Georgia: Could US Free Trade Pact Promote Better Workplace Conditions in Tbilisi?
Twenty-year-old Tbilisi supermarket clerk Kristina works seven days a week, eight hours a day, making a pre-tax monthly salary of about $121 (200 laris). She’s an hourly worker, but since late December she has not been paid. Still, she keeps working: in an economy where jobs are scarce, it’s not like she has a lot of options.
Like most Georgians, Kristina may have heard the news that US President Barack Obama on January 30 called a Free Trade Agreement with Georgia “a possibility,” but she has little sense of what difference it could make for her own working conditions.
If Tbilisi and Washington can agree on a deal, she might see an improvement in her predicament.
Lax labor regulations that affect workers like Kristina have helped shape Georgia’s international image as a pro-business reformer. Yet the labor code that once brought accolades from Donald Trump, international financial institutions, and libertarian think-tanks now may prove a liability for Tbilisi’s hopes of reaching free trade pact with the United States.
For the past two years, Tbilisi has been holding talks with the United States; a deal would be lucrative for Georgia, but to complete an agreement, as well as seal a similar deal with the European Union, Georgia needs to meet International Labor Organization (ILO) standards -- something critics believe the current labor code fails to do.
The government maintains the strength of the code is in its simplicity: Workers and employers are free to negotiate salaries and other details among themselves. Local and international labor organizations assert the Georgian code gives employers an unfair advantage. A September 2011 strike at GeoSteel, an Indian-Georgian-owned factory in Kutaisi, serves as a case in point for such critics. Scores of striking workers were arrested and intimidated by police amid the labor dispute.
“It is a concern if people can face reprisals when they try to represent their and their fellow workers' views and concerns,” Kari Tapiola, a special adviser to ILO Director General Juan Somavia, said in an email interview. “It seems that the rules of the game for proper labor-management relations need to be clarified and better understood.”
Zurab Japaridze, the chairperson for the Institute of Strategy and Development believes the government will likely have to revise the code order to secure the deals. It would seem to be worth Tbilisi’s while to do so. Exports to the United States and the EU were worth $567.6 million in 2011, just over one-quarter of the country’s overall exports for that year.
Japaridze, who supports the code, said Tbilisi is in a “difficult position” because labor issues are “on the table” when it comes to international trade deals. “[E]ven before we started these trade negotiations, there was a demand coming from the European Union that we should solve somehow this issue,” he said.
Using reasoning that is reminiscent of the stances taken by Britain’s Conservative Party and the US Republican Party during union disputes in the 1980s, Japaridze, asserted that workers’ bargaining power comes from market competition, not regulation. “[T]he government has nothing to do with employee-employer relations,” said Japaridze. “Every time the government is involved, it gives some privileges either to employees or to employers.”
Georgia’s labor code does not set minimum wage requirements, or specify hours or rules for overtime or compensation. No clear provisions for union rights are outlined other than a general ban against discrimination – defined as “direct or indirect oppression” at the workplace – based on "religion or membership of other unifications, family status, political and other beliefs."
Japaridze noted that a petition brought by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) to challenge Georgia’s status as a US preferred trade partner is an indication that pressure on Tbilisi is running high. “The U.S. Trade Representative is not like a minor organization that you can ignore. As this issue is taken already on that level, I think the government, even right now, will have to make some sort of concession,” he said.
The petition, submitted September 10 by the AFL-CIO to the US Trade Representative’s Office, argues that the code enables companies to ignore workers like Kristina, who work overtime and weekends without compensation, and can go weeks without a paycheck.
If the petition is approved, Georgia could lose its existing trade privileges under the US General System of Preferences, a program that allows developing economies to export products to the US duty-free, but which requires them to protect basic worker rights. A free-trade deal would give Georgia even more benefits, but also would set more stringent requirements for compliance on labor rights, intellectual property rights and other issues.
For now, Tbilisi appears eager to comply. During a January 24 public hearing on the AFL-CIO petition, officials pledged to “develop collective bargaining” and “facilitate freedom of association” to show Georgia’s “genuine political will” to bring the code “to a higher level of compliance with international labor conventions and best practices.”
But the details remain unclear. Georgian government officials did not respond to requests from EurasiaNet.org for elaboration.
A senior official from the Georgian Trade Union Confederation (GTUC), which unites 27 unions, noted that the government’s promises to tweak the code may “help” the labor situation in Georgia, but cautioned that it is too early to see whether the promises will become reality. “The government should understand that the unions are not evil and they can also play a role in the development of the economy,” said GTUC Chief-of-Staff Paata Beltadze.
Molly Corso is a freelance journalist who works as editor of Investor.ge, a monthly publication by the American Chamber of Commerce in Georgia. The American Chamber of Commerce was among those organizations that submitted testimony to the USTR in support of Georgia’s labor law.
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