Billion-dollar Panama Canal expansion halted due to labor strike

PANAMA CITY – Thousands of workers at the site of a major expansion project on the Panama Canal have stopped work to demand payment of back wages and better working conditions, according to their union.

“Work is completely paralyzed, on the Pacific and the Atlantic side,” Saul Mendez, head of the National Union of Workers in Construction and Allied Industries, the largest in the country, told AFP on Monday.

The canal cutting through Central America is currently undergoing a major $5.25-billion project to expand its choked capacity, set to be completed in 2014, which will allow some of the world’s largest ships to pass through.

The vital waterway handles five percent of world trade annually, and has hosted more than one million vessels since it was inaugurated in 1914. The United States handed over control of the canal to Panama on December 31, 1999.

The largest element of the expansion project is the $3.2 billion building of a third set of locks by the United Group, a consortium of Spain’s Sacyr, Italy’s Impregilo, Belgium’s Jan de Nul and Panama’s Constructora Urbana.

The union is demanding that the consortium pay back wages as well as raise the minimum wage of thousands of workers on the site, according to Mendez, who also accused foreign foremen of abusing Panamanian workers.

Workers staged protests throughout the day that included burning tires.

The United Group denied the allegations, saying in a statement that it “fully complies with the pay and working conditions”agreed upon with the workers and that it is “very respectful of Panamanian regulations.”

It added, however, that there had been “errors in the incorporation of data” on the part of a local contractor that distributes wages and said the consortium is working on fixing the problems.

The consortium said it pays the minimum legal wage of $2.90 per hour for canal workers, which is higher than in the rest of the country.

The expansion work has been slowed by labor disputes in the past, including in November 2010, when work was paralyzed for several days.

The canal generated a record $1 billion for Panama in the fiscal year 2010-2011, for a total of $6.6 billion since the United States handed over control more than a decade ago.