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Viewing cable 07LIMA1805, MINING STRIKE ENDS BUT CHALLENGES REMAIN

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Reference ID Created Released Classification Origin
07LIMA1805 2007-05-18 22:18 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lima
VZCZCXYZ0003
PP RUEHWEB

DE RUEHPE #1805/01 1382218
ZNR UUUUU ZZH
P 182218Z MAY 07
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 5545
INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 1652
RUEHBO/AMEMBASSY BOGOTA PRIORITY 4671
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 2893
RUEHCV/AMEMBASSY CARACAS PRIORITY 0402
RUEHLP/AMEMBASSY LA PAZ MAY 4234
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 9174
RUEHQT/AMEMBASSY QUITO PRIORITY 1225
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 1288
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 4407
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY
RHMFIUU/CDR USSOUTHCOM MIAMI FL PRIORITY
UNCLAS LIMA 001805 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EMIN ELAB EINV ENRG PGOV ECON PE
SUBJECT: MINING STRIKE ENDS BUT CHALLENGES REMAIN 
 
 
Sensitive But Unclassified, Please Handle Accordingly 
 
1.  (SBU) Summary: The recent strike by the National 
Federation of Mining, Metallurgy, and Steel Workers ended 
after the government promised to create a national 
commission, headed by the Minister of Labor, to address 
issues raised by the union.  In public, union leaders 
declared victory and noted that the GOP had already begun 
plans to implement a Supreme Decree that tightens 
restrictions on the use of sub-contractors in the mining 
sector, a key union demand.  In private, union officials and 
MOL insiders admit that resolving long-standing and 
complicated union complaints within the 60 days set by the 
government is unlikely, in large part because the MOL lacks 
the capacity to investigate and punish violations of labor 
law.  The GOP's inability to secure labor peace and regulate 
one of the best-paid union sectors underscores the challenges 
facing broader labor reforms and reflects the general 
suspicion that most unions have of the Garcia Administration. 
 End Summary 
 
------------------------------- 
The Problem with Subcontracting 
------------------------------- 
 
2.  (SBU) On April 30, the mining union announced an 
indefinite strike and predicted more than 80,000 of the its 
120,000 workers would take to the streets to demand a larger 
share of end-of-year bonuses, increased funding for pensions, 
and an end to plans to increase the retirement age.  The 
union's central demand, however, was for mining companies to 
reduce the number of sub-contractors employed in core mining 
activities.  Union leaders claimed that between 40 to 70 per 
cent of mine workers are sub-contractors who lack both the 
labor benefits provided full-time workers and the right to 
become union members.  Union officials have long maintained 
that extensive sub-contracting violates the spirit and letter 
of the law, in particular Supreme Decree 003-2002-TR, which 
prohibits subcontracting in the "principal activity" of a 
mining concern. Spokesmen for mining companies dispute these 
figures and insist the use of sub-contractors is in accord 
with Peruvian law. 
 
3.  (SBU) The strike quickly fizzled.  Less than one-fourth 
of union members participated, and then only sporadically, 
and the protests never garnered the national attention the 
union sought.  Commentators pointed out that the strike was 
poorly timed -- it was announced over a three day weekend -- 
and the mining union lacks the political clout it had five 
years ago.  Union officials blamed the failure on ongoing 
contract negotiations at several key mining sites, which drew 
the attention of union members away from the strike.  After 
five days of desultory protests, the union grabbed the GOP's 
offer of mediation. 
 
4.  (SBU) The GOP also undercut the rationale for the strike 
by issuing Supreme Decree 008-2007-TR on April 27, which 
further defines the principal and complementary activities of 
mining companies.  Principal activities are the productive 
processes indispensable to the functioning and development of 
the business; complementary activities are unconnected to the 
core function and include security, marketing, and cleaning 
services.  Sub-contracting is permitted only in complementary 
work.  The AFL-CIO's Lima-based labor center called the 
decree one of the most important changes in labor legislation 
in the past five years. 
 
---------------------------- 
The Problem with Enforcement 
---------------------------- 
 
5.  (SBU) Most observers doubt the government's ability to 
enforce the law.  One problem is the courts.  Lima Labor 
Court President Javier Aravalo told Poloff that it takes, on 
average, five years for labor courts to resolve a union 
complaint -- and sometimes much longer.  Aravalo said the 
Lima court knows how many cases are filed each year, but 
lacks the technology to determine what kinds of cases are 
filed or how the cases are resolved.  A second problem is the 
MOL's weak investigative capacity.  Working-level contacts at 
the MOL told Poloff that they do not know what percentage of 
mining workers are sub-contractors, and the ministry lacks 
sufficient inspectors to collect and track this data.  The 
same contacts said that, until recently, travel and per diem 
expenses of government inspectors were paid by mining 
companies. 
 
6.  (SBU) Union officials remain skeptical about how serious 
the Garcia administration is about improving labor 
conditions.  Minister of Labor Pinilla announced in August 
2006 that the MOL would double the number of labor inspectors 
to 500 by December 2006, but as of April 2007, the Labor 
Inspectorate had only 235 inspectors.  On May 1, the 
government launched the National Plan to Combat Forced Labor, 
touted by Pinilla as a comprehensive effort to end forced 
labor.  Critics pointed out that the plan was a rehash of a 
2005 report and contained no provisions to fund a nationwide 
survey to document the extent of the problem.  Organized 
labor leaders claim the MOL retains an anti-union bias: in 
2004, for example, the MOL declared 104 out of 107 strikes 
illegal; in 2005, 63 out of 65; and in 2006, 65 out of 67. 
In response to these criticisms, MOL officials say unions 
frequently fail to complete the necessary paperwork on time. 
The most recent mining strike also was declared illegal. 
 
----------------- 
Challenges Remain 
----------------- 
 
7.  (SBU) Comment: The issues raised by the mining strike are 
similar to those surrounding the proposed General Labor Law 
(GLL).  When the Labor Committee passed the GLL draft to the 
plenary on May 8 (septel), many commentators criticized it as 
attempting to legislate labor inflexibility.  Minister 
Pinilla characterized the text, including its attempt to 
clarify language defining the use of sub-contractors in the 
labor force, as "hopelessly muddled."  Even if the plenary 
resolves stubborn differences over the General Labor Law, 
many observers -- and most union leaders -- doubt the GOP's 
ability to enforce it.  Skeptics believe President Garcia's 
interest in labor legislation is tied to his wish to see the 
Peru Free Trade Promotion Agreement approved by the U.S. 
Congress, and will wane after that happens.  Others 
acknowledge the difficulties of re-constituting a system of 
labor protections that has lain dormant for 15 years. 
Whatever the case, future conflict arising out of labor 
practices in the mining sector is almost inevitable.  End 
Comment 
STRUBLE