The Multinational Monitor


B E H I N D    T H E    L I N E S

Ukraine Miners Strike

A TWO-DAY STRIKE in mid-November 1995 by coal miners in Ukraine's Donbas coal fields toppled the Ukranian coal industry minister, a hold-over from the Soviet era, and highlighted the wretched conditions in the nation's coal mines.

One hundred thousand miners from 21 mines in the Donetske basin dropped their picks on November 14 to demand back pay for wages from August totaling some $112 million. The strike was called by the Independent Miners' Union (IMU), which represents miners in 62 of Ukraine's 246 coal mines. Twenty-four members of the IMU also staged a 10-day hunger strike on November 1 at the office of Coal Industry Minister Viktor Poltavets.

In addition to immediate payment of back wages, the miners demanded that the government: raise pensions to 85 to 90 percent of the average wage; pay unpaid disability benefits; and reform the coal industry ministry to meaningfully transfer decision-making power over the industry from the ministry to the miners.

Mykhailo Volynets, head of the IMU, called on the government of Prime Minister Yevhen Marchuk to adopt a program "reforming the coal industry by giving control to unions and passing measures protecting the social well-being of all miners." Volynets says these changes could only be realized with the changing of the guard at the coal industry ministry.

The strike was not supported by the powerful Union of Coal Industry Workers, the Donbas Independent Miners' Union, the Republican Union of Engineer Workers or the regional Donbas Strike Committee. Instead, those unions threatened to press for the resignation of the Ukrainian president if the government did not pay back wages, increase subsidies to the coal industry and fire Poltavets.

On November 15, the second day of the strike, miners agreed to return to work after the government agreed to pay back wages incrementally. One-quarter of the back pay was disbursed immediately. On November 20, Marchuk sacked Poltavets, director of a Donbas coal association prior to the collapse of the Soviet Union, for not initiating "structural reorganization" of the beleaguered industry.

Under Poltavets' leadership, independent Ukraine's coal industry ministry sank deeper into debt and failed to increase coal production. Four-fifths of Ukraine's aging coal mines were subsidized by the government; only one-fifth turned a profit. Coal production in 1994 was down to 94 million metric tons, less than half the amount extracted in 1988 under the Soviets. Coal production is estimated to have dropped to 85 million metric tons in 1995.

None of Ukraine's coal mines have been privatized, despite the country's slow movement to a free-market economy, and the ministry continues to hold a tight rein over the industry. The coal industry ministry continues to regulate the price of coal, distributing returns to profit-generating mines and effectively eliminating competition.

Appointed by President Leonid Kuchma on December 1, the new coal industry minister, Serhiy Polyakov, has promised to give the mines some form of independence without completely decentralizing the industry. The 49-year-old Polyakov, formerly the mayor of the city of Torez in Donetske Oblast, has proposed regulating the industry on a regional, as opposed to national, level.

The miners' demands in 1995 for social protection and decentralization are reminiscent of the demands made by their predecessors during the massive coal miner strikes of July 1989 in the Kuzbass and Donetske basins. The first major workers' strike in Soviet history, the strike of 1989 posed a serious challenge to the Gorbachev administration and sparked the eventual dissolution of the Soviet Union.

According to David R. Marples' Ukraine Under Perestroika, at that time, the Soviet government agreed to honor the strike committee's demands for full economic and judicial independence, improved safety measures and medical treatment for injured and ailing miners, the right to sell their products both within and outside the country at a price higher than the current official rate, and the right for local enterprises to determine any changes in wage scales and work norms. A year later, with the government failing to implement many of the agreed upon reforms, mass demonstrations again rocked the Donbas, forcing many Communist people's deputies in the Ukrainian Supreme Soviet to vote for Ukraine's Declaration on State Sovereignty in July 1990.

While the miners' demands became more political with time, their basic protest against the deplorable conditions in Ukrainian mines remained constant. In the mid-1980s, many of the coal mines in the Donbas coal fields had already reached a dilapidated state. Easily available coal had been extracted, so what remained lay in thin and sloping seams more than 1,200 meters underground. A 1988 study conducted by the Department of Heavy Industry within the Central Committee of the Communist Party of Ukraine revealed that 75 percent of mines in the Donbas had not been reconstructed in 20 years.

Independent Ukraine inherited the ailing coal mines and could not afford to infuse sufficient capital to reconstruct them. Now, Ukrainian coal faces a serious competitiveness problem. Ukrainian coal has a 40 percent higher sulfur content than world standards and is 30 to 50 percent more expensive than Russian coal, prompting Ukrainian metallurgical and power plants to claim that it is more convenient for them to import from Russia.

Major reforms seem inevitable if the industry is to become viable. The World Bank has announced it will assist Ukraine in its effort to restructure the coal industry with an $80 million loan in 1996 to develop profitable mines and close down others. World Bank President James Wolfensohn, who visited a Donetske coal mine during a November 16 to18 visit to Ukraine, said the Bank would support industry restructuring because "conditions in many pits were unsafe and would not be accepted in many countries."

The British firm Longwall also has agreed to loan Ukraine $11 million to purchase conveyer belts and reconstruct three mines in Donetske.

In November 1995, Deputy Prime Minister Pavlo Lazarenko suggested that 80 Ukrainian coal mines could function independent of government support, 150 need to be subsidized, and 64 should be closed. Presidential Adviser Oles Bodnarchuk cautioned, however, that Ukraine cannot abandon its miners. "The state cannot renounce its own coal nor its miners. This affects the fate of millions of people."

-- Khristina Lew

The U.S.-Salvador Gap

Yielding to mounting criticism from consumers, labor organizers and activists over human rights abuses in Central American maquiladoras, The Gap, Inc. has become the first major multinational retailer to agree to independent monitoring of its contractors.

On December 15, 1995, representatives from The Gap and the National Labor Committee Education Fund in Support of Worker and Human Rights in Central America (NLC) signed an agreement which granted observers from the Human Rights Ombudsman Office in El Salvador, the Washington, D.C.-based Interfaith Center for Corporate Responsibility (ICCR) and other human rights groups access to the plant of The GAP's Salvadoran contractor, Taiwanese-owned Mandarin International, and laid the foundation for a system of continued third-party monitoring, as yet not finalized, to assure Mandarin's compliance with The Gap's "Guidelines for Vendor Conduct." The Gap has stopped placing orders with Mandarin, and has agreed to resume them only when Mandarin and the government of El Salvador "demonstrate an ability to effectively investigate and resolve labor disputes fairly, justly, and promptly," and ensure "that our orders will result in humane and productive employment in El Salvador."

"The Gap has now set a new standard for the protection of human rights -- especially the rights of women and workers," said Charles Kernaghan, executive director of the New York City-based NLC. "The Gap listened to its consumers and has taken a significant step in accepting direct responsibility for how and under what conditions its products are made."

Kathleen Bertlesen, a spokeswoman for The Gap, emphasized that the agreement applies only "to independent monitoring of the company's contractors in El Salvador." She declined to comment on whether The Gap would permit similar monitoring of its other overseas contractors. According to its 1994 annual report, The Gap purchases 70 percent of its merchandise from overseas vendors in 47 different countries.

With its precedent-setting emphasis on enforcement of codes of conduct for contractors and reliance on third-party monitoring, The GAP-NLC accord could become a model with far-reaching implications. Maquiladora (assembly plant) exports have skyrocketed in the last decade, especially in labor-intensive industries like garment making. Maquiladora exports from El Salvador to the United States alone rose from $10.2 million in 1985 to $398 million in 1994. The number of Salvadoran maquiladora workers making goods for the U.S. market increased from 3,500 to 50,000. At the same time, however, real maquiladora wages fell 53 percent -- to the current 56 cents an hour -- which provides only 18.1 percent of the annual basic needs of a family of four.

Although many retailers require their contractors to adhere to a corporate Code of Conduct to ensure that their plants meet minimum health and safety standards -- The Gap has had such "sourcing guidelines" in place for several years -- they are rarely enforced in practice, and workers are generally ignorant of their rights under these rules. None of the Mandarin workers were aware of The Gap's Code of Conduct, according to Judith Viera, a former Mandarin employee. Even if it had been posted prominently in the factory, it would have done the workers little good; the code had never been translated into Spanish. As part of the agreement reached between The Gap and the NLC, The Gap's Code of Conduct will be translated into Spanish, Korean and Chinese so that both workers and plant managers will understand exactly what The Gap expects of them.

Last summer the NLC conducted a campaign to raise public awareness of the abuses Central American maquiladora workers regularly endure. In response to worsening conditions in maquiladoras in Honduras, Guatemala, and El Salvador took two young maquiladora workers on a 20-city tour of the United States and Canada. The women's testimony forced many North American consumers to confront, for the first time, the suffering thousands -- primarily young women and girls -- bear for fashion's sake. The tour garnered national media attention and prompted public demonstrations and letter-writing campaigns to pressure The Gap into taking responsibility for the enforcement of its own Code of Conduct. "The response was amazing," says Kernaghan. "People were not only furious -- they wanted to act."

One of the women, 18-year-old Judith Viera, worked in the Mandarin plant making T-shirts for The Gap. She provided her audiences with a harrowing description of conditions during her tenure at the Mandarin sweatshop. Although the workweek was supposed to be only 44 hours long, at least 8 additional hours of overtime were required and uncompensated. Refusal to work overtime typically resulted in termination the next day. The drinking water in the plant was contaminated, and the air choked with dust. During work hours, talking was strictly forbidden, and loud music was piped into the factory to encourage a relentless pace. Bathroom visits required special passes, and were restricted to two per day.

Viera was among the Mandarin workers who formed the Union of Workers of the Mandarin International Company (SETMI) in February 1995 -- the first legally recognized union ever formed in a Salvadoran free trade zone -- to protest the low wages and inhumane conditions at the sweatshop. Almost immediately afterwards, Mandarin began a coordinated campaign of brutality and terrorism designed to destroy the union.

According to the NLC, Mandarin "hired two dozen ex-military, plain-clothed, armed 'security guards.' The women workers were told their union will have to disappear one way or another, or 'blood will flow.'" Since the creation of the union, the plant's 850 workers have endured multiple lockouts, more 100 union members have been fired and union sympathizers have been beaten and threatened with termination unless they renounce the union.

In entering the agreement with the NLC, The GAP acknowledges the legitimacy of SETMI and pledges to make Mandarin choose between accepting the union and giving up lucrative Gap contracts.

Although SETMI is pleased with the agreement, there is some question about how Mandarin will respond. Kernaghan concedes that "it is still unclear whether Mandarin will reinstate the fired union workers." And although El Salvador recently instituted a Labor Code intended to guard against abuses like Mandarin's, its Ministry of Labor is woefully understaffed and underfunded, and is currently in little position to enforce its own rules.

It will thus be up to workers and their supporters -- in El Salvador and around the world -- to keep up the pressure on companies like Mandarin. Ron Blackwell, an economist with the Union of Needletrades, Industrial, and Textile Employees (UNITE), says, "The only party in industry that has unqualified interest in enforcement are workers, and the only party in industry with unqualified interest in violations are workers." With the workers of the world watching, El Salvador, as Kernaghan puts it, "could become an example and inspiration for all of Central America and the Caribbean."

-- Gayle Liles

Tandoori vs. Kentucky Fried

BANGALORE, INDIA -- Taking advantage of market-opening policies in India, Kentucky Fried Chicken (KFC) opened its first fast-food restaurant in Bangalore in July 1995. KFC parent company Pepsico chose Bangalore for its India debut because the so-called "electronic city" was India's fastest growing metropolis in the 1980s, with a substantial middle class.

Among the first Indians to sample the U.S.-based franchise's "finger-lickin'" chicken, however, were Bangalore municipal food inspectors. They announced in August 1995 that they had identified at least one of KFC's secret ingredients: KFC chicken is 2.8 percent monosodium glutamate (MSG), they said.

More was at stake for the fast-food chain in this announcement than a closely guarded trade secret. India's Prevention of Food Adulteration Act sets an MSG food ceiling at 1 percent because MSG has been associated with nausea and headaches among the general public and, among pregnant women, with retardation and birth defects in offspring. Bangalore inspectors revoked the food chain's license and directed police to close the restaurant on September 13, arguing that KFC exceeded legal MSG limits, illegally failed to disclose its seasonings and served food "unfit for human consumption."

A statement issued by KFC said that its chicken "is well below the maximum permissible limit of one percent." Pepsico Senior Research Consultant G.V. Rao argued that India lacked the laboratory equipment needed to accurately test for MSG.

Despite the setback, KFC pledged to "go ahead with plans for opening in Delhi and Bombay," according to Sandeep Kohli, managing director of KFC India Holdings Pvt. Ltd. "All that we say is let the customer decide," Kohli says.

The chain opened its second outlet on October 20 in Delhi. On November 6, Delhi officials canceled that restaurant's license, arguing that it contained sodium aluminum phosphate, which is hazardous to human health. A KFC spokesperson countered that the food contained no harmful chemicals.

Some Western reports on the incidents have mocked the controversy. "In a country where sanitation is so poor that people routinely die of diarrhea and where outbreaks of plague occur, reports now chronicle with considerable license the potential health hazards presented by Western food," commented an October 1995 Chicago Tribune news story. But in India, the MSG showdown has sparked a heated debate over what market, if any, Western fast-food joints should have.

"Multinational basher" strikes

Promoting highly processed "junk food" in a poor country with widespread malnutrition is unethical, charges the Karnataka State Farmers Association (known by the local initials KRRS). KRRS is led by Professor M.D. Nanjundaswamy, who is known as the "multinational basher" for a campaign he organized in this south India state against global seed patenting provisions of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT).

In 1992 and 1993, protesting multinational corporate control over seed patents, KRRS militants ransacked a Cargill office in Bangalore, burning the seed company's documents in the streets, and destroyed part of a Cargill office in the town of Bellary, 300 kilometers outside of Bangalore [see " Farmers Attack Cargill Seed Plant," Multinational Monitor, September 1993]. Even before food inspectors moved to close down KFC, Nanjundaswamy threatened to take direct action against the restaurant, helping to convince KFC to cancel a gala it had planned for its India opening.

"The chicken they serve is full of chemicals, and the birds are given hormones, antibiotics and arsenic chemicals to fatten them quickly," Nanjundaswamy contends. He further charges that processed and fried foods are high in sodium and cholesterol, contributing to hypertension, heart ailments and obesity. "One American develops cancer every seven seconds," Nanjundaswamy says, "and the culprit is processed meat and chicken, served mainly by the junk-food industry."

A KFC statement counters that, "The only antibiotics given to the birds are for prevention of any disease. The chickens are not fed on hormones." KFC also suggests that local Indian government officials maintain an anti-Western bias, arguing that, if MSG is the real reason for closing down KFC, then the government should also crack down on Chinese restaurants. KFC critic Maneka Gandhi, daughter-in-law of the late Prime Minister Indira Gandhi and a former environment minister, responds that China Garden, Bombay's largest Chinese restaurant, was closed for that very reason.

"Eighty million Americans suffer from health problems directly linked to food habits," Gandhi says. "What they serve here is over-priced processed chicken, which is artificially raised and refried several times." A piece of chicken sells for a little more than $1 at KFC, more than the daily per-capita income in India. Activists argue that traditional Indian recipies, such as baked tandoori chicken, are more nutritious than the new junk-food alternatives.

Quit India campaign

Gandhi has galvanized the opposition of 20 members of Parliament and two former prime ministers (V.P. Singh and Chandra Sekhar) to oppose the proliferation of foreign fast-food chains in India. Spurred by a recent liberalization in Indian laws, Pepsico Restaurants International, which owns the Pizza Hut as well as KFC restaurant chains, has received permission to open 30 new outlets throughout the country. Burger King and McDonald's are among others cleared by the Foreign Investment Promotion Board. [see "Fast-Food Culture," Multinational Monitor, July/August 1995].

Nanjundaswamy and Gandhi argue that this fast-food invasion will encourage Indian farmers to shift from production of basic food crops to more lucrative luxury goods such as animal feed and meat, leaving poorer Indians with no affordable food.

One justification for economic liberalization policies used by the Indian government is that they will attract multinationals that will create employment and develop India's infrastructure

But Nanjundaswamy says that fast-food joint "have brought jobs only for a handful of educated elites and have actually displaced the poor majority," Nanjundaswamy says. Venkateswara Hatcheries, for example, is supplying KFC with broilers after closing down its restaurants in Bombay and Pune as part of a deal it cut with KFC.

The KRRS agenda goes beyond fast food. It held a convention on November 1 to protest the invasion of multinationals and the Westernization of local agriculture. National banks, insurance companies, political parties and non-governmental organizations supported the convention.

"We need a new Quit India movement," Nanjundaswamy tells these diverse sectors, referring to Mahatma Gandhi's 1942 campaign against British goods, "this time against junk-food neo-colonialists."

-- Sakuntala Narasimhan is a Bangalore-based journalist specializing in consumer issues.

# END #