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The Sugar Worker, February 2003. News from the Sugar Sector.

Posted to the IUF website 06-Mar-2003

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume V, Number 2
February 2003

Contents




Trinidad: Labour Issues in a Dialogue-less Restructuring

From 20-27 February, the present writer visited Trinidad, in a solidarity action by the IUF with the All Trinidad Sugar and General Workers Union (ATSGWTU) and the sugar workers. During that time, he had the opportunity to discuss the current situation of Caroni (1975) Ltd. with workers in the Felicity, Waterloo and Usine Ste Madeleine areas. He also met with representatives of the union and staff associations and attended an informal meeting with a government official, all of which added information on the viewpoints of the social partners in the sugar industry of Trinidad.

Caroni (1975) Ltd. was established after the government acquired Tate & Lyle assets in the early 1970s. It is the only cane processor in the Caribbean island of Trinidad, with two factories and one refinery. Last year Caroni produced about 91,000 tonnes of sugar. Caroni is also involved in the production of rice, citrus and rum, among several other products. There are about 9,200 people employed by Caroni and some 6,000-cane farmers. Communities in the cane growing areas of Central Trinidad depend heavily on the industry for their daily life, and the company provides the community with some social services (health care, recreation) and infrastructure (roads).

Outline of Government's Restructuring Proposal

The government has outlined its proposal for a new Caroni (1975) Ltd., which would focus on the manufacturing and refining of sugar, while other assets would be devoted to agricultural and housing projects.


  1. Caroni's sugar production would be scaled down to 75,000-80,000 tonnes of raw sugar per year in one mill, the Usine Ste Madeleine. Starting in 2004, farmers would supply all canes and Caroni would stop growing cane. Arrangements would be made to ensure that cane cultivation attracts the best land, the best cane varieties be used, and an efficient use of machinery is achieved. Cane payments would be based on quality.

  2. Approximately 77,000 acres of Caroni's lands would be vested on the State, lands that would be managed by the Estate Management and Business Development Company Limited (EMBD). The Executive created this new agency in June 2002.

  3. A Voluntary Separation of Employment Programme (VSEP) will be offered to all employees, both "daily-paid" employees (workers) and "monthly-paid" employees (staff), according to the conditions and terms of their collective agreements. An "enhanced" VSEP was offered to all employees on 17 February, which adds a lump sum to the severance payments. The lump sum is based on a percentage of the severance and varies according to age groups: from zero (0) percent for employees in the 61-65 years age group to 50 percent in the 46-50 years bracket. Employees have 45 days to accept the enhanced VSEP. The Minister of Agriculture caused some controversy when he told the press that, if the employees do not take the enhanced VSEP, they would be retrenched (and possibly lose the bonus).

  4. Pension benefits: Employees would receive their pension benefits at the retirement age according to the rules of the Pension Plans. Caroni hired consultants to review all pension plans.

  5. New investors would participate in citrus, rice, sugar refining, beef and dairy products, as well as in some areas such as Tractor and Field Engineering, Human Resources Management, Transport Services and others.

  6. In the event of a "favourable" response by employees to the government's "enhanced" VSEP, Caroni would seek to rehire employees based on need and contract, and with new terms and conditions of service. The union opposes this proposal, which may be inconsistent with Trinidad's current industrial relations practices. An official from the Chief Personnel Office shared this opinion and added that rehiring employees in the current circumstances was "unethical" and "unprincipled." Caroni was advised that it should rehire employees under new terms and conditions only if all the employees take the enhanced VSEP. (Issues for the Guidance of the Board of Caroni (1975) Ltd. 10 January 2003.)



The offer of the Voluntary Separation Employment of Programme (VSEP)

On 17 February 2003, over 9,000 workers and staff received a letter from the company with the offer of an "enhanced" VSEP. The offer contains the following:


  1. Severance payments are calculated according to the collective agreements, which in the case of the All Trinidad expired in December 2001 and negotiations for renewal are in progress. (One item that deferred in the negotiations is the formula to calculate severance payments.) The calculation of severance payments has the potential to be a divisive element among employees and be unfair to workers. Because formulas differ, workers would receive up to 65 percent less than the staff for the same number of years of service. Workers outnumber staff on a 7:1 ratio. That means that the overwhelming majority of Caroni's employees would receive comparatively less than a small minority. As the "enhancement" is a percentage of the severance payment, the financial gap between the two groups becomes even greater.

  2. Benefits from Caroni's pension plans will be paid at the age of retirement, 65 years for workers, 62 years for staff. Employees were not informed of their pension benefits payable in the letter offering the VSEP, in part because of concerns about the accuracy of the data kept by the company. (See below.)

  3. Employees would have priority in accessing lands for agricultural purposes, which a process to be run by the EMBD according to set criteria. Both the criteria and monetary and other conditions to access lands are yet to be publicized.

  4. Priority to lease housing lots would be given to those employees who do not own a house already. The lots would be developed by the EMBD as well.

  5. Counselling and Advisory Centres will be set up to provide guidance to employees, and retraining centres will help to asses their needs and make the necessary arrangements to access appropriate training.



The timeline for the implementation of the enhanced VSEP is as follows:



Reactions to the VSEP

In the first week after the enhanced VSEP was offered (21 February), 168 staff and 309 workers had signed the letter of acceptance. From the information collected from workers and the leadership of the union and staff associations, there appears to be a different approach to the VSEP between the staff and the workers: the former tends to see the enhanced VSEP as a relatively good opportunity, while the latter seem to harbour doubts about it.

In the case of the staff, they are to receive a relative generous package because of the severance terms stipulated in their collective agreement, which are improved by the bonus or "enhanced" VSEP. The staff personnel also seems confident that they have enough skills as to be "marketable" - and probably rehired by the new Caroni.

The workers are in a different situation, where two main concerns predominate. In many cases, the severance payment they would receive is poor. Many would receive about TTD 50,000 (USD 7,240), which is in average close to one-year's expenses for a sugar worker and family. It is especially low when compared to the severance awarded to the staff. For instance, a worker with 18 years of service gets 324.5 days as severance. A staff employee, with the same number of years of service, gets 30.5 months pay or about 915 days. If the wage differential and "enhanced" VSEP are added, the financial gap becomes greater.

Secondly, most of the workers are agricultural workers who have devoted most of their adult life to this task. According to union sources, for instance, there are about 4,000 cane cutters. It is not surprising that workers seem anxious about their employability outside sugar and agriculture and the real possibility of being retrained for other crafts.

On Pension Benefits

A major issue for workers is pension benefits. This is not a surprise: there is concern about jobs being lost (either by taking the "enhanced" VSEP or by being retrenched), relatively poor severance payment, lack of skills, and new jobs - of which workers feel there are not many available.

In a letter addressed to Caroni dated on 3 February, the Actuaries and Consultants, Bacon Woodrow & de Souza, hired to review pension benefits, told the company they had identified some problems with the benefits. First, the Actuaries said, they have "serious concerns regarding the accuracy and completeness of the membership data held by the Company." The Actuaries said "it is highly misleading and imprudent to provide employees with statements of their pension benefits when we know that in some cases these might be inaccurate." The Actuaries also said they were willing to provide the Company with their calculations on benefits but "will not be responsible for any errors arising from data inaccuracies." (Ernst & Young, another consultancy firm, was hired to audit the data; as of 28 February, the results of their work were not yet public.)

Another concern raised by the Actuaries was about Benefit Statements on pension payable, which the Company requested and the consultants assumed were for use in the offer of the "enhanced" VSEP. The Actuaries recommended that they themselves "review the wording of the pension aspects of the statement to ensure that it is accurate and does not provide employees with the scope for alternative interpretation�"

The Actuaries underlined that these are "very serious issues" and advised the Company to make a decision "as to whether it is prudent to issue pension statements based on unaudited and possible inaccurate data." Not surprisingly, the VSEP offer does not include any statement on pension payable. Apparently, a decision on the matter was postponed, but at the expense of adding to the workers' anxiety: they have to decide on quitting their jobs without knowing their pension benefits.

On pension benefits, the All Trinidad has proposed reducing the age of retirement to allow workers to access benefits without waiting for too long, and that a minimum of TTD 1,000 per month (USD 144.00) be paid in pension benefits.

Dialogue-less Restructuring?

Although the restructuring Caroni (1975) Ltd. is an important and difficult process for Trinidad as a country, a major obstacle is the lack of real dialogue between the government and the workers and their union. In part, it might be because the Executive, through an Inter-ministerial Committee on Caroni, has overshadowed Caroni's board and management. The State (the Executive) and the employer become one entity, while specialised management losses the possibility to contribute to the process.

Secondly, the restructuring of Caroni is an old topic of discussion in Trinidad as several studies and reports were produced over the years, but the government's current proposal started with a separation of employment programme, which was not negotiated with the employees' representatives. Even though the government met with the union and staff associations, the latter complained that they were informed about the restructuring but did not participate in its formulation. The government started the restructuring by alienating the union and the workers, who are a key stakeholder in the industry. Communication between the social partners is difficult, sometimes nonexistent, even though it is of vital importance when employment is changing, and workers and their families are about to experience major changes in their life.

Statements by government officials carried by the national press have not helped to ease the concerns of workers, the opposite happens instead. For instance, the statement that if workers do not take the enhanced VSEP, they will be retrenched appears nowhere in the VSEP offer, it appeared only on the media. Such statement, however, contributed to heighten the level of anxiety among workers, who are the most vulnerable sector in Caroni.

Politics and Sugar

For an old discussion topic, the current restructuring proposal lacks of technical and economic information easily accessible to the workers, the union and the general public; so needed in a politically charged sector like sugar. Sugar in Trinidad is more than an economic activity; it is an important factor influencing the social and political structures of the country. Moreover, Caroni (1975) Ltd. is a State-owned company (i.e. owned by the people of Trinidad) and not a privately owned company.

The lack of information on the restructuring is challenged on a daily basis by opposite views, even in technical terms. For instance, in the opinion of some senior staff of Caroni, the production target proposed for one factory has to meet several conditions, like the length of the crop, quantity and quality of cane (to be supplied by farmers), no technical breakdowns, improvements in the factory. These are too many "ifs" that create doubts about achieving the target of 75,000-80,000 tonnes, raw value. Additionally, the same sources said, there is no current upgrading of the old Usine Ste Madeleine, where there has no been major capital investment since 1975. Worrying enough, these comments come from the senior staff of the company.

Politics and politicians have, and will continue to have, a major influence in the sugar industries of the Caribbean. In Trinidad, the sugar industry and workers play a crucial role in the country's history and they are the basis for political movements, including the present political Opposition. Unfortunately, there seems to be moments when politics tend to obscure the more important economic, social and technical aspects of the restructuring.

Nobody from all the people the present writer met opposes the restructuring of Caroni. Caroni has human capital and in-house technical expertise to allow a well-planned restructuring that takes into consideration social and economic factors, in a process that should minimise the social dislocation that any restructuring implies. The success of the restructuring depends, however, on the ability of the social partners to develop a meaningful and relevant dialogue about the future of the state-owned sugar company and the sugar industry in Trinidad.

European Union: Social Partners Sign a Code of Conduct in Sugar

On 7 February, the EFFAT-IUF and the CEFS signed a Code of Conduct in the sugar industry in the European Union, becoming the first economic sector to voluntarily agree on minimum standards of their Corporate Social Responsibility (CSR). The EFFAT-IUF is the European Federation of Food, Agriculture, and Tourism Trade Unions, affiliated to the IUF; the CEFS is the European Committee of Sugar Manufacturers (CEFS for its acronym in French).

Corporate Social Responsibility (CSR), says the CEFS, is a concept that "demands that a company conduct its business in a socially responsible manner and that it be accountable for the impact of its activities on the lives of individuals both within and beyond the company". For this, CEFS continues, the company has to take into consideration the needs of all of its stakeholders: shareholders, customers, employees, government, local communities and the public.

The Code of Conduct is a framework that allows the social partners in the industry to promote its development and the respect for fundamental rights. It covers eight areas:


  1. Human Rights: the European sugar industry complies with the principles and rights as defined by the International Labour Organisation (ILO), the UN Declaration of Human Rights and the European Legislation.

  2. Education, Vocational and Life-long Training: investing in its employees to provide them with the best possible skills would contribute to the success and competitiveness of the industry itself.

  3. Health and Safety: the industry provides a healthy and safe working environment based on secure facts and practices, and by prioritising preventive measures on health and safety.

  4. Relationships between the Social Partners: the EFFAT-IUF and the CEFS believe that a constructive social dialogue with employees' representatives and trade unions at all levels is key for a successful operation of the companies, and that providing information to and consulting with employees promote confidence and cooperation between employers and employees.

  5. Fair Pay: the industry meets or exceeds the minimum rates provided by branch or industry collective bargaining agreements and, when no agreement or pay scale exist, wages paid ensure that workers and their families have a decent standard of living.

  6. Working Conditions: the industry meets the European legislation on working conditions and complies with regulations on working hours.

  7. Restructuring: in the context of the social dialogue, the industry can ensure the regular flow of information, exchange of views and joint actions on all issues, including policy and legislation. If the case of restructuring or new investments, the industry would act in a socially responsible manner, and will take steps to improve the employability of its employees.

  8. Business Relations and Choice of Suppliers: the industry expects a socially responsible behaviour from its suppliers, and it is committed to make the concept of Corporate Social Responsibility known at global level.



The Code of Conduct will come into effect on 1 January 2004. The first report will appear in February 2004. The social partners (EFFAT-IUF and CEFS) will ensure the monitoring of the implementation of the Code and will regularly update the examples of good practices in each of the eight areas described. The Code of Conduct covers 15 European countries (14 in the European Union less Luxemburg, plus Switzerland), some 35,000 people directly employed in factories during crop, about 275,000 sugar beet farmers, and 12 sugar companies.

The European Union produced 14.9 million tonnes of sugar, white value, in the 2001/02 campaign. It has a great influence on the global sugar economy, ranking among the top three producers, consumers, and importers of sugar in the world. It is also the world's largest exporter of refined sugar and a key preferential market for sugar from the Africa, Caribbean and Pacific (ACP) countries.

More information on the Code of Conduct is available from www.effat.org