Sunday, September 30, 2012

Multinational corporations & labor violations in Egypt

Jano Charbel
Business executives representing nearly 50 US companies are in Egypt this week, the latest of a series of international trade delegations to visit the country. Foreign investors are a vital part of the current administration’s economic strategy — the hope is that they will provide the jobs and capital to lift the country from its economic malaise.

But labor activists Egypt Independent spoke to have drawn attention to multinational corporations’ patchy records on union rights. Cadbury, Schlumberger, Pirelli, Henkel-Persil and Suzuki, among others, are accused of union busting and punitive sackings.

These violations are not out of step with the general trend in the private sector here, but they raise questions about the commitment of corporations headquartered in countries with nominal trade union freedoms to preserve those freedoms in their international operations. They also raise questions about the government’s willingness to turn a blind eye to workers’ rights, when investment is at stake.


The confectionery giant Cadbury, a subsidiary of the Kraft Foods conglomerate, has been reaping in hundreds of millions of pounds worth of profits since its establishment in the country in 1992.

Located in 10th of Ramadan City and in Hanovil, Alexandria, Cadbury Egypt employs more than 1,500 people. Despite resistance from the administrative board, Cadbury workers managed to establish their independent trade union on 28 April.

Led by their union, these workers launched a two-day strike on 27 July during which they demanded the 15 percent wage increase decreed for the public sector by President Mohamed Morsy on 1 July.

On 8 August, five of nine trade union leaders in the company were dismissed by Cadbury Egypt on charges of instigating unrest within the company.

 Mohamed Hassan, president of the union in Alexandria, says that last year, the union was able to generate profits for the company amounting to LE267 million.

“Nevertheless, the administrative board sacked us for demanding our rightfully earned pay raises.”

He argued that the company’s managing director, Gawad Abaza, “doesn’t want a workers union in the company or anybody else to hold him accountable for our exploitation and the violation of our most basic labor rights.”

Depending on experience and seniority in the company, workers at Cadbury Egypt earn between LE1,500 — LE6,000 per month (US$250 — $1,000), well above the national average. Hassan claims that “administrative board members earn a monthly average of LE15,000 ($2,500), while Abaza earns a large percentage of the profits each month.”

Hassan says Cadbury Egypt’s board dismissed them without first resorting to negotiations with the Manpower Ministry, in violation of labor laws.

“We ourselves engaged in negotiations with the Manpower Ministry’s bureau in Alexandria for 21 days,” Hassan says. “We strive to take our case to the labor courts.”

Hassan pointed out that similar union-busting actions have recently been undertaken by Cadbury in Tunisia.

Late last month, the five unionists dismissed by Cadbury Egypt received letters of support and solidarity from the Swiss-based International Union of Food Workers. Similarly, Kraft workers from various other countries also sent letters of support, demanding their reinstatement.


Established in France and headquartered in Texas, Schlumberger is the world’s largest oil field services company and employs some 115,000 people in 85 countries.

Schlumberger Egypt directly employs about 1,000 well-paid workers and professionals in 10 different sites across the country. Schlumberger Egypt’s profits in 2011 amounted to an estimated $30 million. On average, an Egyptian engineer might earn LE9,000 per month ($1,500) working at the company, while a manual worker at an oil rig might earn LE5,000 ($833) per month.

However, this company apparently does not respect the right to organize. Against the administration’s will, employees there established their first union committee in May 2011.

The administrative board responded by punitively sacking four workers from the company between June and July 2011, including three unionists and one union organizer.

Mohamed Abdel Rahman, secretary general of the Schlumberger Egypt Workers Union, says the company’s France branch sought to compensate them for their dismissals.

“Yet we don’t want monetary compensation,” he says. “We demand our jobs back and we demand the right to organize within the company.”

Abdel Rahman, one of the unionists who were sacked, says Schlumberger officials from France and the US visited Egypt last week to investigate the dispute.

He also says the unionists filed a complaint to the Manpower Ministry last year.

“Ministry officials told us that we did not violate any laws and that we were in the right,” Abdel Rahman says, adding that he and the other unionists who were fired had lodged a legal appeal before the Labor Court in September last year. Their next court hearing has been adjourned to 12 September.

Similarly to the Cadbury Egypt unionists who had been fired, those who had been fired from Schlumberger Egypt have received letters of solidarity from the International Federation of Chemical, Energy, Mine and General Workers Union and its affiliated unions in Canada and Norway.

The unions demanded that Schlumberger Egypt reinstate the four unionists and refrain from union busting.


Headquartered in Dusseldorf, Germany, industrial giant Henkel-Persil — which produces detergents, cosmetic and beauty care products, and adhesive technologies — operates in 75 countries worldwide, with a labor force of some 47,000.

According to its website, Henkel employs 830 workers at its detergent production plants in Port Said. Media reports say Henkel Egypt generated profits of LE1.2 billion in 2011.

Workers at the company launched a strike on 28 August. Hundreds of workers demanded full-time contracts, increased wages, healthcare facilities and parity with Henkel workers in other countries, in terms of incomes, bonuses, profit sharing and paid holidays.

Like Henkel Egypt’s workers, Heinz Egypt’s 400 workers launched protests at their company in 6th of October City last month. Workers at this condiment company demanded an increase in their meager wages, full-time contracts for full-time work, periodic bonuses and profit-sharing payments, among other demands.

Suzuki Motor Corporation, managed by the Seoudi Group in Egypt, has also been involved in union busting. Workers at this company in 6th of October City established an independent union in June 2011, against the will of Seoudi Group.

According to a report issued by the Egyptian Center for Economic and Social Rights, five unionists and three other workers were dismissed from Suzuki Egypt between June and October 2011. These workers have not yet been reinstated.

The Italian global rubber and tires giant Pirelli dismissed five unionists from its company in Alexandria in July, after some 2,000 workers at the company went on strike the previous month. However, the Italian multinational company agreed to reinstate the five unionists and offered other concessions following intervention from the IndustriALL Global Union and Egypt’s General Trade Union of Chemical Workers.


Fatma Ramadan, executive board member of the Egyptian Federation of Independent Trade Unions, argues that “both corporations and the Egyptian state are responsible for increasing labor violations.”
Many workers at multinational companies, she continued, “earn only between LE600 to LE1,000 (about $100–166) per month, rarely more.”

Ramadan says about 130 laborers, primarily union organizers and strike leaders, have been punitively fired since the 25 January revolution for striking or organizing within their workplaces — private and public, domestically and internationally owned.

Talal Shokr, a secretary of the Center for Trade Union and Workers’ Services and the Egyptian Democratic Labor Congress, puts the number at 155.

Trade union rights are generally better protected in public sector companies, Shokr says, and protected worst of all in the “free zones” designed to attract investment, where regulation is largely suspended. He thinks the petroleum sector is among the most aggressive in dealing with its workers.

“Under the pretext of attracting investment, foreign or domestic, all labor violations are legitimized,” Shokr says. “Investors know that the state won’t hold them accountable for violations of labor standards.”

*Photos courtesy of Mohamed Gharnousy & IndustriALL

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