Observation (CEACR) - adopted 1998, published 87th ILC session (1999)

Minimum Wage Fixing Convention, 1970 (No. 131) - Uruguay (Ratification: 1977)

1. The Committee takes note of the Government's report, as well as the statement made by a Government representative to the Conference Committee on the Application of Standards in 1998 and the discussions which took place on that occasion.

Consideration of the needs of workers and their families in determining minimum wages

2. In its previous comments, the Committee requested the Government to indicate to what extent and in what manner the needs of workers and their families are taken into consideration in determining the level of minimum wages, in accordance with Article 3 of the Convention.

3. According to the Government, Article 3 of the Convention is given effect by the provisions of section 1 of Act No. 10449 according to which "the minimum wage is the wage regarded as necessary, in the light of prevailing economic conditions, to ensure a standard of living for the worker sufficient to meet his physical, intellectual and moral needs". The process of fixing minimum wages, whether those established through collective bargaining or those fixed administratively, takes account of this legal provision.

4. The Committee observes that, with regard to minimum wage fixing, the Government's report cites a number of provisions of Act No. 10449 which only ensures "a standard of living for the worker sufficient to meet his physical, intellectual and moral needs". The Committee wishes to point out that this provision makes no reference to the needs of workers and their families, as required by Article 3 of the Convention. Furthermore, the Government does not explain the specific manner in which the needs of workers and their families are taken into consideration in practice for the purpose of fixing minimum wages; for example, is the minimum wage calculated on the basis of a basket of essential goods? Is the minimum cost of education, health care and housing taken into account? The Committee strongly hopes that the Government will be able to indicate in its next report the measures taken to ensure that the needs of workers and their families are taken into consideration for the purpose of minimum wage fixing, as well as indicating how in practice those needs are estimated.

Lack of consultation of the employers' and workers' representatives concerned in the determination of minimum wages

5. In its previous comments, the Committee -- having noted the overall persistence, over many years, of the practice of unilateral determination by the Government of the inter-occupational minimum wage and the minimum wages of rural and domestic workers -- expressed the hope that the Government would soon be able to indicate the measures taken to ensure full consultation with the representative organizations of employers and workers concerned in fixing the national minimum wage and the minimum wages of rural and domestic workers, in accordance with the provisions of Article 4, paragraph 2, of the Convention.

6. In reply to these comments, the Government indicates that the national minimum wage is not applied in practice to determine the minimum payment for work, since it is in reality simply a reference value for the calculation of certain social security benefits. According to the Government, this was confirmed by the statement in 1997 of the Inter-Union Assembly of Workers -- National Convention of Workers (PIT-CNT), that "... the minimum wage is only a political concept, devoid of substance, which serves basically to regulate a number of social security measures (including the amount of family allowances and retirement pensions)". This feature of the national minimum wage in Uruguay means, according to the Government, that "the wage should not be analysed from the viewpoint of the Convention".

7. As regards the minimum wages of rural and domestic workers, the Government points out, firstly, that the country has a complex minimum wage fixing system. On the one hand, it has a general scheme of wage councils established under Act No. 10449 and applicable to all private sector workers. On the other hand, the Executive is limiting the application of the Act in question to particular sectors (public transport, health, construction) and is promoting collective bargaining without state involvement in the other sectors. Lastly, the Executive fixes the minimum wages of rural and domestic workers by decree. The competent administrative authorities for determining the different occupational groups are the Ministry of Labour and Social Security, which has issued a Decree describing the occupations covered by each group, and the National Labour Directorate which, through the Committee for the Classification of Occupations, reclassifies and examines particular cases of new or complex occupations. Relevant Decrees have been issued after obtaining the prior agreement of the representative organizations involved. According to the Government, current national practice, which has been established for over 50 years and has been confirmed in legal terms by the ratification of the Right to Organise and Collective Bargaining Convention, 1949 (No. 98), encourages collective negotiation, without restriction, by company or branch of activity. Procedures are simplified as far as possible, and administrative requirements are set aside if they obstruct collective bargaining, which is the normal procedure for fixing wages in the country from which no sector and no category of workers is excluded. The fact that it is the Government that fixes and adjusts the minimum wages of rural and domestic workers every four months is due to the almost non-existence of representative organizations of employers and workers in these sectors which would conduct negotiations. The Government therefore considers that its role is a subsidiary one of establishing minimum wages that have to be recognized by each employer individually and which extend to social security benefits, including medical care, employment injury insurance, retirement benefits, and other benefits frequently provided for these categories of workers, such as accommodation and food. All of this corresponds to the content of Article 3 of the Convention. The Government recalls its statement to the Conference Committee in 1998 to the effect that there is no obstacle to the development of collective bargaining as representative organizations of employers and workers are established in these sectors, a fact that was confirmed by the presentation of collective agreements concluded by rural workers in 1996-97. In conclusion, the Government states that: (i) the system for fixing and adjusting the wages of rural and domestic workers gives effect to Article 1, paragraph 1, of the Convention in establishing a system of minimum wages applied to diffferent categories of workers, depending on their conditions of employment; where the system is not applicable, those workers are free to negotiate with employers; (ii) at no time has the Government justified the system of fixing and adjusting the wages of rural and domestic workers by referring to agreements made in the context of the Southern Cone Common Market (MERCOSUR); (iii) current wages policy, combined with other measures, has brought about: (a) a fall in inflation from 130 per cent annually in 1991 to less than 20 per cent in 1997; (b) a fall in unemployment from 12 per cent in 1996 to 10 per cent in March 1997; and (c) a 3.64 per cent increase in real wages between 1993 and 1997.

8. The Committee, noting the Government's detailed reply, recalls that, under Article 4, paragraph 2, of the Convention, provision must be made by the ratifying State, in connection with the establishment, operation and modification of wage-fixing machinery, for full consultation with the representative organizations of employers and workers concerned, or, where no such organizations exist, representatives of employers and workers concerned. These provisions do not impose an obligation to negotiate, but do impose an obligation to consult. In the absence of representative organizations of employers and workers, the Government has an obligation to consult representatives of employers and workers concerned. The Committee expresses the firm hope that the Government will adopt the necessary measures in the near future to consult representatives of employers and workers concerned for the purpose of establishing, applying and adjusting minimum wages.

[The Government is asked to report in detail in 1999.

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