Cablegate: The Maldives Moving Toward Compliance With

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RUEHBI/AMCONSUL MUMBAI PRIORITY 6814
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UNCLAS SECTION 01 OF 02 COLOMBO 000903

SIPDIS

DEPARTMENT PLEASE PASS TO USTR MIKE DELANEY/VICTORIA KADER

E.O. 12958: N/A
TAGS: ECON ELAB ETRD
SUBJECT: THE MALDIVES MOVING TOWARD COMPLIANCE WITH
INTERNATIONAL LABOR STANDARDS

1. (U) Summary. The Government of the Maldives (GOM)
has made great strides toward complying with international
labor standards by approving a new employment law and a
constitutional right to strike. The Maldives is still
implementing the labor by writing regulations and designing
programs to enforce the law. For instance, the Maldives has
established labor tribunals and they are developing a system
of health, safety and labor inspections. Several nascent
unions have begun, and there have been several threatened
strikes at tourist resorts. Many employers are concerned
with the new rules, which will significantly increase their
costs, and several predict that the informal sector will not
comply with the new labor rules. End Summary.

The Bad Old Days(

2. (U) Prior to 2008, the Maldives did not have any labor
laws, so work hours, health and safety in the workplace, and
labor representation were strictly between the individual
employee and the employer. In many cases shop assistants
would work seven days a week, from morning to night. There
were also many abuses in the resort islands that form the
core of the Maldives economy. Although the Maldives has a
high youth unemployment rate, there are 70-80,000 legal
expatriate workers, and perhaps 30,000 illegal expatriate
workers, who form one-third of the total population, and many
of their rights were abused. In 1995, the U.S. suspended GOM
eligibility for tariff preferences under the U.S. Generalized
System of Preferences (GSP) because the Maldives did not meet
internationally recognized labor standards.

Great Advances in Labor Rights

3. (U) In 2008 the Maldives approved a new constitution
which provides workers with the right to strike and form
trade unions. The Maldives also passed an employment act
that established a 48 hour work week, annual and sick leave,
maternity leave and provisions for workplace safety. The
Ministry of Human Resources, Youth and Employment is required
to establish a pay advisory board to set minimum wages and a
labor relations authority to implement the new employment
law. The law prohibits discrimination and applies to
Maldivian as well as expatriate workers. The GOM has
established a seven member Labor Tribunal to oversee
implementation of the law. The GOM has not yet developed a
system of labor, health and safety inspections, although
employers are still legally required to meet the new
requirements.

4. (U) Workers are beginning to claim their labor rights
through unions and labor actions. The largest union is the
Tourism Employee Association, which claims 10,000 members but
is thought to have many fewer. One of the founders used the
union as a launch pad to become a member of Parliament.
There are also much smaller unions of fishery workers and
teachers. The Maldives does not have an overarching labor
organization. Workers threatened to strike in four resorts
in 2008, and the GOM facilitated an agreement between the
resorts and their employees. Many resorts have
representative staff committees, where the employees nominate
representatives to a committee to discuss workplace issues
with the employer. GOM officials stated that these staff
committee had been able to improve working conditions in
resorts, but Econoff was not able to verify this claim
independently.

5. (U) Many employers have reservations about the labor
laws because the reforms have substantially increased labor
costs. Ministry of Human Resource, Sports and Labor
officials estimated that labor costs would increase 20-40%
for employers, since employees were restricted to a six day
48 hour work week unless the employers paid overtime. In
some cases shops are now open six days instead of seven so
that the workers have one day off. The Vice President of the
Maldives Chamber of Commerce also complained that the
government never consulted them about the new law, and the
law does not recognize the unique situation of workers on a
resort island. A business consultant commented that some
employees are upset, particularly expatriate workers, because

COLOMBO 00000903 002 OF 002

they are working fewer hours and receiving less pay.
Government and private sources thought that many small
employers, such as small shops on the street, will evade the
legal requirements and become informal businesses. The
business consultant predicts that only the most established
businesses would comply with the laws. Finally, employers
worry that employees could begin striking for a myriad of
reasons, many unrelated to labor rights per se, and that
these strikes could damage the economy.

6. (U) The Maldives has adopted these labor rights at an
economically difficult time. The GOM is seeking to reorient
their economy toward private industry, and as part of their
initiative to reduce government spending they plan to
retrench government employment by up to a third. The GOM is
the country,s largest employer, and traditionally the GOM
absorbed all school graduates. The downsized civil servants
face a difficult transition, since many of them may need to
seek jobs in the private sector.

7. (U) Comment. There will be bumps in the road, but the
Maldives is taking the steps necessary to comply with
international labor standards. The GOM is very eager to
become eligible for the GSP trade preference program, and
related access to financing from the Overseas Private
Investment Corporation (OPIC), so they are very open to USG
and ILO suggestions to improve their labor rights. End
Comment.
BUTENIS

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