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CONSTRUCTION

Sacyr not budging in Panama Canal row

Negotiations over who should pay for extra costs for upgrading the Panama Canal have collapsed, putting the project and up to 10,000 jobs at risk, Spanish group Sacyr said on Wednesday.

Sacyr not budging in Panama Canal row
Ships wait in the Panama canal where work to perform upgrades could be delayed by up to three years after talks collapsed. Photo: RODRIGO ARANGUA / AFP

Completion could be delayed by three to five years if no agreement is reached, a consortium led by  Spanish company Sacyr has warned, citing an estimate by insurance group Zurich.

The threat to the widening of the vital maritime link comes on the 100th anniversary of the opening of the canal, considered an extraordinary achievement of engineering.

The project to widen the canal, one of the biggest civil engineering operations in the world, is due to be completed next year but is bedevilled by a dispute over huge cost overruns.

The canal is a vital link in maritime trade routes being used by 5.0 percent of world shipping.

The canal facilities are being widened to permit the passage of ships carrying up to 12,000 containers, twice the current limit.

But the disputed contract to build locks, due initially to be completed this year, was already running nine months late and since the beginning of this year work has slowed down further.

The consortium of companies undertaking the work, called GUPC, says that unforeseen costs total €1.2 billion ($1.6 billion) beyond the initial €2.36 billion value of the contract.

The announcement from Sacyr hit shares in the company, pushing them down 7.04 percent to €3.604 in early trading on the Madrid stock market which was showing an overall gain of 0.24 percent.

GUPC is in dispute with the Panama Canal Authority (ACP) mainly over who was responsible for the quality of geological information and who should bear the cost of problems and delays arising from unexpected geological problems.

The consortium is proposing that the two sides each pay half of the extra costs until the project is completed.

They would then go before an international arbitration court for a decision on who is responsible for the unforeseen costs and who should pay.

Sacyr said in a statement that the consortium would "continue to seek a solution to finance completion of the project and work in 2015, despite the decision of the Panama Canal Authority to break off negotiations."

It said that the collapse of the talks "puts in danger the widening of the canal and up to 10,000 jobs."

If a solution were not found immediately, the state of Panama and the canal authority would face years of litigation before national and international courts "on the events which have brought this project to the edge of failure," Sacyr said.

The consortium warned at the end of December that it would suspend work in three weeks' time if Panamanian authorities did not provide the extra finance demanded, and the deadline for progress in the talks ended on Tuesday.

The canal, completed in 1914 to offer a short cut and safer journey for maritime traffic travelling between the Pacific and Atlantic oceans, is about 80 kilometres (50 miles) long and is used by 13,000-14,000 ships each year.

Work on building a canal was begun by French interests in 1881 but failed because of difficulties with construction, disease, and bankruptcy for the promoters.

The existing canal was eventually built and completed by US interests in 1914.

In 1999, ownership of the canal reverted from the United States to Panama.

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CONSTRUCTION

Spanish builders made ‘slaves’ by German firm

Wages below the legal minimum, contracts in a language they don't understand and blackmail tactics to keep them quiet: just some of the problems a group of Spanish builders in Holland contracted by a German firm have decided to speak out against.

Spanish builders made 'slaves' by German firm
The builders have just managed to get their hourly wages up from €6 to the legal minimum of €8 an hour. Photo of construction work:Shutterstock

"They want us because we're a cheap workforce," one of the builders who prefers to remain anonymous admits.

Since beginning work with a German firm on road crews in the Netherlands in the spring of 2013, this group of Spanish migrant workers have been bottling up their discontent and frustration.

They've just managed to get their hourly wages up from €6 ($8) to the legal minimum of €8 an hour after the Spanish embassy in Holland informed local workers union FNV Bouw.

But their precarious working and living conditions have still not been fully addressed.

Having signed work contracts written in Dutch and German, languages none of them speak, their awareness of the clauses surrounding extra time, holidays and sick leave is almost non-existent.

"We have to pay for our own work clothes. If we’re ill we don’t get paid," one builder tells Spanish news agency EFE from the tiny bungalows where they’re all housed together.

"Most of them are unaware that they have to sign up to the local town hall to receive social and health benefits," adds Ben Paulides, a local politician who thinks the language barrier is the main factor keeping the Spanish workers in the dark.

The man the builders blame for their poor working conditions is Zeko Rugovac, head of German building firm BS Rugovac Bau Gmbh, the company that brought them over from Spain.

According to the Spanish builders, his exploitative tactics have seen them work more than ten hours a day on the building of a motorway between the Dutch cities of Delft and Schiedam.

"They threaten to send them back to Spain if they speak out," union spokesperson Osman Yildiz told EFE.

Emilio Rincón, a 32-year-old builder from Cádiz who complained, was one of the ones who bore the brunt of "Rugovac's irregularities".

"They told me there was no more work for me and I’m still waiting to be paid my last wages and sick leave," Rincón explained.

But Zeko Rugovac, the Managing Director of BS Rugovac Bau Gmbh told The Local it simply wasn't true Spanish workers with his firm were being paid €6 an hour, or even €8.

He said those workers received between €12 and €13 an hour before tax, and he was willing to provide bank documentation showing this was the case. 

Claims of lower wages from Dutch union FNV Bouw were mere politics, Rugovac said.

"They are afraid of cheap labour coming in from Spain and other European countries," he added. 

Rugovac also said it wasn't true that workers had had to wait for wages. He said the current project in the Netherlands would finish in April and wages for the month would be paid in early May "as is normal in Europe".  

The legal tangle between BS Rugovac Bau Gmbh, the Dutch government body that has ordered the motorway to be built, and A4ALL, which is the group overseeing the motorway's construction, means no one appears willing to take full responsibility for the Spanish workers' precarious situation.

The matter is currently being investigated by Holland's Ministry of Social Affairs.

SEE ALSO: 10,000 jobless Spaniards to be kicked out of Germany

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