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ISE 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 EMPLOYED ON THE ISTHMUS OF PANAMA TO SIXTY-TWO YEARS

OF AGE

FEBRUARY 17, 1976

Serial No. 94-64

Printed for the use of the

Committee on Post Office and Civil Service

U.S. GOVERNMENT PRINTING OFFICE

(S-007 WASHINGTON : 1976
,

COMMITTEE ON POST OFFICE AND CIVIL SERVICE

DAVID N. HENDERSON, North Carolina, Chairman

MORRIS K. UDALL, Arizona, Vice Chairman

DOMINICK V. DANIELS, New Jersey

ROBERT N. C. NIX, Pennsylvania

JAMES M. HANLEY, New York

CHARLES H. WILSON, California

RICHARD C. WHITE, Texas

WILLIAM D. FORD, Michigan

WILLIAM (BILL) CLAY, Missouri

PATRICIA SCHROEDER, Colorado

WILLIAM LEHMAN, Florida

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, JR., South Carolina

STEPHEN J. SOLARZ, New York

JOHN H. MARTINY, Chief Counsa

VICTOR C. SIIIROLDO, Staff Director and Counsel

THEODORE J. KAZY, Associate Staff Director

ROBERT E. LocxuAar, Counsel

JAMES PIERCE MYERS, Assistant Counsel

DAVID MINTON, Associate Counsel

EDWARD J. DERWINSKI, Illinois

ALBERT W. JOHNSON, Pennsylvania

JOHN H. ROUSSELOT, California

ANDREW J. HINSHAW, California

JAMES M. COLLINS, Texas

GENE TAYLOR, Missouri

BENJAMIN A. GILMAN, New

ROBIN L. BEARD, Tennessee

TRENT LOTT, Mississippi

York

SUBCOMMITTEE ON RETIREMENT AND EMPLOYEE BENEFITS

RICH -A RD C. WHITE, Texas, Chairman'

DOMINICK V. DANIELS, New Jersey

HERBERT E. HARRIS, Virginia

GLADYS N. SPELLMAN, Maryland

NORMAN Y. MINETA, California

JOHN W. JENRETTE, JR., South Carolina

MORRIS K. UDALL, Arizona

GENE TAYLOR, Missouri

ROBIN L. BEARD, Tennessee

Ex Officio Voting Members

DAVID N. HENDERSON, North Carolina EDWARD J. DERWINSKI, Illinois

(Ronald P. McCluskey, AssistantCounsel, Room B-345(d), Rayburn Building—Ext. 568311

(1)
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 

Tinsley, Hon. Thomas A., Director, Bureau of Retirement, Insurance, and Occupational Health, U.S. Civil Service Commission 1

Webber, Clyde M., national president, American Federation of Government Employees 8

Additional material:

Copy of H.R. 11495 11

Administration report from U.S. Civil Service Commission 9

Summary of recommendations iv
RECOMMENDATIONS ON H.R. 11495, PANAMANIAN RETIREMENT

Hon. Thomas A. Tinsley, Director, Bureau of Retirement, Insurance, 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 the border and find suitable housing.
PANAMANIAN RETIREMENT

TUESDAY, FEBRUARY 17, 1976

U.S. HOUSE OF REPRESENTATIVES,

COMMII ILE ON 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 subcommittee) 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 nonU.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. Tinsley, Director,

Bureau of Retirement, Insurance, and Occupational Health, U.S. Civil

Service Commission.

STATEMENT OF THOMAS A. TINSLEY, DIRECTOR, BUREAU OF RETIREMENT, 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:]

PREPARED STATEMENT OF THOMAS A. TINSLEY

Mr. Chairman and Members of the Subcommittee, I appreciate this opportuunity 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.
2

When this age was established by Public Law 69-522, 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 somewhat sketchy on this law, we assume that the effects of tropical heat were considered 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 62, therefore, would have a favorable impact on the efficiency of

the 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

Canal Company and the Canal Zone Government of whom 500, or about 4.5%,

are age 62 and over.

If H.R. 11495 is enacted, these 500 non-U.S. citizen employees would be mandatorily 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 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.

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. TINSLEY. Mr. Chairman, I appreciate this opportunity to appear 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 enterprise since July 1926, and for 'ill such U.S. citizens since July 1931.

The present mandatory retirement at acre 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 provision for 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 retirement area. And the Commission estimates that enactment of this bill would increase the unfunded 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 for noncitizens in

the Canal Zone?

Mr. TINSLEY. Seventy, the same as all other employees under the

retirement system with, I believe, two exceptions, the 62 for U.S.

citizens working in the Canal Zone. and, I believe, a group in Alaska

that worked for the Alaska Railroad.

Mr. WHITE. Now, suppose a U.S. citizen were employed there for

15 years in civil service and then returned to the United States and

worked, say, 5 additional years, do you work out a formula for those

15 years down there, or do you figure he becomes debilitated on that

20th year?
3

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 26/14percent of his high 3 salary; 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. Perhaps the people from the Panama Canal Company would know. However, 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 1926. And I

believe when one considers conditions in the world, particularly in the

tropics at that period of time, it would not have been unusual to provide for certain earlier type retirement benefits and certain other benefits 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 themselves 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 type

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. No 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.
4

STATEMENT OF THOMAS M. CONSTANT, SECRETARY, PANAMA

CANAL COMPANY, AND ASSISTANT TO THE GOVERNOR 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, Secretary 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 introduced 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-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 employees.

On behalf of the Panama Canal Company and the Canal Zone Government, I

strongly 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. Of approximately 11,000 non-U.S. employees of the Canal Company

and the Canal Zone Government, some 500 (about 4.5%) are 62 years of age or '

over. Many of these employees occupy manual labor positions, 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 levels of performance 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 job safety under conditions where strength and alertness are factors in avoiding danger.

Finally, an earlier mandatory retirement age would provide 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 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

Jaw took effect. During the first five years thereafter, it is believed from 150 to

200 individuals would be retired annually in excess of the normal rate of voluntary retirements.

No additional expenditures by the Canal agencies are anticipated to carry out

the program. Some savings are expected due to the increased productivity and the

lower beginning wage rates payable to new employees. Although the amount of

such savings is not readily subject to estimate, our personnel bureau believes that

approximately $545,000 in savings could 'be achieved within one year after the

Act becomes effective. I do not have data regarding the financial impact of the

proposed bill upon the Federal retirement system administered by the Civil

Service Commission.

Although the Canal agencies support H.R. 11495 in its present form,-we recommend that one change of a substantive nature be made. The bill should be

amended to provide a deferred effective date of one year after enactment in order
5

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 introduced 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 Government, 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, stevedoring, or handling the heavy mooring lines, or much of their work required climbing Jacob's ladders on ships which is difficult work for

people their age.

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 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 provide 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 living in the Canal Zone in quarters provided by the Panama Canal

Company. If the effective date of this bill were delayed 1 year we think

this would permit the employees to adjust themselves to their retirement in the Republic of Panama 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 opportunity to appear before this subcommittee, and I shall be pleased to answer any questions.

Mr. WHITE. Thank you very much. In this sense, I wonder how this

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

be a 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 tills?

Mr. CONSTANT. No, sir, we do not. They have voiced no objection

to the bill, but I don't know what their feeling toward the Panamanian

Government would be.

Mr. WHITE. Mr. Harris, do you have any questions?

Mr. HARRIS. I have no questions.

Mr. WmTE. Mr. Constant, I understand that presently employees

may retire 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 provide that 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

managementmanaement than the work force.

Mr.WurrE. I'm very interested in how this would affect the present

state of negotiations with Panama. I stand as one of those not interested 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. I 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 Department has not voiced any objection to this bill.

Mr. WHITE. Has there been any indication from the general populace, those who desire to work, how they would regard this bill, or

is this a guess on your part?

Mr. CONSTANT. 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 years.

Mr. WHITE. To the Congress?

Mr. CONSTANT. To Congress, yes, sir, by Congressman Murphy; and

I feel that the employees are familiar with it then. It's being proposed

each year, and I think they would hesitate to give up their positions.

That's just a general feeling from my point of view.
7

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 HON. 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 ray views on .H.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 62 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 treatment 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 attracted to employment in the Zone, thus weakening U.S. control of the Canal in

the long run.

In the last two years there has 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 proposals 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 longtime 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, 1975)

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 a U.S. run school system within the Zone. I am not

suggesting that we should remove senior citizens from their jobs as if they were

some kind of gross encumbrance. They are dedicated and loyal employees of the

Canal regardless of the poltical stituation in Panama and regardless of any problems that may have arisen from Canal treaty negotiations. But 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 to

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, I 'believe we have provided a

reasonable 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. Second

our data shows the great majority of the positions occupied by non-U.S. employees over 62 are positions which require considerable physical dexterity and

strength. Younger employees are generally more able to perform duties as laborers, 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 be 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 EMPLOYEES

•We thank you, Mr. Chairman, and the other members of the subcommittee for

the opportunity to appear before you this morning and testify on this rather

important legislation seeking to extend the concept of equity.

Under Executive Order 11491, Labor-Management Relations in the Federal

Service, the American Federation of Government Employees represents over

700,000 Federal employees, men and women of all nationalities, races, creeds and

occupations.

Since equity is the purpose of the Bill before you, I 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 from

the provisions of E.O. 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 has 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 employed until age 70 and 15 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 President. It amended Section 8335 of Title 5 (Mandatory Retirement),

United States Code by adding paragraph (e) which reads as follows:

"This section applies to an 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 by the Panama Canal Company or the Canal Zone Government, who

becomes 62 years of age and completes 15 years of service in Alaska or on the

Isthmus of Panama."

It is our view that this was in fact a discriminatory action and not in the best

interests of these affected employees. Among other things, we note that employees of the Panama Canal Company working in the United States (and not on

the Isthmus of Panama) are treated in the same way as any other Federal em-
9

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 initiative 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 discriminations 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 contribute 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 Panamanian 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.

HOD. DAVID N. HENDERSON,

Chairman, Committee on Post Office and Civil Service, House of Representatives,

Washington, D.C.

DEAR Mn. CHAIRMAN: This is in further response to your request for the Commission'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 employees 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 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. The only difference is that H.R. 723 would be effective

on enactment, while HR. 11495 would be effective on October 1, 1976 or enactment, whichever is later. We understand the Panama Canal Company is recommending 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 approximately 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 employPes 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,

ROBERT HAMPTON, Chairman.
11

94T11 CONGRESS

2e SESSION H. R. 495

IN THE HOUSE OF REPRESENTATIVES

JANUARY 26, 1976

Mr. Mumun- of New York introduced the following bill; which was referred

to the Committee on Post Office and Civil Service

A BILL

To amend section 8335 of title 5, United Stales 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 sixtytwo years of age.

Be it enacted by the Senate and House of Representa2 lives of the United States of America in Congress assembled,

3 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

6 Railroad in Alaska and to an employee of the Panama Canal

7 Company or the Canal Zone Government on the Isthmus of

8 Panama, who becomes sixty-two years of age and completes
1 fifteen years of service in Alaska or on the Isthmus of

Panama.".

SEC. 2. The amendments made by the first section of this

Act shall apply with respect ,to the pay periods beginning

5 after—

(1) the date of enactment of this Act, or

7 (2) October 1, 1976,

8 whichever is later.

0