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Issue: 40 Section: Foreign Policy Geography: Latin America Guatemala Topics: privatization

October 6, 2006


Canada Post and the privatization of Guatemala

by Michael Skinner

Canada Post is accused of union-busting in Guatemala. photo: Dulcie Meatheringham
Originally published in Briarpatch Magazine

In 1997, the World Bank loaned 13 million dollars (US) to the government of Guatemala to finance privatization of the country's seaport, electrical grid, and telephone and postal services. A Canada Post subsidiary and its offshore partner, International Postal Services (IPS), received the lucrative concession to manage the privatization of the Guatemalan postal service.

Canada Post International Limited (CPIL), which at the time was known as Canada Post Systems Management Limited, is a subsidiary company of Canada Post, a crown corporation wholly owned by the government of Canada.

The World Bank had predicted that the three labour unions representing Guatemalan postal workers would resist the privatization project and the plan to 'shed excess labour.' But rather than negotiate a contract with the unions, CPIL is alleged by former postal workers and postal union leaders to have deliberately eliminated all three unions using illegal tactics.

Former workers and union officials allege that by using bribery, company unions, intimidation, physical assaults, death threats, and various other illegal tactics, CPIL-IPS not only eliminated the unions, but alsoengineered a complete turnover of staff within 18 months.

Guatemalan labour federation leader José Pinzón observes that even the worst labour abuses during the dictatorships (which followed the CIA coup against the labour-friendly democratic government in 1954 and lasted through the 1980s) were no worse than the union-busting tactics employed by CPIL-IPS and the other transnational agents of privatization.

The final step of CPIL's union-busting was to terminate every worker, after which the public postal service was restructured as a private company and renamed Correos. Some former workers, who did not have a history of union activism and who signed a contract promising not to join or organize a union, were rehired by Correos. However, to further ensure no union infiltration of the workplace, these workers were again terminated after they provided sufficient training to their own replacements.

Guatemalan labour federation officials state that wage increases and other perks promised to the new Correos workers never materialized and that the company defaulted on its payments to the national social security fund, which left these unorganized workers without healthcare and other benefits.

The World Bank's privatization scheme had a profoundly devastating effect on Guatemalan society. The United Nations reports the proportion of the Guatemalan population engaged in economic activity fell six per cent during the period of privatization, from 27.6 per cent in 1995, to 21.6 per cent in 1999. At the same time, union representation in Guatemala fell from five per cent of the workforce to 2.5 per cent.

Approximately 65 per cent of the terminated postal workers were women. In Guatemala's highly gender-divided society, these women had a particularly difficult time finding new work. The most accessible 'women's' jobs are domestic servants, maquila workers, home-industry workers, or street vendors. Former postal workers could not hope to find wages and work conditions comparable to their old jobs and many never found employment.

Many former workers had to remove their children from school so they could work to supplement the family income. According to a UN report, Guatemalan children spend, on average, only 1.3 years in school. The International Confederation of Free Trade Unions reports that 821,875 Guatemalan children between seven and 14 years of age were active in the informal economy in 2001, and the International Labour Organization reports that in 2002, 937,530 children worked as domestics in 'conditions of modern slavery.' According to the US State Department, child domestics work 13 to 16 hours a day for an average monthly salary of $51 (US). Many of these child workers suffer psychological mistreatment, violence and sexual abuse.

The unions of Guatemala, as part of a broad coalition of social justice organizations, played a key role in bringing about the peace negotiations that ended Guatemala's 36-year civil war in 1996. Ironically though, the end of the war also made Guatemala an attractive target for transnational companies intent on union-busting and siphoning off national wealth. The negotiated peace accords outlined basic human rights with specific provisions for women, indigenous people and workers. However, a failure to ratify the peace accords after their signing in 1996--largely due to organized right-wing resistance--led to unfulfilled promises for social progress. This also gave corporations the ability to violate the intent of the peace accords without technically violating laws not yet in place.

Regardless of the failure to implement the peace accords to establish expanded workers' rights, Guatemala is a signatory to the major international labour agreements and has a national labour code comparable to most states, including Canada. It is not lax laws or some peculiar cultural traits of Latin Americans that allow abuse by transnational corporations such as CPIL; it is the complicity between states and corporations that allow such abuse to occur.

Proponents of privatization claim that overall service and security has improved since the privatization of the Guatemalan postal service. Former postal workers recognize that the service was in need of improvement, but they add it was government security officers who were most responsible for delaying, opening and stealing mail during the war years.

With all of Correos' profits, as well as guaranteed consultancy fees, flowing to an unidentifiable group of investors in IPS, a company registered in the Bahamas, it may not be clear who specifically is benefiting from the privatization of Guatamala's postal service, but we know who isn't --the people of Guatemala and Canada.

In 2004, the Guatemalan government renewed the initial concession awarded in 1997 to Canada Post International Ltd. and its faceless offshore partner International Postal Services for another 10 years. Since 1990, Canada Post's international wing has undertaken 180 projects, including a similar privatization scheme in Lebanon.

Michael Skinner is a labour activist, musician and educator. Since 2000, he has been on education leave from his job as a letter carrier with Canada Post to pursue studies as a specialist in Peace and Conflict Studies at the Trudeau Centre for Peace and Conflict Studies, University of Toronto, and as a PhD candidate in the Department of Political Science at York University.

This article is based on original research in Guatemala and interviews conducted with former Guatemalan postal workers, union leaders, labour federation leaders, social activists, Guatemalan government officials and United Nations officials. Canada Post officials have thus far declined to comment.

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