Definitive Report - Report No 211, November 1981

Case No 1052 (Panama) - Complaint date: 22-JUN-81 - Closed

1. 142. The complaint appears in a communication from the National Council of Private Enterprise of the Republic of Panama (CONEP) dated 22 June 1981. The Government replied in a communication dated 7 August 1981.
2. 143. Panama 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).

A. The complainant's allegations

1. 144. CONEP alleges that sections 2 and 41 of Act No. 13, dated 15 June 1981, institute general wage increases and modify all the wages agreed upon in the collective agreements in force, thus infringing the freedom of association. Conventions ratified by Panama.
2. 145. The complainant adds that the promulgated wage measures neither encourage nor promote collective bargaining and that the increases imposed by the State reflect an attitude and intention on its part which are unacceptable to the employers and the employers' organisations which have signed collective agreements, the State thus assuming the role of a dictator of voluntarily negotiated conditions of employment and establishing the basis so that in the future such conditions can be altered or modified to the detriment of the employers or the workers.
3. 146. Lastly, according to the complainant, the wage increases instituted by Act No. 13 alter the wage scales freely agreed on between the Panamanian Chamber of Construction and the Single National Trade Union of Construction Workers, as well as modifying all the clauses stipulating wage increases in all the other collective agreements in force; all this contributes to the discouragement of the voluntary negotiation of collective agreements.

B. The Government's reply

1. 147. After referring to the aim and essence of the labour law and, more specifically to its function of protecting the worker in view of the position of inferiority in which he is placed vie-a-vie the employer, the Government declares that it acted in the face of extraordinary conditions, given the marked inflationary spiral, and that the policy of encouraging and promoting the conclusion of collective agreements is not incompatible with an extraordinary wage increase measure whose aim is to restore the lost purchasing power of the workers.
2. 148. The Government also declares that the average wage of the workers - 216 balboas - makes it impossible for a great many of them to cover their basic family reeds, especially if it is borne in mind that the rate of inflation in 1980 was 13.8 per cent while the average general increase in collective agreements was 6 cents per balboa, which represents less than 6 per cent of the average income of the workers. The Government points out in addition that Article 59 of the Constitution obliges the State to formulate economic policies designed to guarantee to every worker the conditions necessary for a decent existence.
3. 149. The Government adds that prior to the promulgation of Act No. 13 of 15 June 1981, the Ministry of Labour and Social Welfare appointed an Interministerial Commission composed of economic advisers of different ministries to make a study of the national economic situation and the possibility and extent of general wage increases. This Commission, the Government continues, concluded that a restoration of purchasing power would require an increase of approximately 38 balboas a month.
4. 150. The Government points out that after the Commission's report had been presented to the employers and the workers, the former were agreeable to increases in the order of 25-30 balboas a month which would include those increases agreed upon in collective agreements for the year 1981, while the workers considered that the increase should be 50 balboas a month on top of what had been agreed on in collective agreements for the year 1981. The Government states that the increases instituted in Act No. 13 of 1981 are closer to the employers' proposal and below the amount worked out by the Interministerial Commission.
5. 151. The Government declares that, having regard to the circumstances mentioned, the preliminary draft of the Act fixed an increase of 30 balboas a month for all workers and granted 25 per cent of that agreed upon in collective agreements. The Government adds that before the adoption of Act No. 13 of 1981 the Panamanian National Legislative Council, through the intermediary of the Labour Commission, gave the workers a hearing at one meeting and the employers at three.

C. The Committee's conclusions

1. 152. In the present complaint, the complainant raised the question of the conformity of sections 2 and 4 of Act No. 13 of 15 June 1981, which institutes general wage increases in the private sector, with the ILO's freedom of association Conventions.
2. 153. The Committee notes that, according to the Government, the measures provided for in Act No. 13 of 1981 were due to exceptional circumstances and aimed at restoring the purchasing power of the workers in view of the fact that the rate of inflation in 1980 was 13.8 per cent whereas the average general increase in collective agreements amounted to less than 6 per cent of the average income of the workers. The Committee also notes that the average wage of the workers, 216 balboas, is insufficient to cover the basic family needs of a great many of them and that Article 39 of the Constitution obliges the State to formulate economic policies designed to guarantee to every worker the conditions necessary for a decent existence.
3. 154. The Committee observes that since the employers in the course of the consultations preceding the adoption of Act No. 13 of 1981 had shown themselves to be in agreement with wage increases in the order of 25-30 balboas a month, in which would be included the increases agreed upon in collective agreement for 1981, the dispute surrounding the said Act relates to the increase of 15 cents in the balboa above the minimum hourly wage agreed on in the collective agreements applying to construction workers hired for specific jobs (section 2) and the employers' obligation to grant their workers 25 per cent of any general wage increases established in the relevant collective agreement (section 4, third paragraph).
4. 155. In general terms, the Committee wishes to underline the importance it attaches to the principle of the autonomy of the parties to the collective bargaining process, a principle generally recognised in the preparatory discussions that led to the adoption by the Conference in 1981 of the Collective Bargaining Convention (No. 154). It follows from this principle that the public authorities should not as a rule intervene in order to modify the contents of collective agreements freely concluded. Such intervention would be justified only for cogent reasons of social justice and the general interest.
5. 156. In this connection the Committee notes that, after furnishing figures in support of its statements, the Government pointed out that it had acted in the face of extraordinary circumstances in order to restore the workers' purchasing power, adding that the average wage of the workers made it impossible for a great many of them to cover their basic family needs. The Committee also observes that the Government described the wage measures contained in Act No. 13 of 1981 as extraordinary measures and that it does not appear that the wage increases prescribed by the said Act are disproportionate in relation to the rate of inflation. The Committee observes, finally, that before the adoption of Act go. 13 of 1981 consultations were held with employers and workers who adopted divergent positions as to the amount of the wage increases to be granted.
6. 157. Taking into account the exceptional circumstances of the present case invoked by the Government as well as the Government's statement that discussions took place prior to the promulgation of Act No. 13 of 15 June 1981 with all parties concerned, the Committee does not find itself in a position to state that the enactment in question violated the principles of collective bargaining. The Committee does however consider in general that the harmonious development of industrial relations would be promoted if the public authorities, in tackling problems relating to the loss of the workers' purchasing power, were to adopt solutions which did not entail modifications of what had been agreed upon between workers' and employers' organisations without the consent of both parties.

The Committee's recommendations

• The recommendations of the Committee
  158. 158 In these circumstances, the Committee recommends the Governing Body to approve the present report and, in particular, to decide that it is not in a position to state that the enactment in question violated the principles of collective bargaining. However, it would draw to the Government's attention that the harmonious development of industrial relations would be promoted if the public authorities, in tackling problems relating to the loss of the workers' purchasing power, were to adopt solutions which did not entail modifications of what had been agreed upon between workers' and employers' organisations without the consent of both parties.