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DE RUEHEG #0195/01 0421606
ZNY CCCCC ZZH
R 111606Z FEB 10
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 0225
INFO RUEHEG/AMEMBASSY CAIRO
RUEHTV/AMEMBASSY TEL AVIV 0002

C O N F I D E N T I A L CAIRO 000195 
 
SENSITIVE 
SIPDIS 
DEPT FOR NEA/ELA, DRL/ILCSR 
DEPT PASS TO USTR/SFRANCESKI AND GSTRICKLER 
 
E.O. 12958: DECL: 2020/02/11 
TAGS: ECON ELAB ETRD EG PGOV
SUBJECT: FOREIGN WORKER AND LABOR PROBLEMS IN QIZ FACTORY 
 
REF: 09CAIRO0561; 08CAIRO2528 
 
CLASSIFIED BY: Donald Blome, Minister-Counselor, DOS, ECPO; REASON: 
1.4(B), (D) 
 
¶1. (C) Key Points: 
 
 
 
-The manager of a ready-made garments factory participating in the 
Qualifying Industrial Zones (QIZ) program told EconOff that his 
company has been holding the passports of foreign workers and that 
it fired an Egyptian employee for organizing a strike. 
 
 
 
-This is first case of passports of foreign workers being held by a 
QIZ-participating employer that EmbOffs have encountered in regular 
visits to QIZ factories. 
 
 
 
-Embassy Cairo has raised the issue with the GOE. The Ministry of 
Trade and Industry has pledged to investigate the matter, and will 
inform us soon of their planned response to the case. 
 
 
 
-Despite this case, NGO's engaged in labor advocacy tell us that 
working conditions and labor standards are generally better in QIZ 
factories than in other private and public-sector factories. 
 
 
 
¶2. (C) EconOff recently met with Oussama Abboud, the Managing 
Director for the Kazareen Textile Company, an Egyptian garment 
exporter participating in the Qualifying Industrial Zones (QIZ) 
program.  Kazareen reports $50 million in annual sales, with its 
biggest contracts coming from Wal-Mart and the New York-based 
Warnaco Group, the parent company for such brands as Calvin Klein, 
Speedo, and Chaps. 
 
 
 
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Passports of Foreign Workers Held, Strike Broken 
 
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¶3. (C) Abboud said that he legally brought in approximately 60 
Bangladeshi workers to work in his factory in 2008, joining some 
1,700 Egyptians on Kazareen's overall staff. (Note:  Egyptian labor 
regulations limit the non-Egyptian workforce to 10%). Abboud 
bluntly told EconOff that Kazareen management held onto to the 
passports of the Bangladeshis. He complained that some of the 
Bangladeshi workers came to Egypt to use it as a "gateway" to 
illegally immigrate to Europe, and that about half of his 
Bangladeshi workers have since left Egypt for Italy via boat from 
Libya. The workers left Egypt without their passports, since they 
could not get them back from Kazareen. 
 
 
 
¶4. (C) Abboud also said that he overcame a day-long work stoppage 
in April 2009 by firing the strike's leader, who had attempted to 
organize the workforce. With the dismissal of the strike leader, 
all of the other strikers returned to work, and there have been no 
further efforts to organize. 
 
 
 
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GOE Response to the Case 
 
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¶5. (C) EmbOffs raised the USG's concern about the holding of 
foreign workers' passports to two different GOE ministries. The 
Ministry of Manpower and Emigration (MOMM), which handles labor 
 
 
issues, denied that such a phenomenon exists in Egypt. However, the 
Ministry of Trade and Industry (MOTI), which handles the QIZ 
program, has pledged to investigate the case and respond. 
 
 
 
¶6. (C) In a January 21 meeting with EmbOffs, Assistant Minister of 
Manpower and Emigration Mervat Wahby said that MOMM has never 
discovered any cases of foreign worker's passports being held in 
Egypt.  Wahby noted that her ministry has 600 labor inspectors who 
monitor factory conditions in Egypt's 29 governorates. 
 
 
 
¶7. (C) EconOff raised the issue of the alleged labor problems at 
the Kazareen factory to Haytham Abdel-Ghany, the Registration and 
Audit Manager at the QIZ Unit in the Ministry of Trade and Industry 
(MOTI). Abdel-Ghany expressed the ministry's concern about the 
alleged mistreatment, and said that the issue had been referred to 
Minister of Trade and Industry Rachid Mohamed Rachid to decide what 
action should be taken. Abdel-Ghany told us on February 10 that 
MOTI is investigating the case, and will inform Embassy Cairo soon 
of its plans to deal with the matter.  Abdel-Ghany emphasized that 
this was an "individual case," and that MOTI had not heard of any 
other QIZ factory holding the passports of its foreign workers. 
 
 
 
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Bangladeshi Embassy Response 
 
--------------------------------------------- --- 
 
 
 
¶8. (C) Harun Rashid, Charge d' Affairs at the Embassy of Bangladesh 
in Cairo, told EconOff that cases of mistreatment of Bangladeshi 
workers, including the holding of passports, is a phenomenon that 
is "happening all the time" in Egypt.  Rashid said that the 
Bangladeshi Embassy has received numerous complaints from its 
nationals about it in the past, but has only heard 1-2 complaints 
in the past year.  Rashid was unsure if there had been a previous 
case of such mistreatment in a QIZ factory, and noted that many 
past cases involved non-QIZ companies.  Rashid says that the 
Bangladeshi Embassy does not raise complaints about such cases with 
the GOE, but instead appeals directly to factory managers to 
improve the conditions for Bangladeshi workers. 
 
 
 
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Labor Conditions Generally Better in QIZ's 
 
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¶9. (C) Local NGO's advocating for labor rights report that working 
conditions are generally better in QIZ factories, compared to other 
manufacturers in Egypt. According to the Land Center for Human 
Rights, a workers' rights advocacy group, salary and benefits are 
particularly better in QIZ factories than in other private sector 
factories.  However, according to the Land Center, the lack of a 
union representation that plagues Egypt's private sector in general 
is also an issue in QIZ factories. 
 
 
 
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Comment 
 
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¶10. (C) This case marks the first time a QIZ company has told us 
directly that it holds the passports of foreign workers. In 
pressing for an expansion of the QIZ program, MOTI has insisted 
that factories operating in QIZ's uphold proper labor standards and 
abide by QIZ rules. QIZ Unit officials have stated that labor 
problems previously associated with Jordanian QIZ's have not 
occurred in Egypt's QIZ's, and QIZ Unit officials have been 
 
particularly sensitive to comparisons between the Jordanian and 
Egyptian programs. Embassy Cairo will follow up on the issue with 
MOTI as it prepares a response to the case. 
 
 
 
¶11. (C) EmbOffs have visited a number of factories in the past 
several months, and have not heard similar  reports regarding 
foreign workers in the factories that may employ up to 10%  foreign 
labor, typically from South Asia. Despite this recent case, labor 
conditions -- driven primarily by strong compliance programs of 
garment buyers -- are generally better in factories participating 
in the QIZ program than in those not participating in the program. 
SCOBEY