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COVERCO is an independent, non-profit monitoring group that focuses on businesses that operate in Guatemala . It was formed in 1997 by a group of professionals active in Guatemalan civil society with expertise in the areas of law, business administration, sociology, communication, education and religion. This diversity of knowledge has allowed COVERCO to conduct broadly-based, technical investigations of workplaces.

COVERCO employs monitors to regularly document working conditions, inspect working environments, interview workers and management, and conduct financial audits. The information gathered is analyzed and used to measure a company's compliance with its code of conduct.

Though COVERCO has grown thanks to corporate demand for independent monitoring, it maintains ownership of information and maintains the right to share findings with other interested parties. COVERCO holds proprietary information and partial results of ongoing investigations in strictest confidence.

OVERCO chooses not to work as a consultant to management, as an advisor to or advocate for workers, nor as an enforcement agency for government. Through this non-substitutive methodology COVERCO seeks to assure its independence. In this process it has succeeded in working along side all these parties as it gathers and disseminates information.


  In 1999 COVERCO began to monitor working conditions in two factories near Guatemala City for Liz Claiborne, Inc., a major apparel manufacturer based in New York .

LCI agreed that COVERCO would have unfettered access to the factories, would be able to meet as needed with factory management and would have full access to payroll and personnel records. In return, COVERCO would highlight cases of non-compliance with LCI's Standards of Engagement.

COVERCO has produced two public reports summarizing the findings of this ongoing project.

LCI is but one of several major corporations that produce apparel at these factories. To date, none of these other companies has asked COVERCO to monitor compliance with their codes of conduct.


  Choi Shin and CIMA Textiles are related companies that share production facilities at a site about 30 km from Guatemala City in the town of Villa Nueva . Both are Korean-owned. The site includes two large factory units, one

more recently built, two canteens, a parking lot and a number of outbuildings. The main production areas have high ceilings and are well lit.

As of March 2001, Choi Shin had 750 workers and 12 production lines. CIMA Textiles had 417 workers and 7 production lines. Each production line has about 30 workers and 2 supervisors.


  According to Guatemalan law, a union must have at least 20 members to gain legal recognition. Furthermore, it must represent at least 25 percent of the workforce before it can undertake collective bargaining with management.

the beginning of July 2001, two unions registered themselves with the Guatemalan government as representing workers at the Choi Shin and CIMA Textiles manufacturing plants. They bear the names SITRACHOI and SITRACIMA . Both are members of FESTRAS, one of several labor federations in Guatemala . Union representatives claim that they had 25 founding members at CIMA Textiles and 22 at Choi Shin. FESTRAS claims that the unions have now affiliated about 10 percent of the total workforce. COVERCO has not been able to confirm these claims independently. About 30 workers at the factories have publicly identified themselves as union members.

Union members claim that their organizing effort took more than a year.

At the present time, there are no other active unions in Guatemala 's apparel industry.


  July 9, 2001- A group of workers from CIMA Textiles and Choi Shin present their incorporation papers, bylaws and registration requests to Guatemala 's General Inspectorate of Labor. The workers share this information with the personnel directors of both factories.

Members of the new unions also appear before the 5 th Labor Court , requesting the court declare “employment immobility” for the two factories. This status enters into effect the same day. As a result, all firings and resignations must now be approved by the court.

Management is free to contest the court decision, but has not yet chosen to do so.

That same day, lawyers from Tulischth Díaz & Associates, legal advisors to VESTEX, the textile and apparel producers association, visit workers at the factories, production line by production line. The lawyers offer workers the opportunity to join a management-supported solidarista association that would provide a variety of economic, social and cultural benefits.

  July 10 - Managers begin to mobilize supervisors in an effort to discourage union affiliation among workers. Managers suggest that union affiliation would lead to the closing of the factories. Managers also suggest that the presence of a union would hurt the workers financially. They refer to the union's right to collect dues from members. (These unions have set monthly dues at one percent of the base wage, excluding bonuses, overtime, and other economic benefits, but have yet to begin collecting them).

From this day, onward, managers engage in other activities to discourage growth of the union, including:

•  encouraging individual workers to sign a document declaring their opposition to the union;

•  offering legal counsel to workers interested in disaffiliation with the union;

•  encouraging anti-union workers to identify union workers and pressure them to resign.

July 11 & 12 - COVERCO is refused access to the factories until further notice. The order is attributed to the factory manager. Factory management is convinced that COVERCO participated in organizing the union.

July 18 - Anti-union workers and supervisors form unruly groups that approach individual union members, demanding that they resign from the factory and the union. Some workers are clearly afraid that their jobs are endangered by the presence of the union in the factories. Violent demonstrations erupt in the factories, targeting union workers. One group of union workers manages to leave the factory, with the assistance, they report, of the police. Another group of workers seeks refuge in the offices of CIMA Textiles. LCI's internal monitor in Guatemala contacts COVERCO requesting our immediate emergency presence to monitor this volatile situation. COVERCO responds immediately and is allowed access to the factory. COVERCO holds a brief meeting with senior management to review the situation. We note that management refuses to assume responsibility for security in the workplace, claiming that they cannot control the actions of the anti-union group. Seven union workers are forced to resign. Two representatives of MINUGUA, the UN mission to Guatemala , enter to observe the situation. Representatives of other unions hold a demonstration outside the factory gate.

July 19 – More violent demonstrations in the factories against union workers. Several union workers and one COVERCO monitor are roughed up. No one is seriously injured. One group of workers, accompanied by plant security, takes refuge in the room adjacent to the factory gate. About 50 anti-union workers participate in the disruptions. Another 150 workers look on while the rest of the workforce remains in the factories. COVERCO meets with the factory president and presents him with a copy of pertinent sections of Guatemala 's Labor Code, noting that these are the laws that will be monitored, as well as LCI's Standards of Engagement. COVERCO assures management that it played no role in the organization of the union. Guatemalan police take up posts outside the factory gate. Representatives of other unions continue to demonstrate outside the factory gate. Senior factory managers continue to insist that they are unable to control anti-union workers.

July 20-25 - About 20 union members choose not to enter the factory, fearing for their personal safely.

July 24 – Both unions are officially recognized by the Ministry of Labor. On August 1 , legal notice of the official certification of both unions appears in El Diario de Centroamérica , Guatemala 's official newspaper.

July 25 - LCI distributes a letter, in Spanish, to the workers of both factories stating that they would continue to work in the factory if:

•  they respect the right of all workers to either join the union or not, according to each person's personal preference.

•  the current situation was resolved pacifically

•  the factory continued to produce quality products in a competitive and reliable manner.

The Ministry of Labor calls a meeting with unions and factory management. The parties agree:

•  to respect freedom of association;

•  to guarantee the security of union members and ensure them access to the factories;

•  to immediately reinstate workers who were forced to resign (the agreement clarifies employment status: the workers must be treated as if there had been no interruption of work, in terms of wage and position);

•  to allow MINUGUA access to the factory to verify compliance with this accord;

•  to communicate to the workforce that the formation of the union would not lead to the closing of the factories.

•  that management apply disciplinary measures to those who perpetrated violent acts against union members or incited aggression.

July 26 - Anti-union banners are taken down from in factory walls. From this day forward, 30 to 40 workers hold occasional anti-union demonstrations on factory grounds at lunch hour.

Senior factory management advises COVERCO that the factory cannot guarantee that it will not close since their continued production depends on orders from foreign companies. A number of workers advise COVERCO that they have heard a similar story from senior managers and line supervisors. This generates renewed confusion in the workforce. Workers are again fearful that the presence of the union will lead to the closing of the factory.

August 9 - Choi Shin and CIMA Textiles managers extend warning letters to seven of the people suspected of participating in acts of aggression and intimidation against union members.

Management and the union meet for a second time before the Ministry of Labor. The meeting produces the following:

•  the company agrees to advise the workforce that the current dearth of overtime is due to a low period in the normal production cycle. Production should pick up by October.

•  management designates the directors of personnel of the two factories as their representatives to deal with complaints by the unions. In their absence, the factory manager will fulfill this role.

•  management states that those responsible for “insults and blows” against union members have been “sanctioned” and that said sanctions are now in each person's employment file (see Findings).


1. General:

•  LCI management intervened promptly and decisively to insist that the management of CIMA Textiles and Choi Shin fulfill their responsibility to guarantee security in the workplace. LCI also requested the prompt reinstallation of union workers who were forced to resign.

•  During the crisis period, LCI used its internal monitor in Guatemala to ensure frequent contact with CIMA Textiles and Choi Shin management. The internal monitor also personally intervened to ensure the protection of union workers whose physical well-being was at risk.

•  LCI management helped diffuse tensions with a letter to workers expressing the company's intention to respect workers' right to freedom of association.

•  Guatemala 's Ministry of Labor failed to visit the factories on the days of greatest unrest (July 18 and 19), despite being requested to do so by both the unions and the managers. A labor inspector finally met with management on Friday, July 20, but union representatives were not invited to be present. According to local management, there is no formal record of the meeting.

•  The letters that Choi Shin and CIMA Textiles managers wrote to seven workers suspected of acts of aggression and intimidation against union members may be invalid. They do not appear to constitute legal reprimands. Based on COVERCO's prior experience, the director of personnel, a senior non-Guatemalan manager and the cited worker normally sign such letters. In this case, only the director of personnel signed. Secondly, the letters do not mention any violation of factory regulations. Thirdly, the documents are described as “first letters (sic) of verbal and written attention,” not a “letter of reprimand.” Fourthly, the letter makes no specific mention of aggression against members of the union.

In a future visit to the factories COVERCO will confirm whether the letters have been added to the files of the respective workers.

- Union members and management representatives have begun to establish a formal procedure for resolving disputes. They held meetings on July 25 and August 9, under the auspices of the Ministry of Labor. These produced agreements on outstanding issues.

2. Specific Breaches of LCI's Standards of Engagement:

Harassment or Abuse – Every employee shall be treated with respect and dignity. No employee shall be subject to any physical, sexual, psychological or verbal harassment or abuse.

•  COVERCO observed that anti-union workers and some members of management subjected those who had publicly identified themselves as union members to physical and verbal abuse, as well as psychological harassment.

•  COVERCO heard from management that some workers felt intimidated and harassed by union members. This has been investigated through interviews with workers, but cannot yet be substantiated.

Health and Safety- Employers shall provide a safe and healthy working environment to prevent accidents and injury to health arising out of, linked with, or occurring in the course of work or as a result of the operation of employer facilities.

•  Senior and middle management repeatedly expressed their inability to guarantee security in the workplace. They were slow to contact local police and chose not to hire additional uniformed security agents to stabilize the situation in the factories.

reedom of Association and Collective Bargaining- Employers shall recognize and respect the right of employees to freedom of association and collective bargaining.

•  A group of anti-union workers, with apparent management support, forced seven union workers to resign during the July 18 and 19 disturbances. These resignations violated the July 6th court order, which declared “employment immobility” at the factories.

The workers are all now back at work, but there was a dispute between the workers and management over the payment of a severance package that ranged from Q.2500 to Q.3500. This package included wages and incentives for the pay period, the mid-year bonus, and a special severance bonus of Q.1000.

The first week of August, the factory manager advised these workers that the full amount paid as a severance package would be discounted from their salaries over the next two to three months. He justified this action by citing Article 99 of the Labor Code. Only after five pay periods would the factory cut new checks for the missed pay-period and mid-year bonus. This measure effectively leaves these seven union members without pay during this period.

At the management-union meeting held on August 9, the parts agreed to amortize this debt at the rate of Q80.00 per pay period (about US$10.00).

•  Four of the workers who had been forced to resign had previously identified themselves as union members. When they returned to work, their job assignment or production line were unilaterally changed. This is a violation of Guatemala 's Labor Code (Article 20) and of the management-union agreement reached on July 25. LCI intervened on behalf of the workers, and by August 10, three of the workers returned to their original posts. At the August 9 meeting, management promised to review the case of the fourth worker

•  The peaceful demonstrations that have taken place since July 26 are permitted under Guatemalan law. However, legal opinion and jurisprudence in Guatemala are divided on the issue of the production of the anti-union banners and placards used in such demonstrations for the following reasons:

•  workers prepared banners and placards during work hours;

•  management provided the materials for their production;

•  management outright encouraged the production of such anti-union materials.

Wages and benefits- Employers recognize that wages are essential to meeting employees' basic needs. Employers shall pay employees, as a floor, at least the minimum wage required by local law or the prevailing industry wage, whichever is higher, and shall provide legally mandated benefits.

•  More than 20 union members were absent from work because of the disturbances. On Saturday, July 21, managers told some of these workers not to enter the factory because their security was still at risk. Management promised that workers would be paid for this day.

On July 23 and 24, COVERCO observed that these workers arrived on time to begin a day of work, but then chose not to enter the factories because management had not increased security.

OVERCO's review of the payroll for the July 20- August 2 period demonstrates that management deducted five days of wages (six days for the seven workers who had been forced to resign) as well as 2 Seventh Day bonuses from these workers' paychecks for this pay period. The August 9th union-management meeting dealt with this case. Management promises to pay these pending wages in the next pay period. COVERCO will monitor compliance with this agreement.

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