Definitive Report - REPORT_NO272, June 1990

CASE_NUMBER 1491 (Trinidad and Tobago) - COMPLAINT_DATE: 28-FEB-89 - Closed

1. 40. By a communication dated 28 February 1989, the World Confederation of Organisations of the Teaching Profession (WCOTP) presented a complaint of violations of freedom of association against the Government of Trinidad and Tobago. On 2 August 1989 the WCOTP presented new allegations relating to its complaint; on 9 January 1990 it presented further information. The Government sent its observations on the case in communications dated 9 November 1989 and 9 April 1990.
2. 41. Trinidad and Tobago has ratified both the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98); it has not ratified the Collective Bargaining Convention, 1981 (No. 154).

A. The complainant's allegations

1. 42. In its letter of 28 February 1989, the WCOTP - on behalf of the Trinidad and Tobago Unified Teachers' Association (TTUTA) - states that the Government, in the 1989 budget, has taken the decision to cut salaries of teachers and other public sector workers by 10 per cent. The 1989 budget has since been approved by Parliament.
2. 43. According to the complainant, the cut was decided without prior consultation or agreement with the unions representing the public sector workers, despite the fact that the Education Act, in sections 62 to 72 (copies supplied by the WCOTP), sets out the procedure to be followed in settling terms and conditions of service for members of the teaching profession. It stresses that this procedure was not followed when the decision to cut salaries was taken.
3. 44. The WCOTP is of the opinion that the Government has thus violated Article 4 of Convention No. 98 on collective bargaining and Articles 2 and 5 of Convention No. 154 on the promotion of collective bargaining.
4. 45. On 2 August 1989 the WCOTP adds that following a report by the International Monetary Fund (IMF) (many figures of which were subsequently found to be wrong) the Government, without holding any consultations took these two decisions:
   • (a) refusal to implement its commitment to raise the teachers' salaries as of 1 January 1989; and
   • (b) unilateral reduction of the said salaries by 10 per cent.
     • The TTUTA launched proceedings in the competent jurisdiction. Unfortunately, the lower court dismissed the case and the Association will probably have to pay US$31,765 in costs.
   • 46. According to a legal opinion recently obtained, the TTUTA might be more successful at the appellate level. Unfortunately, another failure would mean that this small organisation would have to pay approximately US$63,500 in costs.
5. 47. The WCOTP considers that the amount requested by the courts under the first decision, as well as the costs which could be imposed if a second negative judgement were rendered, constitute an impediment to the expression and practice of freedom of association. The TTUTA cannot presently assume a debt which could precipitate the demise of this organisation.
6. 48. In a communication dated 9 January 1990, the complainant alleges that the Government, on 15 December 1989, extended to the end of 1990 the austerity measures taken in 1989. This, it claims, is a continuation of the Government's non-respect of the right to negotiate recognised in Convention No. 98. The legislation in question - the Reduction of Public Sector Emoluments Act - not only cut the salaries, but also empowered the Government to set aside a ruling of the High Court ordering the restoration of cost-of-living allowances and an award (dated July 1988) of the Special Tribunal of the Industrial Court granting a 2 per cent increase in the salaries of public sector employees.
7. 49. According to the complainant, the economic plight of teachers and their families will be compounded by the introduction in 1990 of a value-added tax of approximately 15 per cent on most goods and services. It adds that the past six years have seen unrelenting economic pressure on the teachers and other public servants as the Government continues to implement the structural adjustment policies of the IMF. It lists the following examples: 1984 to 1986 - wage freeze; 1987 - loss of cost-of-living allowance and annual increments; 1988 - imposition of a 5 per cent tax surcharge; 1989 - the measures referred to in this complaint. In addition, the local currency has been devalued twice (in 1984 and 1988) and the cost-of-living index has soared, e.g. the item "food" leapt from 160.2 points to 278.3 points between September 1986 and October 1989.
8. 50. The WCOTP maintains that the economic hardship of teachers is further compounded by the deplorable conditions in which they have to work, e.g. schools in varying stages of disrepair, non-functional toilets, inadequate staffing, shortage of school supplies and equipment and even physical attacks on their persons due to the recent dramatic increase in violent crimes, drug addiction, unemployment and broken homes. The impact of these social ills is felt heavily in the classrooms.
9. 51. According to the complainant, the TTUTA is at present preparing its members for a long and bitter struggle with the authorities to regain the money owed them by a Government which has so far shown contempt for collective bargaining and the economic plight of teachers.

B. The Government's reply

1. 52. In its communication of 9 November 1989, the Government submits that the complaint is unfounded and entirely misconceived, and indicates an absence of full knowledge or proper understanding of the circumstances surrounding the 10 per cent reduction in the pay of public sector workers. According to the Government, the action of cutting wages by 10 per cent was effected by an Act (No. 5 of 1989, a copy of which is supplied) of Parliament - which is the country's law-making body under the Constitution of Trinidad and Tobago - which was passed with a majority at the final vote of two-thirds of all the members of the House of Representatives and of the Senate. This majority was sought by the Government in recognition of the fact that the property rights of the persons concerned, which rights are protected by the Constitution, would be adversely affected.
2. 53. Similarly, the Government states that it recognises and acknowledges its obligations under the Constitution of the ILO in respect of the Conventions it has ratified, including Convention No. 98, the terms of which it continues to observe scrupulously.
3. 54. The Government states that it was compelled to take the action it did by the force of economic necessity. The step was taken as one in a combination of moves calculated to effect essential economic and fiscal adjustments to correct an insupportable imbalance between revenue and expenditure. The various measures were taken only after extensive consultation and intensive debate between Government, the trade union movement and the business sector, as well as considerable public debate in the media. It stresses that the Trinidad and Tobago Unified Teachers' Association participated in these discussions. Describing the economic background to the cuts, the Government states that the petroleum sector is the prime mover of the island's economy but it employs only a small fraction of the labour force and has few links with the non-petroleum sector; thus it is up to the Government to transmit the benefits generated by the petroleum sector to the rest of the economy. The sharp increases in the price of petroleum in the late 1970s brought unprecedented wealth to the country. The production and refining of crude in the country also increased markedly over the period with the result that the Government's revenues rose to levels which had never been envisaged; but the short-lived prosperity was to leave in its wake problems of unimagined magnitude.
4. 55. Referring to the period of decline following the oil boom, with the drop in the price of petroleum and a fall in the levels of production and of refining, the Government emphasises that its revenues from petroleum have fallen by 40 per cent. At the same time, total government expenditure rose. In addition, because of the generally depressed state of the economy, revenue from the non-petroleum sector has also declined, falling by almost 50 per cent between 1982 and 1988 in spite of increased taxation. According to the Government, a large number of businesses have closed or have been placed in receivership and consequently a considerable portion of the labour force has been put out of employment. The level of unemployment in 1988 was estimated to be 22 per cent.
5. 56. The Government goes on to describe its efforts to accommodate the reduced revenue: for example, during the years 1982 to 1986 it cut capital expenditure; when elected to office in December 1986 it immediately set up a task force to determine the precise state of the Treasury; then two further measures, rather than retrench an estimated 15,000-17,000 employees, were chosen: (i) a 5 per cent reduction in the existing salaries of Ministers of Government; and (ii) suspension of cost-of-living allowances and merit increases payable to public officers. Some success was also achieved in reducing expenditure through a reduction of transfers and subsidies to statutory authorities and state enterprises, but the wages and salaries bill in the central Government in 1988 was not reduced substantially. In addition personnel expenditure rose from approximately 41 per cent and 43 per cent of recurrent expenditure in 1981 and 1983 respectively, to 48 per cent of recurrent expenditure in 1988. While it is essential that the Government seek to contain its overall expenditure in line with current revenue, it stresses that, in addition to wages and salaries, large sums need to be allocated to cover the cost of other commitments faced by the Government (e.g. pensions to retired public officers, old-age pensions, social assistance and food subsidies, as well as grants to the University of the West Indies). Given the nature of these commitments, and the pressing need to bring recurrent expenditure more in line with current revenue, the Government was constrained to adopt what it regards as the least painful measure, namely a 10 per cent reduction in existing levels of salaries and wages of the central Government, Tobago House of Assembly, local government bodies and statutory boards with effect from 1 January 1989.
6. 57. The Government states that its problems have been further aggravated by the existence of a heavy burden of external debt resulting from a number of prestige projects undertaken by the previous administration. The debt has drained the country's foreign exchange reserves already under threat of extinction as a result of the dwindling returns from petroleum. By mid-1988 the balance of payments had deteriorated to such an extent that emergency measures were needed, including: restrictions on new acting appointments and the hiring of temporary staff; reduction in expenditure on goods and services; reduction in expenditure on transfers and subsidies to statutory authorities, including public utilities and state enterprises; increases in the excise duty on petroleum and petroleum products; sale and leaseback of aircraft of the national airline; and devaluation of the Trinidad and Tobago dollar. In late 1988 the Government approached the IMF for a stand-by arrangement to facilitate the rescheduling of the country's external debt and to make it possible to obtain programme and sector loans from international lending agencies. The Prime Minister (who is also the Minister of Finance and the Economy) stated in the 1989 Budget Speech that the Government's "overall fiscal objective in 1989 must be a significant reduction in our fiscal deficit". He pointed out that: "On the expenditure side the focus must be on reducing expenditures on wages and salaries, transfers to statutory boards and state enterprises and non-priority capital spending" and indicated that it was proposed to enact the necessary legislation to put into effect a 10 per cent cut in public sector salaries and wages.
7. 58. Referring to the consultation procedures, the Government describes the Joint Consultative Council (JCC) which comprises a cross-section of interests on which the trade union movement is represented. In 1987, the JCC produced a paper in which a possible reduction in the wage and salary levels in the public sector was mooted. The Labour Congress prepared a paper in response which was sent to the Minister of Finance and the Economy and which rejected any suggestion of retrenchment of public servants or reduction of their salaries. The employer representatives also submitted a paper in which they recommended that the budgetary gap be closed in part by a reduction in the salaries and wages bill of the Government, to be achieved if necessary by an across-the-board reduction in personal emoluments. These papers were discussed and the views of their proponents elaborated upon at JCC meetings held in late 1987, and, on 25 January 1989, the Prime Minister and other Ministers of Cabinet met with representatives of the trade union movement, including the TTUTA. Trade union leaders present (including the teachers' representative) expressed dissatisfaction with the suggestion concerning a possible 10 per cent cut and the Prime Minister expressed his gratitude to the representatives for their contributions and pointed to the challenges facing the country in its effort to restructure the economy; he also agreed to keep open the lines of communication with the labour movement.
8. 59. With regard to collective bargaining legislation, the Government notes that sections 62 to 72 of the Education Act set out procedures for consultation and negotiation on terms and conditions of employment of members of the teaching profession. This Act gives the right to the body representing teachers employed by the Government (now the Trinidad and Tobago Unified Teachers' Association) to conduct collective bargaining with the agency of government established for the purpose (namely the Personnel Department). There is provision in the law for matters of disagreement to be referred to a legally binding special tribunal for binding arbitration. There are also similar prescriptions for government employees' collective bargaining in the Civil Service Act, Police Service Act, etc. and the Statutory Authorities Act. In the Government's view, the issue of the reduction in pay encompasses a much wider body of persons than does the collective bargaining legislation just referred to as it includes those persons who because of the nature of their office (e.g. holders of elective offices and others involved in the administration of the State) are considered to be outside the collective bargaining process. It places great importance on the fact that the issue of a reduction has been regarded at all times by the Government as one of national concern. In all the legislation governing collective bargaining in respect of government employees, the Minister of Finance is the authorised member of Cabinet to direct the activities of the agency of government, i.e. the Personnel Department, and he met with the representatives of the trade union movement for purposes of discussing the need for such pay cuts and their implications. However, faced with firm objections from all representatives of the labour movement, the Government took the only course of action available to it, namely to place the matter before Parliament. The debate at this highest possible national level was accompanied by open discussion throughout the country and in both the print and electronic media.
9. 60. The Government points out that the schedule to Act No. 5 of 1989 indicates the range of office holders who are subject to the reduction provided for in the law (including Members of Parliament and the defence forces, ambassadors, and all civil servants) and that section 4(1) lists those who are not to be affected by the reduction (namely, the Chairman of the Tax Appeal Board and the members of the Industrial Court, as well as those persons protected by the National Constitution, such as judges of the Supreme Court).
10. 61. With respect to the Special Tribunal award referred to in the complaint, the Government maintains that it has every regard for the Tribunal and the award. In support of this, it refers to the 1989 Budget Speech:
    • The implementation of the award will increase central Government recurrent expenditure in 1989 by $600 million. I would like to state categorically that this Government accepts the decision of the Special Tribunal. However, as is widely appreciated, the Government does not have the resources to implement the wage award at the present time. In this connection appropriate legislation will be enacted. My Government undertakes to review these two measures in respect of salaries and wages periodically with the representative associations as changed economic circumstances may permit a partial or whole restoration of losses suffered now.
    • The Government adds that sections 5, 6 and 7(2) of Act No. 5 reflect this position as regards the award since they state that payment of the award increases is not required until the Act ceases to have effect. Section 7 of the Act prescribes 31 December 1989 "or such other date, being not later than 31 December 1990" as the end of the Act.
11. 62. Lastly, the Government supplies an extract of the High Court judgement delivered on 7 June 1989. It concerns a constitutional motion filed by the TTUTA and a teacher employed in the teaching service, seeking declarations that Act No. 5 was ultra vires and is null and void since neither the executive nor legislative arm of government has authority to exercise the power given by Parliament in the Education Act to the parties and the Special Tribunal to fix the terms and conditions of employment of teachers. The motion also claims the Act was ultra vires because it suspends the effect of an award of the Special Tribunal thus undermining the independence of the judiciary "merely because a particular decision is considered ... to be inexpedient and/or inappropriate".
12. 63. The motion was dismissed with costs awarded against the applicants. The Government adds that the principle that unsuccessful litigants bear the costs involved is commonly accepted; it points out that costs are assessed by an independent official of the High Court and found to be reasonable at a hearing at which both parties are represented. The quantum of costs in this motion has not to date been assessed and the figure quoted by the complainant (US$31,765) is speculative. The Government states that the same applies to the figure of US$63,500 advanced by the union as the total costs likely to be involved in the event of another failure at the appellate level. The TTUTA has appealed against the High Court decision (apparently contrary to the results of a referendum held among the 9,000 financial members of that union to decide whether or not an appeal should go ahead and, if so, whether members should contribute extra funds for it). According to the Government, the TTUTA is seeking international financial assistance in pursuit of its cause; it adds that the union's audited financial statement for the year ending 30 April 1989 showed that it has assets of over US$143,000, so the suggestion that further litigation would ruin the organisation is without merit.
13. 64. In conclusion, the Government stresses that the Schedule to the Act shows that the action taken was one that was national in scope, touching every stratum of worker in the public sector. The Government fully realised that the impact of the measure would be felt even beyond the area - as wide as it is - of those directly affected. Recognising the seriousness of the issue, the Prime Minister undertook with members of his Cabinet and senior advisors to consult with the leaders of the trade union movement in an effort to achieve a meeting of minds. The step was taken by due process of law within the prescriptions of the country's Constitution, after full debate in Parliament and in the country as a whole. The majority by which the Bill was passed reflects the population's sentiment on this issue.
14. 65. In a communication dated 9 April 1990 the Government confirms that the Reduction of Public Sector Emoluments Act, 1989, was extended by both Houses of Parliament to 31 December 1990. It stresses that before the extension of the Act the Government's Council of Ministers ensured that the concerned public sector unions were consulted.

C. The Committee's conclusions

1. 66. The Committee notes that this case involves allegations that legislative intervention (upheld by the national courts) to impose a public sector wage cut (10 per cent) for 1989 - subsequently extended through 1990 - violates Article 4 of Convention No. 98 and Articles 2 and 5 of Convention No. 154, both of which aim at promoting voluntary collective bargaining without government interference. It is also alleged that this measure was taken without any consultation with the unions involved.
2. 67. The Committee notes from the Government's detailed reply that, in its opinion, it had been compelled by economic necessity to take this measure after a series of other restraint measures had not redressed the serious financial situation facing the country in the aftermath of the collapse of the oil boom. It notes the Government's explanation that there was extensive consultation, both at the level of the union concerned and at the general national level (through media attention and parliamentary debate), before it decided to make the cut. Moreover, the Government argues that it had a two-thirds parliamentary vote in favour of approval of the legislation in question, and stresses that the reduction is to end as of 31 December 1990, upon which date the increase awarded to public sector employees by the Special Tribunal of the Industrial Court in July 1988 shall be paid.
3. 68. On the question of consultation, the Committee notes the meetings held in the Joint Consultative Council (in which the TTUTA took part) as well as the broad debate airing both sides' views on the need for economic measures and on this legislation in particular. It also notes that the consultation requirements of the Education Act (section 64 in particular) appear to have been met by the Prime Minister's meeting (in January 1989) with the representatives of the trade union movement who included the TTUTA. The Committee accordingly considers that on this aspect of the complaint there was no infringement of trade union rights.
4. 69. On the issue of government intervention in the collective bargaining process - bypassing existing dispute resolution procedures - using the justification of compelling reasons of national economic interest, the Committee recalls that it examines such legislative measures in the light of the fundamental principles of freedom of association, namely the right of workers' organisations to negotiate wages and conditions of employment freely with employers and their organisations. In previous cases it has accepted restrictions on the free fixing of wage rates on condition that they are imposed as an exceptional measure and only to the extent necessary, without exceeding a reasonable period, and that they are accompanied by adequate safeguards to protect the living standards of the workers (see Digest of Decisions of the Committee on Freedom of Association, third edition, 1985, para. 641).
5. 70. In addition, the Committee recalls that, since this case involves an across-the-board reduction in public sector remuneration, it should make it clear that Convention No. 98 - ratified by Trinidad and Tobago - is relevant. Article 6 of Convention No. 98 permits the exclusion from the basic right to bargain collectively of "public servants engaged in the administration of the State", a term which the ILO supervisory bodies have looked at in the light of the distinction to be drawn between civil servants employed in various capacities in government ministries or comparable bodies and other persons employed by the Government, by public undertakings or by independent public organisations such as teachers (see, for example, 236th Report, Case No. 1267 (Papua New Guinea), para. 596). The Committee has held under this criterion that teachers should enjoy collective bargaining (see, for example, 202nd Report, Case No. 871 (Colombia), para. 99). In this present case, therefore, the Committee considers that the TTUTA, the sole union representing teachers, had legitimately enjoyed the right to negotiate the terms and conditions of employment of government-employed teachers by means of collective agreements.
6. 71. Given the facts of the present case, it appears to the Committee, for the following reasons, that the Government's intervention did not respect all the criteria set out in the preceding paragraphs concerning acceptable restrictions on the voluntary fixing of conditions of employment, and thus violated Convention No. 98.
7. 72. Firstly, the Committee observes that since 1982 a range of fiscal restraint measures had been applied. Secondly, the Committee notes that the Act makes some small attempt to safeguard the workers' living standards, but only in sections 5(2) and 6 of the Act, by stating that:
8. 5(2) For the purposes of giving effect to the award referred to in (this case, payment of which is to be effected when the Act ceases to be in force), where a person has been paid emoluments at the reduced rate ... the entitlement of the person to emoluments is deemed to have been satisfied to the same extent as if he had been paid emoluments at the 1988 rate.
9. 6. Pension or other terminal benefits of a person that are based on emoluments shall be computed on the basis of the emoluments that would have been applicable if this Act had not been enacted.
10. 73. The Committee is not mandated to decide on acceptable amounts of financial restraint but it has, in past cases, noted that, where possible, these measures should only extend to the sectors actually facing an emergency situation. The Act complained of in this case only affects public employees, albeit a wide range of them, and does not extend to the private sector.
11. 74. Finally, the wages cut in this case does not exceed a reasonable period since it came into force initially for 12 months with the possibility, since utilised, of a 12-month extension. The Committee observes in particular in this connection that a 2 per cent wage increase shall become immediately due when the Act ends. On this point, however, the Committee would draw the Government's attention to the fact that if such a measure were to be extended (even after wide public debate and with a parliamentary vote largely in favour) the Committee would be obliged to criticise it as having exceeded a reasonable time-limit. In past cases (see 230th Report, Case No. 1171 (Canada), para. 160) the Committee has clearly said that restraints on collective bargaining for three years are too long. It thus trusts that, as is foreseen in section 7 of the Act, government intervention by means of Act No. 5 will cease as of 31 December 1990.
12. 75. Against the background of all these elements, the Committee would stress, in general terms, the importance it attaches to the principle of the independence of the parties to collective bargaining. This is a principle which was generally recognised during the preparatory discussions leading up to the adoption by the International Labour Conference of the Collective Bargaining Convention, 1981 (No. 154). Therefore, in the present case, the Committee expresses the firm hope that, in order to restore a climate of harmonious industrial relations, the Government will continue striving to convince the parties to collective bargaining to take account voluntarily in their negotiations of the major economic and social policy reasons and of the public interest which it had mentioned in connection with the salaried employees affected by this measure in 1989-90. In order to achieve this, these reasons could again be discussed at the national level by all parties within the consultative body to which the Government refers (the Joint Consultative Council) and such discussions should be held in accordance with the principles of mutual understanding and trust which are specifically defined in the Consultation (Industrial and National Levels) Recommendation, 1960 (No. 113).
13. 76. The Committee therefore recommends the Government to resume collective bargaining in the areas concerned in order to allow the determination of wages of all workers in the public sector - not just the teachers who presented the complaint in this case - in a climate of mutual trust.

The Committee's recommendations

1. 77. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) Given the facts of the present case, the Committee considers that there was no infringement of trade union rights as regards consultation of representatives of the workers affected by the Reduction of Public Sector Emoluments Act, No. 5 of 1989.
   • (b) However, in view of the importance the Committee attaches to the principle of the independence of the parties to collective bargaining, it recommends the Government to repeal that legislation and to resume negotiations in the areas concerned in order to allow the determination of wages of all public employees - not just the teachers who presented the complaint in this case - in a climate of mutual trust. During these future negotiations, the Committee expresses the firm hope that the Government will continue striving to convince the parties to take account voluntarily of the major economic and social reasons and the public interest which, according to the Government, were behind the 1989-90 wage cut which is the subject of this case.
   • (c) The Committee requests the Government to keep it informed of the outcome of the teachers' union's appeal against the High Court decision of 7 June 1989 which upheld the validity of the Act.