Trade unions break into export processing zones

(October 2008)

Story published in Union View n°11 , also available at http://www.ituc-csi.org/IMG/pdf/VS_Sri_lanka_EN.pdf

Despite employers’ customary hostility, several trade unions have altered their working methods in order to organise workers inside export processing zones. However, Sri Lanka must improve its observance of freedom of association if it wants to retain the trade privileges granted by the European Union and the United States.

Sri Lanka has ratified the principal conventions of the ILO guaranteeing freedom of association, and all its labour legislation applies both inside and outside export processing zones (EPZs). In other words, the theoretical foundations for observance of trade union rights in such zones do exist. Unfortunately, in practice, employers and the authorities have erected numerous obstacles that hamper the exercise of freedom of association.

One of the main obstacles is very tangible – the boundary walls surrounding the EPZs: it is forbidden to enter these without authorisation, and this prohibition applies equally to trade unionists and labour inspectors. A trade union leader cannot enter a zone unless his trade union is recognised within an enterprise in that zone, and his one-day pass permits him to visit only that one enterprise. It is therefore impossible for trade unions to make initial contact with workers within the zones. Trade union recruiters must try to meet them at the exit to the zones, on their way home or at the lodgings where most EPZ workers live.

The three trade unions most active within EPZs are the NWC (National Workers Congress ), affiliated to the ITUC; the FTZ&GSEU (Free Trade Zones & General Services Employees Union), affiliated to the ITGLWF (International Textile, Garment and Leather Workers’ Federation); and the Progress Union. In order to maintain contact after the initial meeting, all three have set up, or collaborate with, small centres located not far from EPZs, in the neighbourhoods where workers live. These centres, which are supported by several donor organisations such as the American Center for International Labor Solidarity (ACILS), provide a whole range of services including advice on labour-related matters, small-scale vocational training courses, artistic activities and the opportunity to watch television and read magazines. Some of these services are not typical trade union activities, but they are very useful in attracting workers in EPZs, the large majority of whom are women aged 18 to 25. Gradually, as trust builds up between workers and the employees at these centres, the latter suggest the possibility of organising themselves into trade unions.

Not frightening workers with the word “trade union”!

The trade union movement does not enjoy a very positive image among the Sri Lankan population, partly because of its divisions and the political affiliations of several trade unions. Within EPZs, the mistrust of trade unions is further reinforced by employers who try to convince workers that the establishment of trade unions inevitably leads to job losses. The NWC, the FTZ&GSEU and the Progress Union, all three of which are independent from political parties, have avoided using the word “trade union” in the names of their centres in order not to frighten workers. For instance, the three centres managed by the NWC have been named “Friendship Houses”, the centre managed by the Progress Union is called the “Progress Center”, and the FTZ&GSEU works with “Women Centres” located near the country’s three largest zones.

Nevertheless, it can take many months between the workers’ initial contact with these centres and the attempt to establish a trade union at their factory. Lalitha Dedduwa, coordinator of the three Friendship Houses managed by the NWC, explains: “We first find out about the enterprise’s state of economic health so as not to demand recognition of a trade union by a factory that is about to close down, because that would provide ammunition to employers who accuse us of hastening bankruptcy. We therefore encourage workers to spread ideas about defending their rights and eventually establishing a trade union. The first activists in an enterprise are very important; we train them to build up their confidence and to enable them to respond to any negative reactions from their fellow workers. We train them in their rights but also in their duties and responsibilities, because they must set an example; it is important for the enterprise to function properly if we want to have a trade union in the long term.”

The next stage - recognition of the trade union by the employer - is the most problematic. As in many other EPZs around the world, Sri Lankan employers generally try to get rid of their workers once they are identified as trade union activists. Techniques range from soft methods (the offer of promotion) to tough measures (threats of dismissal, threats of physical violence, etc.) via a whole range of other methods (contacting workers’ parents to report their daughters’ activities and threaten them with loss of employment, spreading false rumours about the trade union activist, and so on). In some cases, when ‘threatened’ with the creation of a proper trade union, employers establish or revive “workers’ councils” - bodies elected by the workers, but which have no members and are not accountable to them. The people elected to such councils generally have no real negotiating power and are not trained to represent workers effectively. Workers’ councils are therefore not very useful but enable some employers to save face when accused of not engaging in social dialogue.

Months or years before recognition referendum

Under Sri Lankan law, official recognition must be granted to any trade union representing over 40% of employees at a workplace (1). If an employer refuses to do so, the trade union can ask the Ministry of Labour to organise a referendum among the staff to determine whether the 40% threshold has been achieved. Unfortunately, the Ministry often takes months or years to organise such a referendum, which gives unscrupulous employers plenty of time to get rid of workers identified as trade union activists. “We have never requested a referendum because we know that the employer will do his utmost to dismiss or bribe our activists before it takes place”, explains Progress Center coordinator Trixie Hettiarachichi. The NWC also tries to avoid holding referenda wherever possible, even though it was through one such vote that it obtained recognition of its first trade union in an EPZ, at the Polytex plant in Koggala (see box below).

“A new tactic used by EPZ employers is not to wait for a referendum before recognising a trade union, but to recognise only the branch within their own enterprise, refusing any dialogue with the federation’s representatives”, laments Anton Marcus, secretary-general of the FTZ&GSEU. Indeed, there is no legal provision that requires an employer to engage in dialogue with the federation to which his enterprise’s trade union belongs. Isolated and without the support of the federation, such trade unions are less strong.

The Progress Union notes the same tendency on the part of employers, although the NWC does not: “Of the 30 or so enterprises in EPZs where we have members, around 20 accept a certain level of dialogue, including with the federation”, comments Gerald Lodwick, deputy secretary-general of the NWC. “This does not mean that they are willing to go further, to engage in collective bargaining, for instance. Hitherto we have succeeded in establishing a collective agreement only at the Polytex and Star Garment factories in the Koggala zone.”

The government does not honour its GSP promises

Since 2005, Sri Lanka has benefited from the GSP+ trade agreement (2) This has had a major impact: exports of Sri Lankan garments to the European Union, for example, increased from $993 million in 2005 to $1.425 billion in 2007. At the end of 2008, the European Union is due to decide whether it will continue to grant Sri Lanka this trade privilege. The ITUC and the European Trade Union Confederation (ETUC) have alerted the European Commission to the fact that the Sri Lankan government has failed to meet the commitments it made in 2005 in order to secure the GSP +, namely, implementation of all the ILO’s core conventions (and particularly Convention 87 on freedom of association and Convention 98 on the right to organise and collective bargaining).

The ITUC and the ETUC submitted a document to the Commission outlining 10 points that must be improved if the Sri Lankan government wants to demonstrate its willingness to observe its commitments in future. These points are based on remarks made by the ILO’s monitoring bodies about Sri Lanka, and could facilitate trade union activities in EPZs if they are implemented. They include, for instance, setting a maximum four-week deadline for holding a referendum on the recognition of a trade union, lowering the 40% threshold for such recognition and adopting measures to combat antitrade union discrimination. In the United States, an approach similar to that of the ITUC was adopted by the AFL-CIO union in connection with the American GSP.

"Some of our products are selling at half the price they made four years ago."

To date, the Sri Lankan government has scarcely adopted any measures that offer any hope of improved observance of its commitments. Nevertheless, the risk of losing the GSP+ is a major concern in the country. The clothing manufacturers’ association JAAF (Joint Apparel Association Forum ) is lobbying hard to ensure that this does not happen, emphasising among other things the negative repercussions on employment that it envisages in the event of non renewal: “We are already having to deal with inflation close to 30%, a rising rupee exchange rate and the highest energy costs in the region after Singapore”, explains Rohan Masakorala, deputy secretary-general of the JAAF. “If we lose the GSP+, we fear a 15-25% loss in jobs in our sector. Our manufacturing firms’ profit margins have fallen considerably in recent years, partly because of price reductions on international markets. Some of our products are selling at half the price they made four years ago.”

Over and beyond all these analyses, one thing is certain: clothing factories in EPZs provide the population with some 100,000 jobs, but living and working conditions are so onerous that between 10,000 and 30,000 job vacancies have not been filled in recent years. And if the Sri Lankan government continues to turn a blind eye to violations of trade union rights in these zones, the level of trade union membership will not rise beyond its present 10%, leaving around 90,000 workers unprotected from exploitation. This is far from the aim of the GSP+, and it should not be that of a government that claims to be democratic.

Samuel Grumiau

(1) An excessively high threshold in view of recent ILO jurisprudence, according to which even a 30% requirement is excessive.

(2) The Generalised System of Preferences permits manufactured goods and some agricultural

products exported by developing countries to access the EU market by completely or partially

lifting customs duties. The GSP+ provides special incentives for countries that have ratified the principal international conventions, particularly those relating to social rights.

ENCADRE n°1:

Export processing zones struggle to find workers

Accounting for 45% of export revenue, the clothing manufacturing industry is one of the driving forces behind the Sri Lankan economy. It employs some 270,000 workers directly and, according to the JAAF (1), indirectly generates around a million more jobs. Wages range from 9,000 to 15,000 rupees ($92 to $140) including bonuses and overtime. “In 2006, the subsistence level was set at 12,540 rupees for people living in EPZ areas, and 10,608 for the rest”, explains Progress Union president Palitha Atukorale. “Even employers admitted the fairness of this assessment, which was based on a study by a group of NGOs and trade unions grouped together under a platform called Alarm, but they argued that they could not pay such a wage. However, with the 30% inflation now hitting Sri Lanka, this estimate needs to be revised to at least 18,000-19,000 rupees.”

Those worst hit by the wage levels are female workers who have left their villages to work in Sri Lanka’s two largest EPZs, Katunayake and Biyagama. These zones are located on the outskirts of Colombo, over an hour’s drive from the centre of the capital, in areas where there is not much accommodation available. Most workers rent small rooms in local houses. This is good news for local residents, many of whom build new rooms behind their houses to boost their income. Accommodation for workers has become their main source of income.

To limit their expenditure, groups of two to four workers often share small rooms rented near the zones. Living conditions there are very poor: many of these rooms are built of corrugated iron or other materials that make the air very hot in a tropical country like Sri Lanka. Progress    Center coordinator Trixie Hettiarachichi explains: “Since there is generally only one bed in the room, they take turns sleeping in the bed and on the floor. There is usually only one toilet for the whole lodging house, which can accommodate several dozen people. To wash, they have to go to the well or a tank located in the yard or in a public place, where they are exposed to prying eyes and the risk of snake bites. Depending on how ‘comfortable’ the room is, they pay between 2,500 and 4,000 rupees each.”

There are thousands of unfilled jobs in these zones. “After five years, a worker receives a bonus equivalent to half a month’s salary for each year’s service”, FTZ&GSEU secretary general Anton Marcus explains. “She may also receive money deposited in a social insurance fund for her pension. This is usually enough to pay for her dowry, and that is when many women stop working. In the past, when an employee returned to her village, she would advise friends or relatives to go to work in the EPZs. That doesn’t really happen now; they can’t disguise the reality of the living and working conditions, which hardly encourage others to leave everything and move there.”

                                                                                                                      S.G.

(1) Joint Apparel Association Forum

ENCADRE n°2:

Good social climate brings new orders

The Polytex clothing factory in Koggala was the first EPZ enterprise to sign a collective agreement. Jayantha Vyanage, the factory’s trade union representative, explains: “We started organising the workers one by one in 1997. By 2002 we had 450 members out of 1,150 workers. We registered the trade union with the Ministry of Labour, and in October 2002 we informed the factory management that we wanted to recruit more and to hold a referendum.They responded negatively: workers were harassed, some leaders received death threats over the phone, managers contacted workers’ parents to tell them that their daughters would lose their jobs, and so on.

“In July 2003, the referendum at last took place, and we won 82% of the vote. The management thenceforth adopted a constructive attitude towards us and our cooperation led to the adoption of an initial collective agreement in 2004, which was renewed in 2007. We now have two meetings a month with the management: one to discuss workers’ problems, the other to analyse jointly how to improve productivity. Since the referendum we have secured several substantial benefits for workers including three days’ paid leave a year over the legal minimum, an office for trade union representatives, the payment of membership fees by automatic deduction from wages and a number of wage increases. The employer is very pleased with our cooperation and has told us that the good social climate and the workers’ high productivity have helped him to secure more orders.”

                                                                                                             S.G.