazareen factory to Haytham Abdel-Ghany, the Registration and
Audit Manager at the QIZ Unit in the Ministry of Trade and Industry
(MOTI). Abdel-Ghany expressed the ministry's concern about the
alleged mistreatment, and said that the issue had been referred to
Minister of Trade and Industry Rachid Mohamed Rachid to decide what
action should be taken. Abdel-Ghany told us on February 10 that
MOTI is investigating the case, and will inform Embassy Cairo soon
of its plans to deal with the matter. Abdel-Ghany emphasized that
this was an "individual case," and that MOTI had not heard of any
other QIZ factory holding the passports of its foreign workers.

--------------------------------------------- ---

Bangladeshi Embassy Response

--------------------------------------------- ---

8. (C) Harun Rashid, Charge d' Affairs at the Embassy of Bangladesh
in Cairo, told EconOff that cases of mistreatment of Bangladeshi
workers, including the holding of passports, is a phenomenon that
is "happening all the time" in Egypt. Rashid said that the
Bangladeshi Embassy has received numerous complaints from its
nationals about it in the past, but has only heard 1-2 complaints
in the past year. Rashid was unsure if there had been a previous
case of such mistreatment in a QIZ factory, and noted that many
past cases involved non-QIZ companies. Rashid says that the
Bangladeshi Embassy does not raise complaints about such cases with
the GOE, but instead appeals directly to factory managers to
improve the conditions for Bangladeshi workers.

--------------------------------------------- ---------------

Labor Conditions Generally Better in QIZ's

--------------------------------------------- ---------------

9. (C) Local NGO's advocating for labor rights report that working
conditions are generally better in QIZ factories, compared to other
manufacturers in Egypt. According to the Land Center for Human
Rights, a workers' rights advocacy group, salary and benefits are
particularly better in QIZ factories than in other private sector
factories. However, according to the Land Center, the lack of a
union representation that plagues Egypt's private sector in general
is also an issue in QIZ factories.

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Comment

--------------

10. (C) This case marks the first time a QIZ company has told us
directly that it holds the passports of foreign workers. In
pressing for an expansion of the QIZ program, MOTI has insisted
that factories operating in QIZ's uphold proper labor standards and
abide by QIZ rules. QIZ Unit officials have stated that labor
problems previously associated with Jordanian QIZ's have not
occurred in Egypt's QIZ's, and QIZ Unit officials have been

particularly sensitive to comparisons between the Jordanian and
Egyptian programs. Embassy Cairo will follow up on the issue with
MOTI as it prepares a response to the case.

11. (C) EmbOffs have visited a number of factories in the past
several months, and have not heard similar reports regarding
foreign workers in the factories that may employ up to 10% foreign
labor, typically from South Asia. Despite this recent case, labor
conditions -- driven primarily by strong compliance programs of
garment buyers -- are generally better in factories participating
in the QIZ program than in those not participating in the program.
SCOBEY

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