hang on to what they have. With the possibility of a new PanamaUnited States treaty, the U.S. citizen employee must hold on to what benefits he now has.

As a result of the efforts of the Labor representative to the Governor, Labor-Management relations in the Canal Zone had greatly improved. Now he will have to start all over again. We believe that the least the Department of Army should do is to listen to this man and support any of his efforts to improve labor-management relations once again. This will be important during labor-management talks on Executive Order 11491.

The employee must be better informed about the effects of a new treaty inasmuch as his job is concerned. An office could be set up now within the Company/Government structure to arrange transfers to the United States for employees who wish to leave. A genral overall picture of the treaty should be provided to employees for information

purposes.

Most of all, we urge that no further attempts be made by the Department of the Army to remove or change any existing benefits, including leave or tropical differential from locally hired U.S. citizens. We do not desire any more confrontations such as we have just experienced. However, I can assure you that the present mood of the U.S. citizen employee indicates to me that further and more serious confrontations will occur if any further loss of benefits takes place.

Once again, I would like to thank you, Mr. Chairman, and members of your committee for providing us with this forum in which to air our views.

Thank you.

Mr. METCALFE [assuming the chair]. Thank you very much for your statement. Does Mr. Oster have a statement which he would wish to make at this time?

STATEMENT OF CAPTAIN G. OSTER, PRESIDENT, PANAMA CANAL PILOTS ASSOCIATION

Mr. OSTER. Yes, I do.

Mr. Chairman, my name is Gerald Oster, president of the Panama Canal Pilots Association. In addition to my actvity with the Panama Canal Pilots Association, I am also a working pilot.

The recent brutal attacks by the Department of the Army upon community services and employee benefits culminated in a confrontation, the likes of which the Canal Zone has never seen before. We, as responsible labor leaders, did everything that was humanly possible to head off the disastrous trend that appeared to be accelerating. We were, however, completely stymied by the hard line stance that the civilian personnel policy and coordinating board took. This board, with obstinate contempt, refused to meet face-to-face and consult with the employees who were affected by the adverse proposals. It took the recent upheaval to force the board into a semblance of a dialog. Since then, Governor Parfitt has taken steps to enter into meaningful consultations with labor. We hope that this will continue to its logical conclusion of a negotiated agreement that will be beneficial to all parties.

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To alleviate the financial problems of the Canal Zone, we have urged congressional scrutiny of the current accounting practices of the Company. We believe that they place undue constraint on the Company as they are at variance with commercial practice. We are delighted to learn that you Mr. Chairman, Mrs. Sullivan, and Mr. McFall have, in fact, introduced H.R. 12641 since our last discussion which, if enacted, will provide necessary relief.

Additionally, we urge that Congress, by appropriate means, waive the payment to the U.S. Treasury of the interest in the U.S. investment in the Panama Canal Company, at least temporarily during these difficult times.

With regards to toll increases, the Pilots Association goes on record as being against any such increases at this point in time. As seafarers, we are fully aware of the adverse impact increased operating costs has on the shipping industry. We believe that this would further aggravate the loss of revenue by diverting more ships away from the canal. To alleviate what could become a critical situation for American shipping, we would advocate a rebate to U.S. flag shipping to cover any increased costs incurred by a toll increase.

While on the subject of money, the Pilots Association condemns the Company's shortsighted policy of deferring maintenance and overhaul on necessary operating equipment like tugboats and locks, et cetera. We consider this deferral to be a further lowering of the safety margin. An equipment breakdown, while putting a "Panamax". ship into the locks, resulting in an accident would positively cancel out any savings that could be attributed to the deferral of maintenance and overhaul.

The capitalization and implementation of channel improvements is an area of deep concern to the pilots. On the one hand, we are told that the millions of dollars appropriated for capital projects must be spent. On the other hand, we are asked to believe that these boondoggles will improve the canal. We absolutely refuse to rubber stamp ill-conceived Company projects. We are the experts on safely transiting ships of all sizes and configurations and yet when we tell the people in authority that a proposed project has a low priority or is a flat out waste of time and money, our opinions based on years of experience are disregarded. A case in point is that at this very moment the Company is installing a rubber tire fendering system at the sea entrance of Gatun at a cost of approximately $200,000. A similar system was previously installed at the lake entrance of "Miraflores", and has proved to be a liability rather than as asset. The mass and kinetic energy of a sizable ship landing on the tire with any lateral force wipes it right out.

Thus, for periods of up to 8 months while awaiting a replacement to be sent from England there is literally no fendering that is reliable, of relative minimal cost, and has proved to be effective. Yet now, despite our objections, and in the face of practicality, the Company insists on installing, not only another set, but at all the locks this same type system with the commensurate high cost expenditures. We could go on and on like this. The new marine traffic "controller" building is equipped with a computer that is apparently programed to replace a standard blackboard eraser with an elec

tronic eraser. All at a cost of millions. A mighty expensive tourist attraction and nothing else.

The cut deepening project, when it is essential that channels be widened, turns straightened out, shoals removed, and Cristobal Harbor dredged. Necessary projects that must be accomplished to safely handle the increasing number of Panamax ships for transit.

The list is endless together with the attendant apparent reckless expenditures. With this in mind, it is difficult for us to be objective on the subject of the Company's monetary problems.

The immediate problem though, is the lessening of the explosive undercurrents created by the poor labor-management relations which must be rectified now so that labor peace is assured in the Canal Zone. Your consideration of these inequities will be greatly appreciated by this association.

Thank you.

Mr. METCALFE.. Thank you very much, Mr. Oster.

STATEMENT OF SATURNIN MAUGE, PRESIDENT, LOCAL 900, AMERICAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES

Mr. MAUGE. Mr. Chairman, I do not have a prepared statement. I would just like to take a few minutes to make some comments. My name is Saturnin Mauge, president of Local 900, American Federation of State, County, and Municipal Employees.

The two representatives from the Canal Zone mentioned earlier the proposals of the Canal Zone Civilian Personnel Policy Coordinating Board, and I would like to make a few comments on them.

One speaks of the cutoff of the wage base used in the Canal Zone. We believe that the Canal Zone should eliminate the dual wage base for its employees and adopt a U.S. wage base for all employees. That would mean that the employees of the MG categories and NM categories would be paid on the U.S. wage base eliminating the locality wage base.

The Government/Company has made some amendments to the organization, but Local 900 is not fully satisfied in the sense that we still find that the bulk of our membership who are paid under the NM-4 and five levels are going to be hurt under this proposal. What we would like to suggest, and it is something we have been suggesting over the years, the Canal Zone ought to eliminate the different wage bases under which employees are paid and adopt one wage base. What we would recommend is that all employees that work for Panama Canal get U.S. wages. It will eliminate hard feelings and possible job action to come if other changes appear.

Second, we notice also that this proposal speaks about making new eligibility requirements for tropical differential for U.S. citizens. We support the proposition that the U.S. citizens continue to get the tropical differential. However, we have a rider to that. We feel that the Panamanian employees should receive a cost-of-living allowance which would be equivalent percentagewise. The cost of living in Panama is very high, and if there is justification to give U.S. citizens a tropical differential which we support, we would also ask that the Panamanian employees be given a cost of living differential.

The third thing is the collective bargaining machinery. It has taken us almost roughly 20 years to get it on the Canal Zone, but I think the time has come. At the meeting I have attended with Governor Parfitt, he seemed rather honest in his statement and we are taking him by his word. Our recommendation would be that the collective bargaining machinery be made an effective mechanism, something that is meaningful, that the unions could sit together with management and work out the problems. We did not vote on the job action. because we had some differences of opinion, but I think that the situation really warranted a job action. We think if we could have collective bargaining machinery for the unions, that some of the reasons which forced some of our people who have years of service in our canal and did not even think about the job action, would be satisfied. We would like to ask the committee to support the idea of a collective bargaining mechanism on the Canal Zone.

I thank you, Mr. Chairman.

Mr. METCALFE. Thank you very much, Mr. Mauge.
Now, we will hear from Mr. Koczak.

STATEMENT OF CLYDE M. WEBBER, NATIONAL PRESIDENT, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES; PRESENTED BY STEPHEN A. KOCZAK, DIRECTOR OF RESEARCH, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO; AND ELWIN E. LEWIS, NATIONAL VICE PRESIDENT, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO

Mr. KOCZAK. Mr. Chairman, Mr. Webber, the president of the American Federation of Government Employees asked me to extent his excuses to you, his regrets. He was not able to attend the hearing today. He had previous engagements.

Mr. Elwin Lewis, the AFGE national vice president for the 15th district of our union, within whose jurisdiction the Panama Canal Zone falls, has kindly consented to be in attendance today. Many of the technical questions which may be raised fall within his purview. With that introduction I shall appreciate the opportunity of reading Mr. Webber's statement at this stage, as follows.

We thank you, Mr. Chairman, and the other distinguished members of this Subcommittee for giving us this opportunity to be heard on this important subject of the status of employees in the Panama Canal Zone. We are particularly gratified to appear before you again because of the hospitality and understanding with which you have always received our testimony.

I should like to take this opportunity also to express publicly our deep appreciation to Congresswoman Leonor Sullivan, who has been the Chairperson of the Merchant Marine and Fisheries Committee since 1973. We regret very much her decision to retire at the end of this current session.

I shall not repeat the statistics which you already have regarding the numbers and composition of the personnel employed by the Canal Zone Government and Company. These have been presented to you by the Company itself, the General Accounting Office and our own union in previous appearances. Suffice it to recapitulate that there are now approximately 3,800 employees who are U.S. citizens and about 10,200 who are not U.S. citizens.

Nor shall I repeat the problems of the past-most notably, those which were created by the imprudent actions of the Department of the Army in trying to impose intolerable changes in salary and wage structure on these employees.

You are aware that this scheme would have frozen 3,500 of the 14,000 employees, that is, fully one out of every four, at current pay rates for perhaps up to fourteen years.

I should like, instead, to concentrate my testimony on that subject which has been the essence of my testimony for the last four years, this is-let us treat the employees of the Panama Canal Zone Government and Company the same as we treat all other Federal employees working on American territory. Let us show them that wherever the United States Flag flies as the symbol of our sovereignty, there the same rule of law applies to all.

On July 22, 1975, I had the privilege of appearing before your Subcommittee to testify on the issue of labor-management and personnel problems in the Panama Canal Zone. Because the issues have not changed yet the problems have become magnified, may I have your consent to place into the record a copy of that statement as an annex hereto.

Mr. METCALFE. That statement will be placed in the files of the subcommittee.

Mr. KOCZAK. Thank you very much.

As you will note, my theme was, and now is, that the best first step to good personnel management and good labor-management relations is to withdraw the 'suspension' by the Secretary of the Army of the application of E.O. 11491 to the Panama Canal Zone.

I should like to observe here that, if E.O. 11491 had been applied in the Panama Canal Zone, we would have now only a few of the problems in labormanagement relations which plague us today. Instead, we would have advanced to a more equitable dialog between management and labor.

Federal employees working on territory over which the United States holds sovereignty, are entitled to the same rights as, for example, Federal employees working in the District of Columbia, which itself is not a State of the Union. "Therefore, as the single most constructive step, I once again urge your Subcommittee to raise with the Secretary of the Army the issue of withdrawing the suspension of E.O. 11491.

Secondly, the Department of the Army should adopt a policy where the U.S. wage base is applied uniformly at all levels of Manual Grade and nonmanual grade within the Canal Zone.

Third, the Department of the Army should announce that it is withdrawing in toto the imprudent salary and wage proposals which precipitated the recent crisis.

I think these three actions would create a climate where all parties could begin immediately to develop plans for resolving the remaining problems.

Because I wish to concentrate entirely on the most important steps which can be taken administratively, with the least difficulty, I should like to limit my suggestions at this point to these three issues.

All of them can be activated at once with the greatest administrative easethey require only the signature of the Secretary of the Army. None of these would need any legislative action.

Even so, I believe it would be unrealistic for us to assume that the Department of the Army would be inclined to take these suggestions without the involvement of your Subcommittee, exercising its oversight functions. For this reason, I hope that you will enter into a phase of relations with the Department of the Army to focus Congressional and public attention on accomplishing these three objectives.

Thank you very much.

Mr. METCALFE. Thank you very much, Mr. Koczak.

I skipped over Mr. Lewis. Do you have a statement you wish to make?

Mr. LEWIS. No, sir, Mr. Koczak presented our testimony.

Mr. GRAHAM. Mr. Glenn Richard Heath has gone to a great deal of trouble and expense to make a presentation.

Mr. METCALFE. You are reading my mind. I was just going to