In March 2000, an international development agency commissioned COVERCO to conduct an independent review of compliance with labor laws in Guatemala 's recently privatized electric power generation industry.

Four power-generating projects, linked to multinational corporations, were selected to take part in this review. When commissioning this report, the international development agency requested anonymity for itself, the international corporations and the local companies involved.

The time, scope and resources applied to the report were set by the international development agency. It originally requested a review of both the construction and operational phases of the four power-generating projects in Guatemala , as well as a review of labor conditions throughout the industry. These aims were only partially fulfilled. (See “Limitations” below).

Unless otherwise stated, the “companies” referenced in the following summary are local contractors and subcontractors (often Guatemalan companies) of the general contractor for the project (typically, a multinational corporation), and the “workers” referenced below are the employees of such local contractors.

This review involved looking into several categories of allegations :

1. Non-conformance with local and international (ILO) labor rights standards regarding of hours worked and health and safety violations;
2. Interference with the right of association and the right to engage in collective bargaining;
3. Use of illegal undocumented foreign workers;
4. Forced labor;
5. Use of underage workers.

METHODOLOGY:

• Administrative and operational personnel of the electric companies selected for the study;
• Industry experts;
• Representatives of Guatemalan business organizations;
• Officials from the Guatemalan Ministry of Labor;
• Guatemalan Ministry of Mines and Energy
• Union officials;
• Representatives of national and international agencies working in the area of labor rights.

The investigation included:

• Interviews with administrative personnel, workers, industry experts, union members, secondary sources, and national and international labor rights specialists;
• Review of historical documents and files;
• Review of internal management files on the construction and operation phases .
• Review of personnel and payroll files for the construction and operation phases.
• Review of aerial photographs of the construction sites.

LIMITATIONS:

During the investigation, COVERCO identified a complex network of contractors and subcontractors. This posed the challenge of figuring out their relationship to the multinational corporations, and to one another. In some cases, the multinational corporations volunteered information about such work partners. In other cases, COVERCO was on its own to discover links and relationships.

Many of the local companies and multinational corporations reviewed chose not to share documentation nor grant access to production sites since COVERCO had no legal authority to subpoena records or enter private property. The over-all limitations on access to information and physical access to work sites seriously reduced the overall scope of this study.

Lack of time was a major investigative hurdle. The international development agency asked COVERCO to conduct the review in one month. This time period was extended twice because of delays in the project, inadequate access to information and sites, and larger than expected quantities of documentation. Furthermore, many local companies and multinational corporations were slow to deliver promised information. Many documents were only handed over at the very end of the investigative period. As a result, COVERCO strained to adequately review documentation delivered in the final days of the investigation.

A final challenge in compiling this report was trying to figure out how to process the volume of testimonies that COVERCO received. For example, monitors met a number of people who came forward with complaints about labor rights violations. However, much of that evidence was anecdotal, and could not be substantiated due to the limitations described above.

SUMMARY OF FINDINGS:

  Working conditions

  Hours of work:

- Workers involved in the construction phase of certain projects reported that they frequently worked more than the legal maximum number of hours. COVERCO found cases where workers worked as much as 126 hours of overtime per month. (The legal maximum for overtime is 80 hours per month.)

- Some workers reported that, during the construction phase, companies occasionally required employees to work seven days a week. Union representatives also issued this charge. This would constitute a violation of the Guatemalan law.

- COVERCO discovered technical violations of Guatemalan labor law by some of the companies with respect to work shifts. They mixed legal day-shift hours with legal night-shift hours, without respecting the overtime pay structures established by local law.

- Guatemalan law allows for three shifts: day, night and mixed. The day shift falls between 6 a .m. and 6 p.m. and allows a maximum of 8 hours of work daily for a total of 44 hours per week. Additional hours are considered overtime, for which the employer must pay time-and-a-half. The night shift falls between 6 p.m. and 6 a .m. and allows 6 hours of work per day for a total of 36 hours per week. Additional hours are considered overtime. A mixed shift is any that bridges the previous shifts. Guatemalan law says mixed shifts can last 7 hours per day, for a total of 42 hours per week. Additional hours must be paid as overtime. Because many companies reviewed operated with mixed shifts, a technical violation occurred when they only began to pay overtime after 44 hours, rather than after 42 hours.

Wages and benefits:

  •  A limited review of payrolls suggested that skilled workers in the electrical power industry earned considerably more than the minimum wage in Guatemala .

  •  Guatemalan employees at one site complained that workers from other near-by countries received more money for the same task during the construction phase. That would be a violation of the labor law.

  •  Some companies delayed in registering with the country's social security system (referred to by the acronym IGSS). One company only registered with IGSS two and a half years after it began operations. This is a violation of Guatemalan law.

Health and Safety:

•  Among the companies studied, COVERCO recorded two cases of workers dying in work-related accidents where there was evidence that the accidents could be attributed to insufficient training and inadequate supervision.

•  COVERCO heard from a variety of sources that there was a need for more safety training and more safety equipment. For example, union officials at one site claimed that distribution of safety equipment only took place five to six months into the project. The union also claimed that the equipment was not always new. Some of the multinational corporations working with the local subcontractors also listed safety as a concern. In addition, a government labor inspector issued a report chiding a subcontractor for failing to provide “overalls, safety glasses, gloves, safety helmets, security belts, back supports, ear plugs, appropriate tools and equipment.” The inspector also stated: “the company fails to comply with security and personal protection equipment, nor are workers provided with lockers, showers, rest rooms or eating facilities”.

•  COVERCO noted that some companies failed to provide instructions for safety equipment in Spanish, the national language. This is a violation of Guatemalan law.

•  Companies were sometimes tardy in designing and implementing on-site safety programs. COVERCO found that one company only implemented a general on-site safety program a year into the project. In a second example, a company failed to conduct environmental safety and hazard training until the sixteenth month of the construction project. In a third example, a worker's death on the job due to an apparent heart attack generated no internal investigation, while a fatal accident several months later at the same company generated a prompt and thorough administrative review.

•  Workers for one company complained that they were given unreachable production goals. COVERCO heard testimony from a variety of sources that workers tried to reach these goals by “subcontracting” relatives, friends, or neighbors. These “informal” workers had no legal status or protection, had received no proper training, and did not use safety equipment.

Right of Association and Right to Engage in Collective Bargaining

•  In one company, workers formed a union. It registered with the Guatemalan government and began working toward a collective bargaining agreement with management. The union alleges that, within the year, there were mass firings to get rid of organized workers. This would be a violation of Guatemalan law. Company officials denied the charge, telling COVERCO that no employees were fired. Officials claimed they simply exercised their option to not renew contracts when they expired. COVERCO noted that some contracts were indeed for a determined period of time, while others were open-ended.

•  Union members accused management of taking a variety of reprisals against them, including threats, intimidation and blacklisting. COVERCO reviewed a number of affidavits to this effect, filed with the government and with international organizations. A labor inspector's report also stated that the company had taken reprisals against the workers, in noncompliance with the demands placed on the company by the Ministry of Labor, with the further finding that the administrative and conciliatory procedure has been exhausted. This allowed the union to file complaints against the company in the labor tribunal.

•  COVERCO heard evidence that when a company began to hire new workers, it excluded from employment all workers who had belonged to a union in another company. One well-placed source noted that when he learned of the presence of a union, he warned other subcontractors of its existence. He also told COVERCO that one company had fired 25 to 50 workers to thwart the extension of the union movement.

•  Security guards at one work site told COVERCO that they were “contractually prohibited” from forming a union.

•  Following the formation of the union, the affected company reincorporated under another name. According to the union, that process was undertaken to destroy it. Its officials claimed that most of the resources of the original company were moved over to the new company, thereby putting the jobs of unionized workers in jeopardy.

Undocumented Foreign workers

  •  Some subcontractors were suspected of hiring undocumented foreign workers. Managers for one subcontractor are alleged to have brought in about 50 undocumented workers from a neighboring country; another subcontractor is alleged to have brought in as many as 150 undocumented workers. Hiring of undocumented foreign workers is a breach of Guatemalan law.

•  COVERCO reviewed a report filed by a Guatemalan labor inspector. It notes the presence of undocumented supervisors from a neighboring country. It also calls for immigration authorities to investigate. COVERCO found no evidence that the immigration authorities followed up on this recommendation.

•  In one case, managers at a construction site told COVERCO that there were only 10undocumented foreign workers on the job. A review of payroll records demonstrated the presence of at least 5 other workers from a neighboring country.

•  COVERCO spoke with a labor inspector who said he found evidence of approximately 100 undocumented foreign workers onsite, or 40% of the workforce.

•  COVERCO reviewed a document written by a labor inspector, addressed to the manager of a subcontractor. It demands “immediate compliance with procuring work permits for the foreigners who labor in the business, since all are (foreigners), both supervisors and workers.” In another part of the document, the inspector describes having asked 12 supervisors (each one was named) for their work permits and immigration documents. None were able to comply. When the inspector presented the document for management signature and comment, officials refused to receive the document and showed the labor inspector the door.

Forced Labor and Use of Under-aged workers

  - COVERCO found no evidence of use of under-aged workers in either the construction or operational phases of these projects.

- COVERCO also found no evidence of the use of forced labor by the power-generating industry.

FINAL OBSERVATIONS

  1. The international corporations operating power generation facilities in Guatemala lack effective systems of control capable of guaranteeing compliance with generally accepted international labor standards throughout the complex web of contractors and subcontractors employed to build and operate their facilities.

2. Guatemalan contractors have not demonstrated the ability to implement management systems and practices that assure compliance with the generally accepted international labor standards monitored in this study.

3. While COVERCO identified several cases where Guatemalan labor inspectors identified problems at particular sights, government agencies did not demonstrate a capacity to enforce Guatemalan law or generally accepted international labor standards.

4. Most of the projects studied demonstrated acceptable health and safety procedures in the operational phase.

5. By Guatemalan standards, the projects studied provide above average wages and benefits to skilled Guatemalan workers.