J 
 PANAMANIAN RETIREMENT 
 
 HEARING 
 
 BEFORE THE 
 
 SUBCOMMITTEE ON 
 EETIEEMENT AM EMPLOYEE BENEFITS 
 
 OF THE 
 
 COMMITTEE ON 
 
 POST OFFICE AND CIYIL SERVICE 
 
 HOUSE OF REPRESENTATIVES 
 
 NINETY-FOURTH CONGRESS 
 
 SECOND SESSION 
 ON 
 
 H.R. 11495 
 
 A BILL TO AMEND SECTION 8335 OF TITLE 5, UNITED STATES 
 CODE, TO REDUCE THE MANDATORY RETIREMENT AGE FOR 
 NON-UNITED STATES CITIZEN EMPLOYEES OF THE PANAMA 
 CANAL COMPANY OR THE CANAL ZONE GOVERNMENT EM- 
 PLOYED ON THE ISTHMUS OF PANAMA TO SIXTY-TWO YEARS 
 
 OF AGE 
 
 FEBRUARY 17, 1976 
 
 Serial No. 94-64 
 
 / tiif''''"''^ — H 
 
 / |f'\\$\AR/fj» ""^Printed for the use of the 
 
 /' / v^ • ' Conlttiitf&e on Post Office and Civil 
 
 
 „. GOVERNMENT PRINTING OFFICE 
 6&-007~' r -v < ^,//// / WASHINGTON : 1976 
 
COMMITTEE ON POST OFFICE AND CIVIL SERVICE 
 
 DAVID N. HENDERSON, North Carolina, Chairman 
 MORRIS K. UDALL, Arizona, ViU Chairman 
 DOMINICK V. DANIELS, New Jersey EDWARD J. DERWINSKI, Illinois 
 
 ROBERT N. C. NIX, Pennsylvania ALBERT W. JOHNSON, Pennsylvania 
 
 JAMES M. HANLEY, New York JOHN H. ROUSSELOT, California 
 
 CHARLES H. WILSON, California ANDREW J. HINSHAW, California 
 
 RICHARD C. WHITE, Texas JAMES M. COLLINS, Texas 
 
 WILLIAM D. FORD, Michigan GENE TAYLOR, Missouri 
 
 WILLIAM (BILL) CLAY, Missouri BENJAMIN A. OILMAN, New York 
 
 PATRICIA SCHROEDER, Colorado ROBIN L. BEARD, Tennessee 
 
 WILLIAM LEHMAN, Florida TRENT LOTT, Mississippi 
 
 GLADYS N. SPELLMAN, Maryland 
 STEPHEN L. NEAL, North Carolina 
 HERBERT E. HARRIS, Virginia 
 WILLIAM M. BRODHEAD, Michigan 
 PAUL SIMON, Illinois 
 NORMAN Y. MINETA, California 
 JOHN W. JENRETTE, Je., South Carolina 
 STEPHEN J. SOLARZ, New York 
 
 John H. Martiny, Chief Counsel 
 
 Victor C. Smiroldo, Staff Director and Counsd 
 
 Theodore J. Kazy, Associate Staff Director 
 
 Robert E. Lockhart, Counsd 
 
 James Pierce Myers, Assistant Counsel 
 
 David Mikton, Associate Counsd 
 
 Subcommittee on Retirement and Employee Benefits 
 
 RICHARD C. WHITE, Texas, Chairman 
 DOMINICK V. DANIELS, New Jersey GENE TAYLOR, Missouri 
 
 HERBERT E. HARRIS, Virginia ROBIN L. BEARD, Tennessee 
 
 GLADYS N. SPELLMAN, Maryland 
 NORMAN Y. MINETA, California 
 JOHN W. JENRETTE, Jr., South Carolina 
 MORRIS K. UDALL, Arizona 
 
 Ex Officio Voting Member* 
 
 DAVID N. HENDERSON, North Carolina EDWARD J. DERWINSKI, Illinois 
 
 (Ronald P. McCluskey, AssistantCounsel, Room B-345(d), Rayburn Building— Ext. 56831) 
 
 (H) 
 
 
CONTENTS 
 
 Statement of— Page 
 
 Constant, Thomas M., Secretary, Panama Canal Company, and 
 
 Assistant to the Governor, Panama Canal Zone Government 4 
 
 Murphy, Hon. John M., a Representative in Congress from the State 
 
 of New York 7 
 
 Tinsley, Hon. Thomas A., Director, Bureau of Retirement, In- 
 surance, and Occupational Health, U.S. Civil Service Commission-- 1 
 Webber, Clyde M., national president, American Federation of Gov- 
 ernment Employees 8 
 
 Additional material: 
 
 Copy of H.R. 11495 11 
 
 Administration report from U.S. Civil Service Commission 9 
 
 Summary of recommendations iv 
 
 <m> 
 
Recommendations ox H.R. 11495, Panamanian Retirement 
 
 Hon. Thomas A. Tinsley, Director, Bureau of Retirement, Insur- 
 ance, and Occupational Health, U.S. Civil Service Commission: 
 
 (1) Amend the bill so as to^give an individual time (1 year) 
 to adjust to any reduction in income and living standards that 
 would result from enactment of this bilL 
 Hon. Thomas M. Constant, Secretary, Panama Canal Co., and 
 Assistant to the Governor of the Panama Canal Zone Government : 
 
 (1) This legislation, should be enacted in order to : (a) increase 
 the efficiency of the work force of the Canal organization; and 
 (b) provide increased employment opportunities for younger 
 Panamanians. 
 
 (2) Delay the effective date of the.' bill 1 year so as to permit 
 the employees time to adjust. themselves to their retirement in the 
 Republic of Panama across tne border and find suitable housing. 
 
 (IV) 
 
PANAMANIAN RETIREMENT 
 
 TUESDAY, FEBRUARY 17, 1976 
 
 U.S. House of Representatives, 
 Committee ox Post Office and Civil Service, 
 Subcommittee on Retirement and Employee Benefits, 
 
 Washington, D.C. 
 
 The subcommittee met at 9 :30 a.m. in room 311, Cannon House 
 Office Building, Hon. Richard C. White (chairman of the subcommit- 
 tee) presiding. 
 
 Mr. White. The subcommittee will come to order. 
 
 The subcommittee has convened this morning to consider the merits 
 of H.R. 11495, a bill introduced by Congressman John M. Murphy of 
 New York. 
 
 The effect of the bill would be to establish the same requirement for 
 mandatory retirement under the Civil Service Retirement Act for non- 
 U.S. citizen employees of the Panama Canal Co. and the Canal Zone 
 government employed on the Isthmus of Panama as that which 
 has been in effect for most of the U.S. citizen employees of the canal 
 enterprise since July 1926 and for all such workers since July 1931. 
 
 Our first witness this morning will be Thomas A. Tinslcy. Director, 
 Bureau of Retirement, Insurance, and Occupational Health, U.S. Civil 
 Service Commission. 
 
 STATEMENT OF THOMAS A. TINSLEY, DIRECTOR, BUREAU OF RE- 
 TIREMENT, INSURANCE, AND OCCUPATIONAL HEALTH, U.S. CIVIL 
 SERVICE COMMISSION 
 
 Mr. Tinsley. Mr. Chairman, I have a very brief prepared statement 
 which can be submitted for the record. 
 
 Mr. White. Without objection, the statement can be placed in the 
 record in full at this point. 
 
 [The complete statement follows:] 
 
 Pbepabed Statement of Thomas A. Tinsley 
 
 Mr. Chairman and Members of the -Subcommittee. I appreciate this oppor- 
 tuunity to appear before your subcommittee to give the Commission's views on 
 H.R. 11495. 
 
 The bill would, in effect, establish the same mandatory retirement age for 
 non-U.S. citizen employees of the Panama Canal Company and the Canal Zone 
 Government employed on the Isthmus of Panama as that which has been in effect 
 for most U.S. citizen employees of the Canal enterprise since July 1926, and for 
 all such U.S. citizens since July 1931. 
 
 The present mandatory retirement at age 62 after 15 years service on the 
 Isthmus of Panama applies only to U.S. citizens. We have no objection to the 
 same provision for non-U.S. citizens. 
 
 (1) 
 
When this a#e was established by Public Law 68-522, enacted July 3. 1926. 
 one of the prime considerations was the effect of exposure to extreme heat over 
 an extended period of employment. "While our legislative background is some- 
 what sketchy on this law, we assume that the effects of tropical heat were con- 
 sidered less harsh for indigenous employees. 
 
 The Canal Zone Government advises that most of their semi-skilled and 
 unskilled positions, as well as nearly all positions requiring heavy manual Labor 
 are filled by non-U.S. citizen employees. Reduction in the mandatory retirement 
 age from 70 to G2. therefore, would have a favorable impact on the efficiency of 
 tlu* workforce of the Canal agencies since older workers in such positions do not 
 generally have the agility and stamina to meet the demands of many positions. 
 Another result would be improved safety since experience has shown that older 
 workers in jobs requiring heavy manual labor or physical agility are more 
 accident prone. 
 
 There are approximately 11,000 non-U. S. citizen employees of the Panama 
 ('anal Company and the Canal Zone Government of whom 500, or about 4.59c, 
 arc age t>2 and over. 
 
 If II. R. 11495 is enacted, these 500 non-U.S. citizen employees would be manda- 
 torily retired when the law takes effect. For each of the first five years after 
 enactment there would be from 150 to 200 mandatory retirements above the 
 normal rate of voluntary retiremens. 
 
 We estimate that enactment of H.R. 11495 would increase the unfunded liabil- 
 ity of the Civil Service Retirement and Disability Fund by about $7.4 million 
 which would be amortized in 30 equal annual installments of approximately 
 $459,000. 
 
 In conclusion, the Commission has no objection in principle to enactment of 
 H.R. 11495 which would put non-U.S. citizen employees on the Isthmus on the 
 same mandatory retirement footing as U.S. citizen employees in the Canal Zone. 
 
 I thank you for the privilege of appearing this morning. I will be happy to 
 answer any questions. 
 
 Mr. TixsLi.Y. Mr. Chairman, I appreciate this opportunity to ap- 
 pear before your subcommittee to give the Commission's view on 
 H.R. 11495. 
 
 This bill would establish the same mandatory retirement age for 
 non-U.S. -citizen employees on the Isthmus of Panama as that which 
 has been in effect for most U.S.-citizen employees of the canal enter- 
 prise since July 1020, and for 'ill such U.S. citizens since July 1931. 
 
 The present mandatory retirement at a<re 62 after 15 years' service 
 on the Isthmus of Panama applies only to U.S. citizens. 
 
 The Commission, Mr. Chairman, has no objection to the same pro- 
 vision lor non-U.S. citizens as that contained in this bill. 
 
 The cost of the bill, Mr. Chairman, is relatively minor when one 
 considers the size of expenditures in the re< irement area. And the ( Jom- 
 ion estimates that enactment of this bill would increase the un- 
 funded liability of the Civil Service Retirement and Disability Fund 
 by about $7.4 million which would be amortized in 30 equal annual 
 installments of approximately $459,000. 
 
 Thank you. Mr. Chairman. 
 
 Mr. White. What is the present age of retirement tor noncitizens in 
 the Canal Zone? 
 
 Mr. TlNBLET. Seventy, the same as all other employees under the 
 
 retirement system with, T believe, two exceptions, the 82 for U.S. 
 citizen- working in the Canal Zone and, I believe, a group in Alaska 
 that worked forthe Alaska Railroad. 
 
 Mr. White. Now, suppose a S. citizen were employed there for 
 ]"> years in civil service and then returned fco the United State- and 
 worked, 5 additional years, do yon workout a formula fortho e 
 15 years down there, or do you (inure he becomes debilitated on that 
 20th year? 
 
Mr. Tinsley. No, the general formula contained in the Retirement 
 Act is applicable in either case. An individual with 15 years of service, 
 regardless of whether it was on the Isthmus or someplace else, would 
 receive 261/4 percent of his high 3 salar}^; 20 years' service would be 
 36% percent. 
 
 Mr. White. Suppose he came back to the United States, would he 
 have a term that would allow him that complete amount of time ? 
 
 Mr. Tinsley. Yes, sir : the full 15 years. 
 
 Mr. White. Will this change the law to benefit our status there in 
 relation to the Government of Panama? Are present negotiations 
 underway ? 
 
 Mr. White. That I'm not certain of, Mr. Chairman, that would be 
 a matter the State Department would be more competent to comment 
 on rather than I. 
 
 I do not know if the State Department has reviewed this bill. Per- 
 haps the people from the Panama Canal Company would know. How- 
 ever, they should be aware of it. and I know of no objection that they 
 have entered. 
 
 Mr. White. Was the early retirement for U.S. citizens originally 
 established because the American citizen was working outside the 
 United States, and, if so, how does this apply as in noncitizens from 
 this country originally ? 
 
 Mr. Tinsley. The original provision contained in the law. Mr, 
 Chairman, goes back quite a number of years, back to 1026. And I 
 believe when one consider? conditions in the world, particularly in the 
 tropics at that period of time, it would not have been unusual to pro- 
 vide for certain earlier type retirement benefits and certain other bene- 
 fits for employees that had spent a considerable period of time working 
 in that climate and environment. 
 
 Mr. White. I'm advised that a number of the employees of the 
 Panama Canal Zone have indicated they would like the effect of this 
 bill to be delayed 1 year so that they could, I presume, adjust them- 
 selves rather than have the 62 years of retirement age imposed on them 
 at this time. 
 
 Do you have any comments on that ? 
 
 Mr. Tinsley. The Commission would have no objection to that typo 
 of amendment to the bill, Mr. Chairman. In fact, I personally think it 
 would be well to so amend the bill and give an individual a time to 
 adjust to any reduction in income and living standards that would 
 result. 
 
 Mr. White. Thank you. very much. 
 
 Mr. Harris, do you have any questions? 
 
 Mr. Harris. Xo questions. 
 
 Mr. White. Thank you, Mr. Tinsley. 
 
 We have Mr. Thomas M. Constant, Secretary of the Panama Canal 
 Company, and Assistant to the Governor of the Panama Canal Zone 
 Government. 
 
STATEMENT OF THOMAS M. CONSTANT, SECRETARY, PANAMA 
 
 CANAL COMPANY, AND ASSISTANT TO THE GOVEENOR OF THE 
 PANAMA CANAL ZONE GOVERNMENT 
 
 Mr. Constant. Thank you, Mr. Chairman. I will summarize my 
 statement, if it please the subcommittee. 
 
 Mr. White. Without objection, your entire statement will be placed 
 in the record in full at this point. 
 
 [The complete statement follows :] 
 
 Prepared Statement of Thomas M. Constant 
 
 Mr. Chairman and members of the Committee, I am Thomas M. Constant, Sec- 
 retary of the Panama Canal Company. Accompanying me this morning is my 
 assistant, Mrs. Hazel M. Murdock. 
 
 I am here to offer testimony regarding the bill, H.R. 11495, which was intro- 
 duced on January 26, 107G, by Congressman Murphy of Xew York. The bill would 
 amend section 8335 of title 5, United States Code, to reduce the mandatory retire- 
 ment age of non-United States citizen employees of the Panama Canal Company 
 or the Canal Zone Government employed on the Isthmus of Panama from 
 70 to 62 years. The bill would thus establish the same mandatory retirement age 
 under the Civil Service Retirement Act for non-U. S. citizen employees of the 
 Canal agencies as that currently in effect for U.S. citizen emplo: 
 
 On behalf of the Panama Canal Company and the Canal Zone Government. I 
 strongly urge that this Subcommittee favorably consider H.R. 11405. It is the 
 position of the Canal agencies that reduction in the mandatory retirement age 
 for non-U. S. citizens would result in an increase in efficiency of that portion of the 
 work force. Of approximately 11.000 non-U. S. employees of the Canal Company 
 and the Canal Zone Government, some 500 (about 4.5%) are 02 years of age or 
 over. Many of these employees occupy manual labor position-, as, for example, 
 longshoremen, seamen, and line handlers aboard vessels. Due to their age these 
 workers are often found not to have the agility and physical stamina necessary 
 to meet the demands of the job. such as handling cargo or heavy mooring lines or 
 Climbing a Jacob's ladder on a ship. Despite the lower level nuance of 
 
 these older employees, termination for cause is usually not supportable and their 
 physical condition is not such that they would qualify for disability retirement. 
 
 We believe that mandatory retirement at age 62 would increase the efficiency of 
 the work force of the Canal organizations because it would permit replacement of 
 the Canal organizations because it would permit replacement of the older em- 
 ployees with younger workers who are physically agile and more capable of 
 performing heavy manual labor in the unskilled and semiskilled categories. It is 
 
 obvious, of course, that use of younger workers WOUld have a position effect in 
 terms of jolt safety under conditions where strength and alertness are factors in 
 avoiding danger. 
 
 Finally, an earlier mandatory retirement ajjo would provide Increased employ- 
 ment opportunities for younger Panamanians whose primary hope for employment 
 in the Canal Zone lies with the Panama Canal Company or the Canal Zone 
 ernment, since these agencies employ about 75% of the total Federal workforce 
 
 in the Zone. 
 
 Approximately 500 non-U.S. citizen employees would be retired at the time the 
 
 'aw took effect. During the flrsl five years thereafter, it Is believed from 150 to 
 
 Ldividual8 would be retired annually in excess of the normal rate Of volun- 
 tary ret Lrements. 
 
 No additional expenditures by the Canal agencies are anticipat< rry out 
 
 the program. Borne savings are expected due to the Increased productivity and the 
 
 payabh t<> new employees. Although the amount of 
 
 BUCh savim-s j>: net readily subject to estimate, (Mir personnel bureau believes that 
 
 approximately $545,000 a could be achieved within one year after the 
 
 .\et : Bfective. J <!<> no! have data regarding Mm- financial Impact of the 
 
 proposed bill apon the Federal retirement system administered by the Civil 
 Ice Commission. 
 Although the Canal agencies support U.K. 11495 in its present form. 
 
 mend tlmt one change of a substantive nature be made. The bill should he 
 
 amended t«> provide a deferred effective date of one year after enactment in order 
 
to give the employees over age 62 sufficient time to prepare for retirement. This 
 is particularly desirable in the case of Canal Zone residents where termination 
 of employment will also involve loss of rights to Canal Company quarters and 
 the need to locate private housing in the adjacent Republic of Panama. Such a 
 result could be accomplished by amending Section 2 of the bill to read as follows : 
 "Sec. 2. This Act shall become effective one year after enactment." 
 
 I appreciate very much this opportunity to appear before this Subcommittee, 
 and I shall be pleased to answer any questions the Members may have. 
 
 Mr. Constant. Mr. Chairman, and members of the committee, it is 
 a pleasure to be here this morning, and I appreciate this opportunity 
 to provide testimony regarding the bill, H.R. 11495, which was intro- 
 duced on January 26, 1976, by Congressman Murphy of New York. 
 
 The bill would amend section 8335 of title 5, United States Code, to 
 reduce the mandatory retirement age of non-U.S. -citizen employees of 
 the Panama Canal Company or the Canal Zone Government employed 
 on the Isthmus of Panama from 70 to 62 years. 
 
 On behalf of the Panama Canal Company and the Canal Zone Gov- 
 ernment, I urge that this subcommittee favorably consider H.R. 11495. 
 It is the position of the canal agencies that reduction in the mandatory 
 retirement age for non-U.S. citizens would result in an increase in 
 efficiency of that portion of the work force. We have, approximately, 
 11,000 non-U.S. employees of the Canal Company and the Canal Zone 
 Government. Some 500 of the employees are 62 years of age or over, and 
 following that about 150 to 200 each year for the next 5 years would 
 be involved. 
 
 Due to their age these workers are often found not to have the agility 
 and physical stamina necessary to meet the demands of the job. Many 
 of them are in blue-collar positions as. for example, seamen, stevedor- 
 ing, or handling the heavy mooring lines, or much of their work re- 
 quired climbing Jacob's ladders on ships which is difficult work for 
 people their age. 
 
 We believe that mandatory retirement at ace 62 would increase the 
 efficiency of the work force of the Canal organizations because it would 
 permit replacement of the older employees with younger workers who 
 are physically agile and more capable of performing heavy manual 
 labor in the unskilled and semiskilled categories. 
 
 We feel, also, that an earlier mandatory retirement age would pro- 
 vide increased employment opportunities for younger Panamanians 
 whose primary hope for employment in the Canal Zone lies with the 
 Panama Canal Company or the Canal Zone Government, since we 
 employ approximately 75 percent of all the work force in the Canal 
 Zone. 
 
 We recommend one substantive change in this bill which we felt 
 would help. The initial sum of the initial 500 who would retire would 
 be Jiving in the Canal Zone in quarters provided bv the Panama Cnnal 
 Company. If the effective date of this bill were delayed 1 year we think 
 this would permit the emploveos to adjust themselves to their retire- 
 ment in the "Republic of Pnnama across the border and find suitable 
 housing. So we do feel that the 1-year delay in the effective date would 
 be appropriate. 
 
 I appreciate very much this opportunitv to appear before this sub- 
 committee, and I shall be pleased to answer any questions. 
 
 Mt. White. Thank you very much. In this ^onse, I wonder bow ibis 
 would be received by the 500 persons affected if we changed the law. 
 
6 
 
 Are they going to be pleased with it. or is this going to be a further 
 source of agitation? 
 
 Mr. Constant. I feel that any such action involving the non-U.S. 
 
 citizens would not be too favorably received by those 500. Their 
 
 chances of employment in Panama would be very slim at that age, and 
 
 they probably would object to it. But from our point of view it would 
 
 more efficient operation. 
 
 Mr. White. How would the Government of Panama feel about this \ 
 
 Mr. Constant. I would have to refer you to the State Department 
 about this. sir. I have no idea how the Panama Government would feel. 
 As far as equality of treatment between U.S. and non-U.S. citizens. 
 this furthers the equality of treatment by bringing the retirement of 
 the non-U.S. citizen up to the standard for the U.S. citizen. 
 
 Mr. White. You have no indication whatever from the State 
 Department on this? 
 
 Mr. Constant. Xo. sir, we do not. They have voiced no objection 
 t o the bill, but I don't know what their feeling toward the Panamanian 
 ( rovernment would be. 
 
 Mr. White. Mr. Harris, do you have any questions? 
 
 Mr. Harris. I have no questions. 
 
 Mr. "White. Mr. Constant, I understand that presently employees 
 may ret ire at the age of 62 with 5 years of service at the option of the 
 employee. 
 
 Mr. ( Constant. They may : yes, sir. 
 
 Mr. "White. How many employees have taken this particular option 
 on your work force ? 
 
 Mr. Constant. As I recall, this last year we had about 100 take 
 advantage of this retirement; however, to be sure, sir, I'd like to pro- 
 ride t hat for the record, the exact number. 
 
 Mr. White. Would this bill be more desired by the management or 
 by the work force? 
 
 Mr. Constant. I think, probably, it would be preferred more by 
 management than the work force. 
 
 Mr. White. I'm wry interested in how this would affect the present 
 state of negotiations with Panama. I stand as one of those not inter- 
 ested in relinquishing any of our essential rights down there. But at 
 the same time I don't want to throw a match on the gasoline cache, and 
 this could lead to some such results. 1 think the committee should know 
 this before we go forward on this bill. 
 
 Mr. Constant. We have had no indication from the Ambassador in 
 
 Panama that there is any problem. To my knowledge the State I )epart - 
 ment has not voiced any objection to this bill. 
 
 .Mr. WHITE. Has there been any indication from the general popu- 
 lace, those who desire to work-, how they would regard this bill, or 
 is 1 1 on your part \ 
 
 Mr. ( lONSTANT. I would say it was a guess on my part. sir. This bill 
 has been submitted each year for the past 5 years, 5 to 6 yew 
 
 Mr. White. To the Congress? 
 
 M !■. ( Ionstant. To ( longress, yes, sir. by ( Jongressman Murphy : and 
 that the employees are familiar with it then, [t's being proposed 
 each year, and I think they would hesitate to give up their positions. 
 That's jusi a general feeling from my point of view. 
 
Mr. White. Thank you very much, we appreciate your coming 
 before us. 
 
 Mr. Constant. Thank you very much, sir. I appreciate the 
 opportunity. 
 
 Mr. White. There being no further business, the subcommittee is 
 adjourned. 
 
 [Whereupon, at 9 :40 p.m., the hearing was adjourned.] 
 
 [The statements which follow were received for inclusion in the 
 record.] 
 
 Prepared Statement of How. John M. Murphy, a Representative in Congress 
 From the State of New York 
 
 Mr. Chairman, and members of the committee, I appreciate the opportunity 
 to appear before the subcommittee and convey to you my views on II. R. 11495, a 
 bill which would lower the mandatory retirement age of non-U. S. employees of 
 the Panama Canal Organization from 70 to 62 years of age. Although H.R. 11495 
 affects fewer employees than many pieces of legislation before this subcommittee, 
 it is legislation which is very important to the Panama Canal Organization, 
 and both U.S. and non-U. S. employees of the Canal. 
 
 In March 1972, as Chairman of the Subcommittee on the Panama Canal, 
 I led a Congressional inspection visit to the Panama Canal Zone. That tour 
 involved a number of meetings with governmental and citizen representatives, 
 as well as an enormous amount of discussion as to the best political posture for 
 the United States to assume during these volatile political times in the Republic 
 of Panama. 
 
 The summary report of the inspecting Congressional Delegation, published on 
 March 9, 1972, proposed several changes in U.S. policy in the Canal Zone. One of 
 the changes advocated was a reduction of the mandatory retirement age for non- 
 U.S. employees from 70 to 02 years, a matter that had been raised by the Canal 
 Organization on several occasions, both for the purposes of equity to the U.S. 
 employees of the Canal, and for the improvement of the unemployment situation 
 in the Canal Zone. Mr. Chairman, the basic conditions which stimulated the 1972 
 report and my co-sponsorship of this legislation several years ago still exists 
 today. 
 
 First, there is a basic question as to whether a U.S. -owned and U.S. -operated 
 facility built on territory acquired by the United States should engage in treat- 
 ment that is unnecessarily preferential for non-U. S. citizens. In my view it should 
 not. Furthermore, the continued disparity in mandatory retirement ages is the 
 kind of rule which could discourage U.S. citizens who might otherwise be at- 
 tracted to employment in the Zone, thus weakening U.S. control of the Canal in 
 the long run. 
 
 In the last two years there lias been in the Panama Canal Zone a major drive 
 toward equality and parity of benefits for U.S. and non-U. S. employees. Many of 
 the issues joined over the last two years are ones that my colleagues and I pushed 
 in 1972. In 1975, for example. non-U. S. employees of the Canal Organization were 
 granted a leave system which gives them parity with U.S. citizen employees on 
 the Canal, except home travel benefits. Another recent example of this drive 
 toward parity occured when the Governor of the Canal Zone implemented pro- 
 posals to consolidate school systems in the Zone, as well as the separate housing 
 communities existing there. All three of the moves I have cited respond to long- 
 time aspirations of the Latin American community in the Canal Zone. Now that 
 they have been accomplished, I cannot see how anyone could attack the concept of 
 retirement parity as it is contained in this bill. 
 
 Unemployment problems still exist in the Canal Zone and the Republic of 
 Panama. A 1974 survey (the GAO report on personnel policies, May 28, P>7.">) 
 indicated that just over one-third of the recent graduates of the Latin American 
 High Schools in the Canal Zone were unemployed. As long as the Canal is the 
 major factor in employment on the Isthmus of Panama. I think we can do better 
 in hiring graduates from ;i U.S. run school system within the Zone. T am not 
 suggesting that we should remove senior citizens from their jobs as if they were 
 -■'hi- kind of gross encumbrance. They are dedicated and loyal employees of the 
 Canal regardless of the poltical stituation in Panama and regardless of any prob- 
 lems that may have arisen from Canal treaty negotiations. Put while recognizing 
 
8 
 
 the achievements of these men and women, we should also give their children an 
 opportunity for employment in what is a very limited labor market. 
 
 Undoubtedly, Mr. Chairman, when any group of employees becomes subject ro 
 mandatory retirement, they are not going to like it. Before we address ourselves 
 to those Objections that will inevitably be raised. I think we ought to analyze 
 the effects of this particular legislation. First. 1 believe we have provided B 
 liable transition period in the second section of H.R. 11495. If the legislation 
 is unduly delayed in the Congress, the effective date could be amended. Se 
 our data shows the great majority of the positions occupied by non-U. S. employ- 
 er 62 are positions which require considerable physical dexterity and 
 strength. Younger employees are generally more able to perform duties as labor- 
 ers, line-handlers, guards, and messengers. In addition, these jobs generally do 
 not require the lengthy training periods which might jeopardize the continuous 
 and efficient operations of the Canal if a large number of employees retired 
 simultaneously. 
 
 Finally, the available data also indicates that the great mass of non-U. S. 
 employees already retire prior to the age of 70. A clue that shows this legislation 
 may not l>e so devastating after all. I believe this Subcommittee is In a position 
 to do something both proper and practical — proper for all employees of the Canal 
 particularly the young unemployed Panamanians and practical for the greater 
 efficiency of the Canal Organization and its financial improvement. I hope that, 
 the Subcommittee will favorably consider the bill. 
 
 Thank you. 
 
 Prepared Statement of Clyde M. Webber, National President, American 
 Federation of Government Emploi 
 
 We thank you, Mr. Chairman, and the oilier members of the subcommittee To- 
 the opportunity to appear before you this morning and testify on this ra 
 imp o-tant legislation seeking to extend the concept of equity. 
 
 Under Executive Order 11491, Labor-Management Relations in the Federal 
 American Federation of Government Employee over 
 
 700,000 Federal employees, men and women of all nationalities, races, creeds and 
 occupations. 
 
 Sin'-" equity is the purpose of the Bill before you, T should like to state at the 
 outset that all Federal employees in the Canal Zone are the subject of unfair 
 treatment by the Secretary of the Army who has arbitrarily excluded them Prom 
 the provisions of E.0. 11491. There is no warrant, under that Executive Order, for 
 such an exclusion. And I should like to register before you also our grievance 
 over that circumstance. 
 
 Even though the Federal employees and our union have been denied basic 
 rights to representation, I am pleased to say that we have the confidence of 
 Canal Zone employees so much that they are our active members. On their 
 behalf I should like to comment on H.R. 11495. 
 
 We are pleased that Congressman John M. Murphy of New York has raised 
 the important subject of equity by placing all employees on the Isthmus of 
 Panama (employed by either the Panama Canal Company or the Canal Zone 
 Government) into the same category regardless of their nationality, race, creed, 
 color or sex. Our union lias regularly and consistently supported such efforts. 
 However, we question, in this specific instance, whether the real goal of his 
 Bill is best served by the specific modifications which it incorporates 
 
 As you know, all employees in the Federal service are entitled to remain em- 
 ployed until age To and in years of service. Then they can be retired mandatorily. 
 On September 6, 1966 Public Law 89-554 was enacted by Congress and signed 
 
 by the I'' Ident. It amended Section 8836 Of Till'' 5 (Mandatory Retirement), 
 
 United States Code by adding paragraph (e) which reads as follows : 
 
 "This section applies t" nn employee of The Alaska Railroad in Alaska, and to 
 
 an employee who is a Citizen of the United States employed on the Isthmus of 
 
 Panama i>\ the Panama Canal Company or the Canal Zone Government, who 
 becomes 62 years or at • and completes 15 years of service in Alaska or on the 
 Isthmus of Panama." 
 
 ft is our view that this was in fact a discriminatory action ami n<>t in the best 
 
 Interests of these affected employees. Among other things, we note that em- 
 
 the Panama Canal Company working in the (Jnited states (and net on 
 
 thmus of Panama) are treated in the sam<- way as any other Federal em- 
 
ployees, who are mandatorily retired at age 70 after 15 years of service while 
 those serving on the Isthmus suffer discrimination. 
 
 U.S. citizen employees in the Canal Zone therefore are now unfairly deprived 
 of 8 years potential service compared to U.S. citizens working elsewhere. But 
 they have lesser rights even than non-citizens in the Canal Zone. Moreover, only 
 U.S. citizens in the Isthmus suffer this discrimination while non-citizens can 
 work till age 70. We believe that both of these circumstances are improper and 
 should not be allowed. 
 
 Congressman Murphy has seen, of course, the inequity of the treatment as to 
 citizens and non-citizens in the Zone, and we appreciate his insight and initia- 
 tive to remove it. But there still remains the inequity of employees in the Isthmus 
 compared with Federal employees in the United States. 
 
 We feel that there is a better way to achieve his goal by removing all discrimi- 
 nations against Federal employees solely because they work on the Isthmus 
 either for the Panama Canal Company or the Canal Zone Government. 
 
 Consequently, our organization recommends that Public Law 89-554 be repealed. 
 
 We have a further reason for recommending a different route to equity than 
 the one chosen in H,R. 11495. 
 
 All of us are aware of the serious tensions that currently exist in Panama and 
 the Canal Zone now over the issue of sovereignty. H.R. 11495 might well con- 
 tribute to increasing those tensions by affording an opportunity to those in 
 Panama who argue that the only way to protect the fate and security of Pana- 
 manian employees in the Canal Zone is to officially and permanently transfer 
 sovereignty over the Canal Zone from the United States government to the 
 Panamanian government. They might cite the change in status of non-citizens, 
 depriving them of eight potential years of service as evidence of the indifference 
 by U.S. authorities to their needs. 
 
 We would request you, therefore, to weigh the advisability of the Congress 
 taking such legislative action at this time which might provoke hostile reaction 
 from Panamanian nationals, especially since there is a basic issue of equity at 
 stake. Besides this issue of basic equity, we fear that it might become politically 
 and diplomatically embarrassing to the United States to allow such a change in 
 status to exacerbate conditions on the Isthmus. 
 
 We, therefore, respectfully urge this subcommittee to substitute for this Bill 
 a simple revision which would have as its sole purpose the repeal of Public Law 
 89-554. 
 
 We thank the subcommittee for this opportunity to make our views known 
 on this legislation, and we wish particularly to reemphasize our high regard for 
 Congressman Murphy who has done all of us a favor by raising the fundamental 
 issue of equity in H.R. 11495. 
 
 United States Civil Service Commission, 
 
 Washington, D.C., February 18, 1976. 
 Hon. David N. Henderson, 
 
 Chairman, Committee on Post Office and Civil Service, House of Representatives, 
 Washington, D.C. 
 
 Dear Mr. Chairman : This is in further response to your request for the Com- 
 mission's views on H.R. 723, a bill "To amend section 8335 of title 5, United States 
 Code, to reduce the mandatory retirement age for non-United States citizen em- 
 ployees of the Panama Canal Company or Canal Zone Government employed on 
 the Isthmus of Panama to sixty-two years of age", and on H.R. 11395, a similar 
 bill. 
 
 The effect of either bill would be to establish the same age requirement for 
 mandatory retirement under the Civil Service Retirement law for non-U. S. citizen 
 employees of the Panama Canal Company and the Canal Zone Government em- 
 ployed on the Isthmus of Panama as that which has been in effect for most of the 
 U.S. citizen employees of the Canal enterprise since July 1926 and for all such 
 workers since July 1931. The only difference is that H.R. 723 would be effective 
 on enactment, while HR. 11495 would be effective on October 1, 1976 or enact- 
 ment, whichever is later. We understand the Panama Canal Company is recom- 
 mending a deferred effective date provision to give employees sufficient time to 
 prepare for retirement. 
 
 The Canal Zone Government has advised us that, altogether, there are approxi- 
 mately 11,000 non-U.S. citizen employees of whom 500, or about 4.5%, are age 62 
 and over. 
 
10 
 
 These 500 non-U. S citizen employees would be mandatorily retired at the time 
 the law takes effect, and it is estimated that for five years thereafter there would 
 be from 150 to 200 mandatory retirements annually in excess of the normal rate 
 of voluntary retirements. 
 
 The Commission does not have any objection in principle to enactment of the 
 bill which would put non-U. S. citizen employees on the Isthmus on the same 
 mandatory retirement footing as U.S. citizen employees. 
 
 Enactment of H.R. 723 or H.R. 11495 would not increase the normal cost of 
 the Civil Service Retirement System. It would, however, increase the unfunded 
 liability of the Civil Service Retirement and Disability Fund by about $7.4 
 million. This amount would be amortized in 30 equal annual installments of 
 approximately $459,000. 
 
 The Office of Management and Budget advises that, from the standpoint of 
 the Administration's program, there is no objection to the submission of this 
 report. 
 
 By direction of the Commission : 
 Sincerely yours, 
 
 Robebt Hampton, Chairman. 
 
11 
 
 94tii CONGRESS 
 2d Session 
 
 H. R. 11495 
 
 IN THE HOUSE OF REPRESENTATIVES 
 
 January 26, 1976 
 
 Mr. Mukphy of New York introduced the following bill; which was reform! 
 
 to the Committee on Post Office and Civil Service 
 
 A BILL 
 
 To amend section $?>?>?> of title 5, United States Code, to reduce 
 the mandatory retirement age for non-United States citizen 
 employees of the Panama Canal Company or the Canal Zone 
 Government employed on the Isthmus of Panama to sixty- 
 two years of age. 
 
 1 Be it enacted by the Senate and House of Reprcscnta- 
 
 2 fives of the United States of America in Congress assembled, 
 o That section 8335(e) of title 5, United States Code, is 
 
 4 amended to read as follows: 
 
 5 " (e) This section applies to an employee of the Alaska 
 (j Railroad in Alaska and to an employee of the Panama Canal 
 7 Company or the Canal Zone Government on the Isthmus of 
 S Panama, who becomes sixty-two years of age and completes 
 
12 
 
 UNIVERSITY OF FLORIDA 
 
 ll III III III 
 
 3 1262 09115 0093 
 
 1 eats (»i service in Alaska or on the Isthmus of 
 
 2 Panama.". 
 
 : ; Sec. 2. The amendments made by the first section of this 
 
 4 Act shall apply with respect to the pay periods beginning 
 
 5 i ft< '— 
 
 (J ( l ) the date of enactment of this Act. or 
 
 7 (2) October 1, 197C> ? 
 
 8 whichever is later. 
 
 O