Viewing cable 09PORTAUPRINCE553, HAITI ANXIOUSLY AWAITS DECISION ON MINIMUM WAGE

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C O N F I D E N T I A L SECTION 01 OF 03 PORT AU PRINCE 000553

SIPDIS

STATE FOR WHA/EX, WHA/CAR, EEB
STATE PASS SOUTHCOM FOR POLAD

E.O. 12958: DECL: 06/09/2019
TAGS: PGOV PREL ECON EAID ETRD EINV HA
SUBJECT: HAITI ANXIOUSLY AWAITS DECISION ON MINIMUM WAGE

REF: A. PORT-AU-PRINCE 00486
 ¶B. PORT-AU-PRINCE 00538

Classified By: Deputy Chief of Mission Thomas C. Tighe
for Reasons 1.4 (a, d)

¶1. (SBU) Summary: Parliament's decision to raise daily
minimum wages in the commercial and industrial sectors
continues to strain relations between President Preval and
members of Parliament. Since mid-May, President Preval has
encouraged dialogue between members of Parliament and the
private sector to spark consideration of a lower or phased-in
minimum wage that would allow Haiti to keep jobs, foster
greater investment, and defer his responsibility of signing
the current minimum wage law. President Preval has yet to
sign the law and Parliament is annoyed with Preval's apparent
unwillingness to make a clear decision about the increase. A
Haitian Association of Industry (ADIH)-funded study indicated
that a 200 Haitian gourdes (HTG) per day wage would devastate
the textile sector and noted that it could only thrive with a
HTG 100 per day minimum wage. Private sector representatives
are convinced that members of Parliament understand the
impact the increase would have on employment and Haiti's
struggling economy. Members of Parliament, however, are
adamant that the law be signed as written. No party to the
discussion wants to be tainted by appearing to compromise
Haitian workers' progress. End Summary.

Parliament Frustrated by Preval's Inaction
------------------------------------------

¶2. (SBU) Several leading Senators signaled they are inclined
to compromise on the minimum wage law, including Senate
President Kely Bastien. During a June 8 speech to the
National Assembly, Bastien urged protestors to refrain from
violence and echoed a key demand of the students, who called
on authorities to release protesters arrested by police June
4-5 (Ref. B). Senator Jean Hector Anacacis called for calm
and Senator Joseph Lambert asked protestors to peacefully
await President Preval's decision on whether to sign the
minimum wage law. According to a key advisor to Bastien,
legislators left the June 5 meeting with President Preval
unsure of whether he would sign the bill or send it back to
Parliament for revisions. (Note: Since Parliament adjourned
shortly after the Senate voted the minimum wage bill in early
May, Parliament was required to resubmit the bill to
President Preval after the opening of the next session on
June 8. Preval has 8 working days from that date to sign the
bill into law or return it to Parliament with his objections.
 Senate President Bastien's chief of staff confirmed to
Poloff June 9 that the Senate had indeed resubmitted the bill
to the National Palace the preceding day. End note.)
Minimum wage bill sponsor Deputy Stephen Benoit summoned
industry leaders to a meeting in Parliament June 10,
demanding that they produce evidence to support their claims
that an increased minimum wage would eliminate their profit
margins.

¶3. (C) Some legislators argue that the bill should be
promulgated without a ''phase-in'' period or any other
modifications. Deputy Cholzer Chancy told the press he was
unconvinced by Preval's explanations during a meeting at the
National Palace June 5, and had seen no evidence that the
assembly sector would suffer if the law were enacted.
Senator Youri Latortue criticized the President for only
belatedly consulting with Parliament on the matter and
Senator Rudy Heriveaux voiced his support for peaceful
student protests to pressure Preval to sign the law as
passed. In a conversation with Poloff June 8, Heriveaux
described his failed attempts as president of the Senate's
commission on public health to reconcile the students and the
university administration. He said he attempted to mediate
the conflict the week of June 1, but students' demands
escalated as street protests gained momentum. He regretted
that the protestors' ''rough handling'' by the police and the
arrest of 24 of them had further radicalized the students.

¶4. (C) Many in Haiti's parliament seem exasperated by what
they consider to be untimely lobbying efforts by President
Preval and industry representatives. Deputy Sorel Francois,
who voted against the new minimum wage law, told Poloff June
9 that even legislators inclined to moderation would face
tremendous public pressure to reject any proposed
modifications to a law they have already voted to approve.
At a meeting the week of June 1 with industry representatives
and 11 deputies, many were receptive to industry leaders'
arguments, but argued that the time for lobbying was before,
not after, the Parliament approved the law. Senators
Heriveaux and Michel Clerie have privately made the same
point, and emphasized that recent student protests have only
increased pressure to reject any proposed amendments to the
law.

Preval Expected to Make the Next Move
-------------------------------------

¶5. (C) According to legislative procedure established by
Haiti's constitution, following the submission of a law from
Parliament, the President is expected to sign or veto the law
within eight working days. This would force Preval to make a
move by June 17. Lionel Delatour (protect) a member of the
HOPE Tripartite Commission (CTMO-HOPE) told Econ/Poloff June
8 that the President is unlikely to make a formal decision on
the law and will continue to request that Parliament engage
in dialogue with the sector. (Note: President Preval sent a
letter to the presidents of the Senate and Chamber of
Deputies May 18 requesting that Parliament consider the
impact the higher wage would have on employment and the
overall investment climate in Haiti. End note) Preval was
expected to depart Haiti June 10 for the 6 PetroCaribe Summit
(June 10-11) in St. Kitts, however, Ministry of Foreign
Affairs Director of International Organizations Azad Belfort
reported to PolOff on June 10 that Preval plans to send the
Foreign Affairs Minister in his place.

Industry Study: Wage Increase Will Kill Textile Sector
--------------------------------------------- ----------

¶6. (U) The Haitian Association of Industry (ADIH) funded a
study on the impact of the proposed minimum salary increase
on the textile sector. Study author Lhermite Francois
interviewed 12 out of 25 factory owners, representatives from
the public industrial park (SONAPI), the banking sector and
ADIH to discuss the significance of the HTG 200 wage on the
sector and its workers, HOPE II opportunities, and the
banking sector. Haiti's garment sector employs approximately
27,000 workers. The study found that 53 percent of workers
earn an average salary of HTG 154 (from HTG 90-200, USD 2-5,
daily). Thirty-eight percent presently receive an average of
HTG 218 (almost USD 5.50/day). Overall, the average salary
for workers in the sector is HTG 173 (USD 4.33). The study
notes that the current salary structure promotes productivity
and serves as a competitive wage in the region (Note: The
minimum salary for workers in the Free Trade Zone on the
Haiti-DR border is approximately USD 6.00. End note)
Francois concluded the study by stating that a minimum daily
wage of HTG 200 would result in the loss of 10,000 workers in
the sector.

¶7. (SBU) ADIH Executive Director Gregor Avril and HOPE II
factory owner Clifford Apaid admitted that the prospect of
the law, coupled with the weak global economy, has caused
approximately 1,000 job losses during the last month. One
factory (a HOPE II legislation beneficiary) closed and other
factories have closed down lines and dismissed newly employed
workers. According to Avril and Apaid, the garment industry,
represented by ADIH, has met with Preval on three occasions
and has presented the impact of the HTG 200 minimum wage to
over 40 members of Parliament and political parties, who they
believed afterward to be sympathetic to the sector's
findings.

Comment
-------

¶8. (SBU) Controversy over the minimum wage issue continues to
ramp up. Some members of Parliament, notably Benoit, demand
that the President sign the law as currently written while
they entertain private sector pleas for a reconsidered or
phased-in minimum wage even if only to show that they did
confer.

¶9. (C) Despite Preval's meetings with Parliament and the
private sector on how to manage the minimum wage legislation
without killing investment and job creation, he has said
little in the face of continuing student demonstrations.
Haitian National Police (HNP) and Ministry of Justice
officials are convinced these ''students'' are being funded
and mobilized by interests that go far beyond the university;
it remains unclear who is fomenting the disturbances.

¶10. (SBU) Although the numbers of protestors remain
relatively small, numbering 500 to 1,500, the HNP has had to
use tear gas frequently to control the crowds and the police
appears stretched then. While the demonstrations could peter
out as the academic year ends and students leave campus,
there are worrying signs that the demonstrations may be
picking up steam.

¶11. (C) With the expected return of the body of former priest
and close collaborator of former President Aristide, Gerard
Jean-Juste, on June 16 and planned Senate election run-offs
on June 21, Haiti is approaching a politically sensitive
period. A more visible and active engagement by Preval may
be critical to resolving the issue of the minimum wage and
its protest ''spin-off'' -- or risk the political environment
spiraling out of control.
SANDERSON