Racing against time: CNMI contract worker program ending soon despite labor crisis

July 7, 2017

 

 

Saipan -- Commonwealth of the Northern Mariana Islands officials are pressed for time in finding a solution to their current worker crisis, given the CNMI-Only Transitional Worker or the CW-1 program’s uncertain future. The CNMI is facing a huge labor demand in the coming years with 22 projects in the pipeline, including six new hotels and two hotel-casinos on Tinian.

 

The CW-1 program, which directs business owners to transition their foreign employees to other United States eligible work visas, is set to expire in December 2019.

 

CNMI officials, led by Governor  Ralph DLG Torres, have been lobbying and pleading for the Federal government to either extend the program another ten years and increase the CW1 numerical limit to 18,000, or give long-time guest workers improved status. These recommendations were agreed to by the CNMI and federal panels and included in the 902 report submitted to U.S. Congressional leaders early this year.

 

The U.S. Government Accountability Office, in a separate report released last month, said the CNMI economy would again crash if the CW-1 program ends with no possible solution in sight to the ongoing labor crisis. GAO representatives visited the CNMI in December last year and conducted a field study, during which they interviewed business owners, CW-1 workers, CNMI officials, and foreign groups on the potential impacts if the CNMI-Only worker visa program ends on Dec. 31, 2019.

 

GAO representatives also discussed the CNMI’s immigration and minimum wage issues. The U.S. Congress requested the study as part of its deliberation on whether to enact changes on the Consolidated Natural Resources Act of 2008, the law that created the CW-1 program.

 

Forty-five percent of the CNMI’s labor force is composed of foreign workers—mostly in the hospitality and tourism trades, the oil that turns the wheels of commerce of the Commonwealth and contributes heavily to the government’s revenues.

 

The U.S. Citizenship and Immigration Services agency was tasked to oversee the CW-1 program and is compelled by law to reduce the numerical limit every fiscal year, until it is zeroed out after 2019. USCIS expects employers and other businesses to have already transitioned their foreign laborers to other U.S. eligible work visas before the program ends in 2019, in order for them to continue to be employed in the CNMI.

 

FY 2018’s maximum possible numerical limit was already reached after USCIS had received the maximum CW-1 petitions on May 25, 2017. UCIS has yet to release the numerical cap for FY 2018, but the law states that the number of workers should be less than 12,998 set the previous fiscal year.

CNMI officials, businesses and CW-1 workers heaved a sigh of relief in the previous fiscal year after the USCIS only reduced the numerical limit from 12,999 to 12,998.

 

The GAO, in its report, said the CNMI’s economy would again be gravely affected if the program is either removed or not extended. Its analysis projects a 26 to 62 percent decrease in the CNMI’s gross domestic product, another possible economic crisis that the CNMI would face after coming out from years of slump that saw a record low of negative levels including a minus 17.5 percent performance in 2009.

 

The closure of garment factories and declining visitor arrivals caused the CNMI’s economy to crash, with businesses cutting work hours and the government implementing austerity measures when declining funds come into the treasury. The expiration of the General Agreement on Tariffs and Trade killed the once thriving garment industry in the CNMI, which pumped billions of dollars to its coffers.

 

The CNMI had happier times before the garment factories exited. Money was pouring as big-name brands such as Ann Taylor, Anne Klein, Levi’s, Liz Claiborne and Polo Ralph Lauren were shipped out by the thousands to shops all over the world.

 

Unfair labor practices, however, were discovered by U.S. Department of Labor as well as other violations, leading to the slow death of a billion-dollar industry. Garment factories paid huge fines for unfair treatment of  workers—mostly Chinese—and with GATT expiring, companies  doing business in the CNMI  relocated  their businesses to other countries such as Vietnam, Cambodia, and other southeast asian countries offering cheap labor.

 

Things started to change in the last four years thanks to the arrival of more Chinese visitors, brought by the sudden boom of the Communist country’s economy and Korean tourists. Low-cost airline carriers also capitalized on the growing number of mainland Chinese nationals travelling to other parts of the world.

 

The entry of casino-investor Imperial Pacific International further boosted economic activity, most especially on Saipan, where restaurants and other specialty shops began sprouting, ready to accept the thousands of dollars tourists bring in.

 

However, the casino encountered hiccups after it was revealed that at least four Chinese contractors hired to finish the multibillion dollar hotel project in the heart of Saipan’s tourist district allegedly committed federal violations and other unfair labor practices, an allegation reminiscent of the garment industry days.

Chinese construction workers, who entered the CNMI by illegally posing as tourists, staged a number of protests, demanding that contractors that hired them—namely the state-owned MCC International, Gold Mantis, Beilida Overseas, and CMC Macau—pay their wages and overtime due, return the money they paid as recruitment fees and bring them back home.

 

The Federal Bureau of Investigation raided one of the contractors’ offices while the U.S. Labor Department also conducted their investigation along with the Occupational Safety and Health Administration. OSHA cited and imposed fines on the contractors. The U.S. Customs and Border Protection agency was also involved.

 

The contractors, with the help of their lawyers, had already reached an agreement to pay the workers and shoulder their airfare back to China. Several hundred workers have been sent home and settlement agreements are being negotiated for those left behind.

These problems stalled the construction of the hotel-resort. Cranes that were moving 24-7 stopped along with the other construction activity. Its casino component is set to open soon after everything has been in place including all gaming tables and the support staff that were trained to welcome foreign players to the island paradise.

 

It is yet to be seen whether or not U.S. Congressional leaders will abide by the recommendations made by both panels on the 902 report and institute changes on immigration and labor laws. But the issue with the CNMI’s Chinese construction workers will clearly be part of the legislative deliberations as they weigh in on the future of the CNMI’s economy.

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