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Viewing cable 07LIMA2135, CONGRESS LABOR COMMITTEE ON THE GENERAL LABOR LAW

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Reference ID Created Released Classification Origin
07LIMA2135 2007-06-19 18:34 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lima
VZCZCXYZ0003
PP RUEHWEB

DE RUEHPE #2135/01 1701834
ZNR UUUUU ZZH
P 191834Z JUN 07
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 5901
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 4780
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 2940
RUEHCV/AMEMBASSY CARACAS PRIORITY 0480
RUEHLP/AMEMBASSY LA PAZ JUN 4308
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 9204
RUEHQT/AMEMBASSY QUITO PRIORITY 1288
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 1333
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 4416
RUEHBS/USEU BRUSSELS PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHMFIUU/CDR USSOUTHCOM MIAMI FL PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY
UNCLAS LIMA 002135 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USEU FOR DCM MCKINLEY 
 
E.O. 12958: N/A 
TAGS: ELAB ETRD PGOV PHUM ECON PE
SUBJECT: CONGRESS LABOR COMMITTEE ON THE GENERAL LABOR LAW 
 
REF: A. 06 LIMA 4547 
 
     B. LIMA 240 
     C. LIMA 1805 
     D. LIMA 1850 
 
1.  (SBU) Summary: Two pro-labor members of Congress's labor 
committee described efforts to overcome remaining obstacles 
to the draft General Labor Law (GLL) and their hope that 
Congress will approve the law by the end of the year.  They 
warned that critics were nitpicking to death an historic 
piece of legislation that represents a necessary first step 
in reforming Peru's labor law.  Committee Chairman Aldo 
Estrada (UPP) criticized the business community for being 
disingenuous and for allowing "the perfect to become the 
enemy of the good."  Deputy chair Luis Negreiros claimed that 
quick passage of the PTPA could undermine support for the 
GLL.  Business leaders counter that Peru's labor legislation 
should reflect the government's market-oriented policies. 
Widespread criticism of the draft law throughout its 
evolution underscores the difficulty of genuine labor reform. 
 End Summary. 
 
Overcoming Committee Deadlock 
----------------------------- 
2.  (SBU) Congressmen and staffers on Congress's labor 
committee are seeking to negotiate the draft General Labor 
Law (GLL) through the remaining persistent obstacles in its 
path.  When the committee presented the draft law to the full 
Congress May 8, it received a broadside of criticism. 
Article 165, which required labor judges to determine 
compensation for workers fired without cause (reftel D), was 
particularly controversial.  Committee staffers told poloff 
recently that Congress planned to appoint a five-person 
commission to study the problem and that compromise was 
likely.  Congressional leaders would quietly ask the 
commission to recommend that fired workers be eligible for 
monetary compensation but not re-employment and that a "third 
party," rather than labor judges, determine the level of that 
compensation.  They said the former fix was intended to 
please business while the latter was meant to placate labor, 
and they speculated that the third party could be the 
Ministry of Labor. 
 
3.  (SBU) Staffers said a special commission was necessary 
because the labor committee was hopelessly deadlocked by 
ideological and personal disagreements.  Only five of eight 
committee members signed the draft law.  Congressman Oswaldo 
de La Cruz of the Fujimorista bloc refused to sign because 
the draft GLL went too far in strengthening worker rights and 
threatened to undermine economic growth.  Juan Huancahuari of 
the Nationalist Party refused because the draft law did not 
go far enough in protecting labor rights and took away 
protections that had already been agreed to in public 
hearings.  UPP Congressman Victor Mayora opposed the bill 
simply because he does not like his fellow UPP-ista Estrada, 
according to staffers. 
 
Anger at Business Groups 
------------------------ 
4.  (SBU) While Estrada and Negreiros expressed annoyance 
with their congressional colleagues, their real anger was 
aimed at business groups involved in the GLL negotiations. 
Estrada said the committee had made every change requested by 
business, even adopting verbatim the language they proposed, 
only to have business spokesmen caricature these efforts as 
attempts to create absolute labor stability.  Estrada called 
the Peruvian businessmen responsible for these 
mischaracterizations "devious" and "short-sighted."  Both 
congressmen said that business groups failed to understand 
the true significance of the GLL as an umbrella piece of 
legislation that promised to codify and simplify the 
confusing patchwork of existing labor laws and regulations. 
(Comment: Our own conversations with business representatives 
over the last several months do not bear out Estrada's 
claims.  While they appreciated the chairman's willingness to 
listen and consider their viewpoint, they have consistently 
opposed the provisions ultimately adopted in a number of 
areas, particularly forced rehiring of dismissed workers. 
End Comment.) 
 
Deal Hostage to Bickering 
------------------------- 
5.  (SBU) Negreiros and Estrada further emphasized that 
agreement had been reached on 415 out of the 430 articles in 
the bill, and lamented that the whole package could be 
undermined by nitpicking over Article 165, which concerns the 
rights of workers fired without cause.  Negreiros insisted 
that the committee had remained even-handed in its approach. 
He noted that, even after the GLL was passed, most unions 
would be unable to organize sector-wide; the minimum wage 
would remain at USD 1.50 per hour; and workers fired without 
cause would not be entitled to regain their old jobs. 
Negreiros insited that the real threat to job growth was 
legislation tilted so far in favor of business that social 
unrest was inevitable.  (Comment: Negreiros comments should 
be viewed in context.  A former labor official himself, 
Negreiros is seen by many in his own party, including 
President Garcia, as being statist and favoring strong labor 
stability.  End Comment.) 
 
6.  (SBU) Negreiros also speculated that quick passage of the 
PTPA in the US Congress could undermine the GLL.  He noted 
that most Peruvian congressmen believed the GLL was a 
necessary precondition for the PTPA, and with the PTPA in 
hand, support for the General Labor Law could fade.  Even if 
the PTPA was not approved in the US Congress, Estrada and 
Negreiros rated the GLL's odds as no better than 60/40 in 
favor.  Both expected the bill would die in committee if it 
was not approved by December. 
 
Business Interests Disagree 
--------------------------- 
7.  (SBU) Business interests disagree with the analysis of 
Estrada and Negreiros.  Business groups are continuing to 
negotiate "in good faith", according to Harry Stewart, 
General Counsel for ADEX, Peru's association for exporters. 
The problem, he said, was the GLL needed to reflect the 
government's market-oriented economic policy.  Otherwise, 
Peru could face a return to a "state-controlled economy," and 
risk undermining its strong economic performance of recent 
years   Stewart rejected criticisms from the bill's 
supporters, noting that it lacked support in the full 
congress. 
 
Comment: The Fruitless Frustration of Finding Compromise 
--------------------------------------------- ----------- 
8.  (SBU) After a year of steady and at times sharp criticism 
from labor, business, the media, the Ministry of Labor and 
their own parties, Estrada and Negreiros are running out of 
gas.  At one point during the meeting with poloff, Estrada 
rose to his feet and pounded the table to emphasize his anger 
at business groups.  Negreiros said that seeking a viable 
compromise among the competing interests involved had been 
"brutal."  Palpably frustrated by the challenges of bringing 
more workers into the formal economy and strengthening the 
government's ability to enforce labor protections, both 
congressmen believe the General Labor Law is a necessary 
first step and that its critics are merely seeking to retain 
the short-term benefits provided by a chaotic and unregulated 
labor market.  End Comment. 
STRUBLE