A complete report on this subject is not yet available, but I am
forwarding for your information a copy of a memorandum dated 21 October
1948 from the Governor of the Panama Canal to the Secretary of the Army,
which may be of interest. This gives, in a preliminary fashion, some
indication of the action which is being taken and the consideration
which is being accorded to these various questions. In transmitting this
memorandum to me, the Secretary of the Army stated that he was expecting
a complete report from the Canal Zone in the near future and would make
this available as soon as it had been received.
[Enclosure]
Memorandum by the Governor of the Panama
Canal (Newcomer) to the
Secretary of the Army (Royall)
Washington, October 21,
1948.
Subject: Labor Relations in the Canal Zone
Reference is made to memorandum of 15 September 1948 on the above
subject to you from the Secretary of Defense in which he requested
an appropriate answer that he could send to the Secretary of State
in reply to certain criticisms voiced by the latter with respect to
labor conditions in the Canal Zone. Accompanying the Secretary of
State’s letter was a memorandum in which there were enumerated three
particular items described as evidences of discrimination in the
Canal Zone that should be corrected as promptly as possible.
My purpose in writing this memorandum during my present visit in
Washington is to place before your office information in the nature
of an interim report that may be helpful pending the receipt of a
more complete report from the Isthmus. I am informed that the
Commander-in-Chief, Caribbean, has referred the subject to the Canal
Zone Personnel Board for consideration and preparation of a report
[Page 685]
that will be;
coordinated there among the four agencies that are concerned.
By way of general observation on the Secretary of State’s letter and
its accompanying memorandum it occurs to me that the Secretary of
State may not have been fully informed on progress that has been
made in labor relations in the Canal Zone since the time that
General McSherry made his report to the Governor. That report was
submitted to the Governor in June 1947. It was made at the request
of the Governor in order that he might have the benefit of the views
of a disinterested investigator and has, of course, been carefully
studied and the recommendations contained in it have been or are
being implemented to the extent justified or feasible. A Canal Zone
Personnel Board has been created by the Commander-in-Chief,
Caribbean, to keep him advised of labor conditions in the Zone and
to accomplish such coordination in labor matters among the four
governmental agencies as is practicable. An extensive survey of the
18,000 positions filled by aliens in the service of The Panama
Canal-Panama Railroad was completed early this year by The Panama
Canal and a new wage schedule which effected material increases in
the compensation of a large portion of these workers was made
effective at the end of February 1948. The work was planned and
conducted with the aid and advice of several of the best qualified
experts of the United States Department of Labor and the completed
task resulted in the establishment of a wage schedule and the
compilation of job analyses which are in conformity with modern
practices in this respect. The minimum wage for alien employees
previously fixed at 16 cents per hour was advanced to 26 cents and
the maximum rate was advanced to $1.40 per hour. A grievance
procedure patterned on that followed in industry in the United
States has been established and is working well. Leave privileges of
alien employees have been liberalized within the past year and
further changes are presently under consideration. Additional
examples of improvements that have been effected could be cited but
the foregoing will suffice to indicate that the policy of the Canal
administration is sympathetic toward labor and is not static.
Turning to the specific issues raised in the memorandum accompanying
the Secretary of State’s letter, the first is that the principle of
equal pay for equal work is not used in the Zone. As a statement of
general policy, this criticism is not supported by fact. It is true
for example that “Gold” carpenters receive a higher wage than do the
“Silver”. The difference is not due to citizenship, American on the
one hand and alien on the other, but to the complete and basic
differences in their qualifications. A journeyman carpenter
recruited in the United States has certain well defined capabilities
based on training, experience, and
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an ingrained sense of responsibility for his
work. He is needed for certain purposes. Other so-called carpenters
also are needed but they need not, and do not, have the
qualifications of the journeymen. They are recruited locally. The
former are paid at rates based on those prevailing in the United
States while the latter’s compensation is based on rates prevailing
in the locality. The same comments may be made with respect to other
categories of employees but would serve no purpose other than to
emphasize that there are two rates of pay based on qualifications
and that this condition is inherent in the Canal Zone and must be
recognized as economically sound. It is no more an evidence of
discrimination than would be the statement that all carpenters in
the employ of the Government in the United States do not receive the
same wage, a statement that is obviously correct. In support of
General McSherry’s contention, however, it is desired to state that
there are some two hundred positions in the Canal service the
occupants of which are “Silver” employees paid at local rates and
whose work is on the borderline between that expected of “Gold”
employees and of “Silver” employees. These positions are now being
carefully surveyed to insure that there is no discrimination because
of nationality and it is quite probable that some of these may be
changed over to the United States rate basis.
As indicated above, further liberalization of alien or native leave
privileges is now under consideration on the Isthmus. The McSherry
report recommends that leave privileges of silver roll employees be
adjusted to equal those of United States Government employees
elsewhere. This recommendation is considered inappropriate for at
least three seemingly sound reasons: first, the employees are
reasonably well satisfied, with some minor exceptions, with the
present leave regulations; second, a rough estimate of the cost of
effectuating the recommendation is $1,200,000; third, there is no
basic principle on which the recommendation can be justified. If the
United States is in a position to invest annually an additional
$1,200,000 in the wages of the alien employees it would, in my
opinion, be much more humanitarian to raise their rates of pay
rather than give them more leave, which they are not requesting and
which they do not particularly need. This subject is, however, being
given further consideration.
General McSherry recommends that the silver roll employees be placed
under the Civil Service Retirement Act and seems to believe that the
Act authorizes such action. Since the passage of the Act the Canal
administration has construed it as being inapplicable to alien
employees of the Canal-Railroad because by its own terms it excludes
those employees of the United States who are subject to any other
retirement laws. The Canal Zone Code was amended in 1937 to grant
certain disability monthly cash payments to alien employees of not
[Page 687]
less than ten years
service who are removed from the rolls for physical reasons.
Additional legislation will be required, therefore, before the
present system can be changed. The Civil Service Commission concurs
in this construction of the present law. Four possible plans to
accomplish desirable modifications in the retirement law have been
developed during the past several months and are now being readied
for discussion with the Civil Service Commission in anticipation of
the introduction of an appropriate bill in the coming session of the
Congress. There is little doubt that it will be possible to make
beneficial modifications in the present retirement law applicable to
alien employees and it is my purpose to carry the matter to early
completion.
The foregoing is not intended to be a complete answer to the letter
from the Secretary of State but simply to indicate that labor
relations in the Canal Zone are receiving active attention and that
substantial progress has been made to improve them, with additional
progress in prospect. A more comprehensive report will be
forthcoming from the Isthmus.
