Subject: World Bank Labor Troubles in Timor
September 2004 - VOLUME 25 - NUMBERS 9
T H E F R O N T
World Bank Troubles in Timor
A labor dispute in Timor-Leste (East Timor) is putting the World Bank's
"dream [of] a world free of poverty" to the test.
The dispute challenges the Bank to apply to itself the standards the
institution claims to promote, including a commitment to rule of law, poverty
elimination, fundamental labor rights and sustainable development.
On December 3, 2003, security guards and custodial workers at the World Bank
headquarters in newly independent Timor-Leste went on strike after eight days of
informational picketing. They were protesting a unilateral 30 percent wage
reduction by their employer Chubb Protective Services, a multinational
subsidiary of the conglomerate United Technologies Corporation, which had been
contracted by the Bank. Chubb, which has a history of poor labor relations in a
number of countries, sacked the 32 striking workers the next day.
The Timor Lorosa'e Trade Union Confederation (KSTL), which represents the
striking workers, alleges that in December 2002, Chubb instructed workers to
sign a new contract -- written in English, a language that many did not
understand -- cutting their monthly wages from $133 to $94. Using threats of
termination to coerce signatures, union representatives say Chubb offered no
explanation at the time for the cut. KSTL officials say they were bounced back
and forth between Chubb and the Bank in its protracted efforts to negotiate a
resolution -- with each shifting blame to the other.
Since the strike, the fired workers and their families have struggled to
support themselves. Some have returned to work for Chubb, where, according to
KSTL, company staff has warned rehired workers not to engage in union activity.
The union has also alleged that "termination without reason, termination
without warning, unpaid overtime, discrimination on salary, and recruitment
without contract" characterize Chubb's operations in Timor-Leste.
The union says Chubb has violated articles 50, 51 and 52 of Timor-Leste's
constitution, providing for the "right to work," "right to strike
and prohibition of lock-out" and "trade union freedom," and that
it has also violated Timor's Labor Code.
"We condemn" Chubb's "exploitation and violation of workers'
human rights," say the Chubb workers in a statement.
In a letter to United Technologies Corporation and Chubb Protective Services,
the World Bank reminded the companies that it "supports the promotion of
the International Labor Organization's (ILO's) Core Labor Standards and expects
its contractors to follow such in accordance with the applicable national law.
The World Bank recognizes the important role the core labor standards can play
in advancing economic, social and human development." One of the core labor
standards is the right of freedom of association and collective bargaining.
Despite this reminder, the Timor-Leste workers say the Bank has evaded
responsibility for its subcontractor's treatment of workers at its own facility.
The Bank insists it "is not a party to the dispute between Chubb and its
employees, and the Bank has no right to direct a settlement of this dispute, or
direct Chubb to re-hire any particular person." Global pressure has forced
multinational corporations like Nike to accept accountability for the actions of
their subcontractors, however, and the unionists and their supporters say no
less should be expected of the Bank.
Part of the dispute is rooted in the Bank's policy to promote, rather than
require, respect for the ILO's core labor standards. Thus, like many of its
borrowers, the Bank in Timor-Leste has voluntarily opted out of the very
policies it claims to encourage.
This labor dispute also raises questions about the Bank's commitment to
poverty elimination. The first of the UN Millennium Development Goals, which the
Bank has actively endorsed, is to "eradicate extreme poverty and
hunger," with extreme poverty defined as living on less than one dollar a
day. The Bank itself contends that a dollar a day represents an absolute poverty
line. At $94 per month, the new Chubb wage would support about three people at
the absolute poverty line, but most of the sacked workers are the primary wage
earners for larger families.
In a letter to global unions which have contacted the Bank in solidarity with
the Timor-Leste workers, the Bank contends that it "requires that Chubb
provide its employees with fair wages, leave and medical benefits." Chubb
must "pay salary and benefits commensurate with industry averages for the
area, that meet or exceed local labor codes and guidelines, and which are
benchmarked against government pay scales, where applicable." However, the
workers say that if a "fair wage" is interpreted as a living wage,
then in Timor-Leste, the Bank is choosing an impoverishing market wage. An
unskilled worker should be paid $109-$160 per month, according to an August 2003
international nongovernmental organization voluntary salary scale.
"Chubb's normal business practice is to offer employees terms and
conditions that are consistent with local regulations," says the company in
a statement. "Our employees in East Timor were offered a competitive market
rate as well as free medical service for themselves and their families. During a
dispute over pay in the last year, some workers took action, which Chubb
believes to have been illegal." The company says it "is confident that
its actions were both legal and fair."
Chubb also reports that it sold its Timorese business to a local manager at
the start of September.
The East Timor Action Network and several labor organizations, trade unions
and union federations have protested Chubb's actions to United Technologies
Corporation and the World Bank. In the meantime, KSTL has taken its case against
Chubb to the Dili District Court, where it is now being heard.
-- Karen Orenstein is Washington Coordinator of the East Timor Action Network
Support ETAN, make a secure financial contribution at etan.org/etan/donate.htm
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