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### Viewing cable 07PHNOMPENH788, CAMBODIA'S STRIKES WANE, BUT CONTENTIOUS LABOR

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07PHNOMPENH788 | 2007-06-11 01:38 | 2011-07-11 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Phnom Penh

`

    VZCZCXRO0917
    PP RUEHCHI RUEHDT RUEHHM RUEHJO RUEHNH RUEHPOD
    DE RUEHPF #0788/01 1620138
    ZNR UUUUU ZZH
    P 110138Z JUN 07
    FM AMEMBASSY PHNOM PENH
    TO RUEHC/SECSTATE WASHDC PRIORITY 8541
    INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
    RUEHXI/LABOR COLLECTIVE PRIORITY
    RUEHBY/AMEMBASSY CANBERRA PRIORITY 2284
    RUEHGV/USMISSION GENEVA PRIORITY 1605

` `

    UNCLAS SECTION 01 OF 03 PHNOM PENH 000788

    SIPDIS

    SENSITIVE
    SIPDIS

    STATE FOR EAP/MLS, DRL/ILCSR--MARK MITTELHAUSER
    GENEVA FOR JOHN CHAMBERLIN
    STATE PLEASE PASS TO LABOR FOR ILAB--BILL BRUMFIELD, JIM
    SHEA, CHRIS WATSON, AND ZHAO LI
    STATE PLEASE PASS TO USTR--DAVID BISBEE

    E.O. 12958: N/A
    TAGS: ELAB ECON PGOV CB
    SUBJECT: CAMBODIA'S STRIKES WANE, BUT CONTENTIOUS LABOR
    ISSUES LOOM

    REF: A. 06 PHNOM PENH 1124
         ¶B. PHNOM PENH 662

    ¶1.  (SBU) Summary.  Cambodia's often tumultuous labor sector
    has been notably calm so far in 2007, with working days lost
    to strikes down 50% from 2006 levels.  A crackdown on a
    particularly notorious union, a recent minimum wage increase,
    embassy efforts to discourage illegal strikes, and slowly
    increasing sophistication among union members have all helped
    to contribute to the decline in labor unrest.  But, there are
    signs of potential trouble ahead.  Controversial issues of
    night shift wages, employmentcontracts, and union rights and
    responsibilities which have languished for years are finally
    being discussed, but these conversations are taking place in
    the pro-business Eighth Private Sector Working Group.  Unions
    have little effective say in the decisionmaking there--both
    due to the structure of the group and to their internal
    weaknesses--and as a result, worker's interests are not being
    adequately represented.  Minister of Labor Vong Sauth, who
    has now been in the job for one year, shows few signs of
    bringing effective leadership to this or any other issue.
    End Summary.

    Labor Unrest Subsides in Early 2007...
    ---------------------------------------

    ¶2.  (U) Working days lost to strikes in Cambodia's garment
    industry have declined dramatically from record-setting
    levels in 2006:  in the first five months of 2007, only half
    as many days were lost to strikes as in the same period in
    ¶2007.  Several factors contribute to the drop in labor
    unrest.  Last year's FTU-led effort to increase the minimum
    wage fueled unrest, labor observers say, while workers who
    now have an 11% increase in the minimum wage are reluctant to
    strike.  Embassy outreach to union leaders last year helped
    explain that strikes should only be pursued as a last resort,
    and emphasized that excessive strikes could lead buyers to
    pull out of the country due to fears about production delays.
     Free Trade Union (FTU) President Chea Mony reported that
    some workers are becoming more aware that some unscrupulous
    union leaders are manipulating workers to be able to extort
    factory owners and are refusing to participate in illegal
    strikes.

    ¶3.  (SBU) Government pressure against one notorious union,
    the CPP-affiliated Khmer Youth Free Trade Union (KYFTU), has
    also played a significant role in keeping labor unrest to
    reasonable levels.  The Garment Manufacturers Association of
    Cambodia (GMAC) lodged complaints against the union in
    November 2005 and September 2006 and post raised concerns
    about the union during meetings with senior Ministry of Labor
    officials in September 2006 and during the  Trade and
    Investment Framework Agreement Joint Council in February
    ¶2007.  KYFTU leader Yun Rithy was reportedly detained and
    questioned for three hours in September 2006.  Seng Sekada,
    Director General of the Labor Department, tells us that the
    union has taken a lower profile after committing the "serious
    offense" of implying the Prime Minister endorsed a thinly
    veiled bribe request letter sent to garment factories.

    ..but Big Issues Loom on the Horizon
    ------------------------------------

    ¶4.  (U) The FTU's threat to hold a general strike in response
    to the National Assembly's expected passage of a lower night
    shift wage (ref B) seems to be fizzling.  The National
    Assembly has not taken up the issue as quickly as expected
    and the presidents of the FTU and its partner, teacher's
    union CITA, are leaving June 9 for three weeks of Sam Rainsy
    Party political and fundraising events in Long Beach,
    California; Lowell, Massachusetts; and Houston, Texas.

    ¶5.  (U) In contrast to the deflating night shift wage issue,
    several labor observers have warned that two pending labor
    issues have the potential to seriously erode worker's rights
    and to create significant unrest:  fixed duration contracts
    and efforts to revise legislation about union rights and
    responsibilities.  Cambodian labor law distinguishes between
    two types of employment contracts:  fixed duration contracts
    (FDCs), which must be written, last for not more than 2
    years, and have a precise starting and end date; and
    undetermined duration contracts (UDCs), which are essentially

    PHNOM PENH 00000788  002 OF 003

    everything else.  Labor observers believe that fixed duration
    contracts can be easily abused, with working periods as short
    as 3 months before renewal creating perpetual job insecurity,
    particularly for union leaders and pregnant women who would
    be entitled to paid maternity leave.  Employers would like to
    negate an Arbitration Council decision that ruled that FDCs
    can be renewed only up to a total period of two years, at
    which point they automatically become UDCs.  Employers argue
    publicly that they need more flexibility in their workforces,
    and explain privately that firing unproductive or troublesome
    employees is much more likely to lead to strikes than simply
    failing to renew the short-term contracts of those workers.

    ¶6.  (U) It is still not entirely clear what specific issues
    would be addressed in the discussion on union rights and
    responsibilities, but the ILO's John Ritchotte believes that
    illegal strikes, union registration requirements, and most
    representative status will most likely be included.
    Currently, the vast majority of garment sector strikes are
    illegal, with unions failing to give seven days notice and
    take a secret ballot vote as required.  Lax laws surrounding
    union registration and the government's failure to certify a
    single union at each factory as most representative for the
    purposes of collective bargaining have led to a situation
    where there are more than 900 factory-level unions competing
    for members in Cambodia's 300 garment factories.  As a
    result, factory-level union leaders compete with one another
    for members, fueling excessive demands and illegal strikes,
    and some unions harass and intimidate rival union members.

    Eighth Working Group is Where the Action Is
    -------------------------------------------

    ¶7.  (SBU) There is substantial new energy and power in a
    year-old group tackling labor issues, but labor observers and
    unions complain that worker interests are often ignored in
    the business-centered process.  Like the other working groups
    affiliated with the semi-annual government-business
    conference called the Private Sector Forum, the group has
    business and government co-chairs, but unions have no part in
    the leadership structure.  While the working group has met
    three times, it has yet to consider any proposals submitted
    by unions, focusing instead on issues raised by businesses
    and at times frustrating even government participants with
    its strident pro-business tone.  Meanwhile, three out of the
    four union seats on the working group have gone to
    pro-government/pro-management unions, which are more numerous
    but smaller than the pro-opposition and independent unions.
    Unions are further disadvantaged by the poor organization of
    the group, which tends to meet in a series of frenzied
    discussions just weeks or days before they are called on to
    announce their progress in the semi-annual Private Sector
    Forum.  (Note:  The next Private Sector Forum is tentatively
    scheduled for mid-July.  End Note.)  Well-prepared employers
    come ready with proposals that they have already discussed
    with government officials privately, while unions seem to
    ignore rumors of what is likely to be discussed and only
    start thinking about a response when the issue is all but
    decided.

    ¶8.  (SBU) The ILO is so disturbed by the lop-sided power
    structure of the group and the lack of effective worker
    representation that it has threatened to publicly resign from
    the committee if the process is not made more democratic.
    Employers are pleased that long-standing labor issues are
    finally being addressed.  Ken Loo of GMAC acknowledged that
    workers have relatively little say in the group, but favored
    reforming the group's functioning rather than scrapping the
    group altogether.

    The New Minister of Labor Unimpressive One Year On
    --------------------------------------------- -----

    ¶9.  (SBU) After a year in office, the Minister of Labor, Vong
    Sauth, seems to many to be as invisible and powerless as his
    ineffectual predecessor, Nhep Bunchin.  The minister rarely
    appears in public, has little apparent hands-on interaction
    with labor issues, and has little influence over the Eighth
    Working Group.  Pro-CPP union leader Vong Sovann described
    the new minister as ineffective, unresponsive, and lacking
    the authority to solve labor problems.  Men Nimmith, the
    Executive Director of the USAID- and DOL-funded Arbitration

    PHNOM PENH 00000788  003 OF 003

    Council Foundation, traveled with Vong Sauth on a study tour
    of labor relations in Australia and said that the minister
    seemed to have little knowledge of current labor affairs.  He
    was vague and unimpressive in his meetings with Australian
    officials, and refused to deliver a speech written at his
    request, instead having his staff distribute copies to the
    media and explaining to Men Nimmith that actually talking to
    the media was too embarrassing as they were prone to ask
    political questions.

    ¶10.  (SBU) Employers have a slightly rosier picture of Vong
    Sauth, noting that, as a CPP member and the son-in-law of
    National Assembly President Heng Samrin, he has better
    connections than Nhep Bunchin, who complained of not even
    being able to control his CPP subordinates because he was a
    FUNCINPEC minister.  Nonetheless, even to employers, his role
    seems to consist of forwarding business-initiated proposals
    up the Cambodian leadership chain rather than pro-actively
    finding solutions.

    Comment
    -------

    ¶11.  (SBU) The current relative calm in Cambodia's labor
    sector is a welcome change from the tumult experienced at
    this time last year.  Unions seem to be slowly maturing with
    regards to the frequency with which they launch strikes.  At
    the same time, national level unions remain ineffective
    representatives of their worker's interests, a critical
    failing which becomes more and more damaging as the Eighth
    Working Group manages to tackle long-simmering issues such as
    night shift wages, employment contracts, and union rights and
    responsibilities.  If this imbalance remains and important
    issues are decided without effective worker participation and
    against their interests, labor unrest is likely to increase
    once more.  End Comment.
    MUSSOMELI

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