Report in which the committee requests to be kept informed of development - Report No 259, November 1988

Case No 1450 (Peru) - Complaint date: 28-MAR-88 - Closed

1. 198. The complaints are contained in a joint communication from the General
   • Confederation of Workers of Peru and the United Textile Front dated 28 March
2. 1988. The Government replied in a communication dated 26 September 1988.
3. 199. Peru has ratified 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 complainants' allegations

1. 200. The General Confederation of Workers of Peru (CGTP) and the United
2. Textile Front allege in their communication of 28 March 1988 that certain
3. provisions in the law seriously restrict collective bargaining between workers
4. and employers in the textile industry. Section 7 of Supreme Decree No. 5 D.T.
5. of 17 August 1956, for example, reads: "The negotiation of wage claims in the
6. textile industry is henceforth suspended except in so far as they are
7. justified by a fundamental change in the system of work". Supreme Decree No.
8. 12 D.T. of 13 December 1960 subsequently added to that provision the following
9. criteria governing the exception provided for therein, by virtue of which
10. there are only three circumstances in which collective bargaining on wages is
11. possible:
12. a) when the place of work concerned has not concluded a collective
13. agreement or has not settled a collective wage demand;
14. b) when the workers are employed in places of work set up after 17 August
15. 1956, in so far as the corresponding wage scales have not been determined by
16. agreement or by judicial or administrative award;
17. c) when after 17 August 1956 new machinery is installed, existing machinery
18. is modernised or working conditions are introduced that make greater demands
19. on the workers or give them more responsibility, without the corresponding
20. wage scales being fixed. There is therefore no possibility of negotiating new
21. collective agreements embodying wage increases other than in the above
22. circumstances. In practice, the legislation in force requires trade unions to
23. submit their demands to their employers before collective bargaining can
24. begin, with a copy to the Ministry of Labour which then initiates the
25. collective bargaining procedure so that the direct negotiations stage can
26. start. In the case of collective bargaining for the textile industry, the
27. labour authority has exceeded its powers and has engaged in undue interference
28. in direct negotiations by concurring with the employers' view that
29. negotiations should not be allowed to begin until it has been established that
30. the demands conform to Supreme Decree No. 12 D.T. referred to above.
31. 201. The complainant organisations cite a number of examples to illustrate
32. the attitude adopted by the authorities for more than ten years:
33. - Subdirectorial Ruling No. 162-75-911000 of 16 December 1975, concerning
34. the collective bargaining engaged in by the "Remo" Textile Workers' Union,
35. denies the possibility of negotiating either conditions of employment and work
36. or wages on the grounds that such negotiations are "inappropriate in so far as
37. they do not conform to any of the exceptions set out in Supreme Decree No. 12
38. D.T. of 13 December 1960";
39. - Divisional Decision No. 04-84-2DV-NEC of 20 January 1984, concerning the
40. negotiations which the Union of Spinners and Weavers of Manufacturas Tres Ele
41. S.A. were seeking to initiate, recalls that the presentation of wage claims in
42. the textile industry is prohibited in so far as wages are automatically
43. readjusted;
44. - Subdirectorial Decision No. 116-87-2SD-NEC of 14 October 1987 declared a
45. list of workers' demands to be irreceivable on the grounds that, although new
46. machinery had indeed been installed and the demands therefore came within the
47. terms of Supreme Decree No. 12 D.T., the machinery had been purchased and
48. installed after the presentation of the demands; and the enterprise's refusal
49. to negotiate the demands was therefore justified, though the claimants were
50. entitled to submit a new list of demands with respect to the new machinery. In
51. practice, this has meant that the trade union has wasted a year and has had to
52. initiate proceedings again which, as in the previous instance, have been
53. formally rejected by the enterprise.
54. 202. The complainant organisations add that, in addition to the provisions
55. referred to, the restrictions on wage claims are based on section 5 of the
56. Supreme Decree of 29 March 1945 which stipulates that "no wage claims related
57. to cost-of-living increases shall in future be admitted", following the
58. introduction of a system of automatic readjustment of remuneration under an
59. agreement which, as will be seen below, has been suspended unilaterally by the
60. Government yet is still supposed to apply to collective demands.
61. 203. According to the complainants, this restriction which initially
62. concerned only conditions of remuneration was subsequently extended, in the
63. case of works unions, to working conditions. Thus, at first the restriction
64. was taken as referring solely to wages, and works committees were able to
65. negotiate conditions of work and employment. Subsequently, when collective
66. bargaining was introduced at the federal level, this right was reserved
67. exclusively for the national federation and was denied to the works unions,
68. which are the most active part of the country's trade union movement.
69. Subdirectorial Decision No. 116-87-2SD-NEC accordingly states that, "by virtue
70. of the constant and repeated rulings of the labour administration, ... demands
71. relating to working conditions submitted by employees in the textile industry
72. ... shall be negotiated at the level of the federal trade union". Conversely,
73. the Textile Federation is recognised as being empowered to negotiate only
74. working conditions and not wages. However, the complainants point out that
75. Peruvian legislation contains no provision for denying such a right, which
76. should be left entirely to the discretion of the social partners. Hence the
77. paradoxical situation in which a large number of textile unions are unable to
78. negotiate wage conditions because they do not meet the requirements of Supreme
79. Decree No. 12 D.T. and are unable to negotiate working conditions because the
80. labour authorities have decided that such negotiations are possible only at
81. the sectoral level.
82. 204. The complainants allege further that in 1976 the existing systems of
83. automatic wage readjustment were suspended by Legislative Decree No. 21531
84. (section 10) for a specified period of time which was successively extended.
85. Previously, workers in the textile industry had benefited from an automatic
86. wage readjustment by virtue of a collective agreement concluded on 21 March
87. 1945 and legalised by the Supreme Decree of 29 March 1945. In 1981 the
88. Peruvian Government endeavoured to correct the injustice by reintroducing an
89. automatic wage readjustment scheme devised by the Ministry of Labour itself,
90. although the new scheme is not the same as that of the 1945 collective
91. agreement, which has been suspended indefinitely. The new readjustment scheme
92. was implemented by means of the creation by Ministerial Ruling No. 079-81-TR
93. of "standard scales" which were regularly updated and which have now been
94. replaced by "conversion scales" introduced by Ministerial Ruling No.
95. 100-87-TR. As indicated in its preamble, the latter originated in a decision
96. to devise a wage system for the textile industry that would entail the
97. disappearance of the standard scales so as to bring them in line with the
98. scope and objectives of the Supreme Decree of 29 March 1945. However, none of
99. the formulas devised so far by the Peruvian Government corresponds to what the
100. workers and employers voluntarily agreed upon. Although the labour authority
101. is quite aware that the indefinite suspension of the 1945 collective agreement
102. - merely because it wishes to help employers in the textile industry by
103. introducing a system that sets wages lower than they should be under the
104. agreement - is completely arbitrary, it persists in doing so. It no longer has
105. the excuse initially advanced that the country was going through an industrial
106. recession, as this is now not the case in the textile industry. Nor is there
107. any possible justification for prolonging indefinitely - in one way or another
108. - a 12-year-old measure which by its very nature was supposed to be
109. exceptional. In a communication to the Minister of Labour and Social
110. Advancement dated 2 October 1987 the Peruvian Parliament itself informed the
111. executive that the Chamber of Deputies had decided to draw its attention to
112. this state of affairs "so that it might take the necessary steps to enforce
113. the collective labour agreement of 21 March 1945, legalised by the Supreme
114. Decree of 29 March of the same year, which provides for the automatic
115. readjustment of remuneration in the textile sector, the latter being mandatory
116. for the parties concerned in accordance with article 54 of the Constitution".
117. This request was ignored by the Government which maintained its unilateral
118. decision to suspend the agreement.
119. 205. Finally, the complainant organisations state that all the claims
120. presented by the Textile Federation since 1981 in its negotiations by branch
121. of industry at the national level have been dealt with unilaterally by the
122. Ministry of Labour itself, since the employers have not the slightest interest
123. in reaching any kind of agreement as it is much easier for them to wait for
124. the Ministry (where they have a powerful lobby) to come up with a solution
125. which is bound to be in their favour. This, they allege, is a patently
126. disloyal attitude that reflects the bad faith with which they approach
127. negotiations in the sector.
128. B. The Government's reply
129. 206. In its communication dated 26 September 1988, the Government states
130. that, in accordance with the collective agreement concluded on 21 March 1945
131. and the provisions of the Supreme Decree of 29 March of the same year, all
132. textile workers throughout the country benefit from the automatic monthly
133. readjustment of their remuneration based on the cost of living. In other
134. words, this is the option that has been chosen to readjust wages instead of
135. periodically submitting a list of demands. Given the existence of this
136. automatic adjustment scheme, Supreme Decree No. 5 D.T. of 17 August 1956
137. announced the suspension of negotiations over wage demands in the textile
138. industry except in so far as the system of work is changed. Supreme Decree No.
139. 12 of 13 December 1960 subsequently amended section 7 of that Decree by adding
140. that, without prejudice to the automatic readjustment of remuneration based on
141. the cost of living, wage increases may be requested in the following specific
142. cases:
143. a) when the place of work concerned has not concluded a collective
144. agreement or has not settled a collective wage demand;
145. b) when the workers are employed in places of work set up after 17 August
146. 1956, in so far as the corresponding wage scales have not been determined by
147. agreement or by judicial or administrative award;
148. c) when after 17 August 1956 new machinery is installed, existing machinery
149. is modernised or working conditions are introduced that make greater demands
150. on the workers or give them more responsibility, without the corresponding
151. wage scale being fixed.
152. 207. The Government adds that article 54 of the Constitution of Peru
153. promulgated by the Constituent Assembly in 1979 provides that "collective
154. labour agreements between workers and employers have force of law". Thus, in
155. so far as a system of automatic readjustment of remuneration based on the cost
156. of living was established for textile workers pursuant to the 1945 collective
157. agreement, this is the system that has been chosen to maintain the level of
158. real incomes and to avoid a decline in purchasing power. Consequently, the
159. Government cannot accept the position of the complainant confederations that
160. it should be possible at the same time to submit wage claims, since this would
161. mean that there would simultaneously be two methods or channels for achieving
162. the same objective, whereas they are mutually exclusive. As indicated in the
163. previous paragraph, however, textile workers are entitled to negotiate wage
164. increases collectively at the level of each workplace in the exceptional
165. circumstances set out in Supreme Decree No. 12 D. T. of 13 December 1960, in
166. which case the demands are taken up and discussed once the existence of such
167. exceptional circumstances has been established by expert appraisal.
168. 208. The Government concludes by stating that the State has not limited or
169. restricted collective bargaining for textile workers since the parties
170. concerned opted freely for the system in force, and that only they can decide
171. to abandon the automatic readjustment of wages based on the cost of living
172. and, instead, discuss wage increases on an annual basis. In any case, the two
173. systems cannot exist side by side. At present, collective bargaining applies
174. only to the exceptional circumstances set out in the Supreme Decree referred
175. to above. The textile workers benefiting from the automatic readjustment of
176. their remuneration are in fact in a privileged position compared to other
177. workers, who regularly demand to be allowed to benefit from the same system as
178. the textile workers. Since the latter are already in this advantageous
179. position, they have the non-exclusive second option of having their wages
180. increased by virtue of the exceptions to the legal norm already referred to.
181. They are now claiming as a third option to be able to submit freely an annual
182. list of demands to have their income readjusted.
183. 209. As to the alleged unilateral imposition of the level at which
184. negotiations can take place, the complainant organisations claim that the
185. Government does not allow wage increases to be discussed at the level of the
186. federation but only at the level of each workplace. The Government states
187. that, as it has already pointed out, the existence of a system of automatic
188. readjustment of remuneration based on the cost of living means that wage
189. claims cannot as a general rule be submitted either by a trade union or by a
190. federation as there would then be two systems of readjustment operating side
191. by side. A special provision exists, however, whereby collective claims can be
192. put forward in so far as they relate to the exceptional circumstances set out
193. in Supreme Decree No. 12 D.T. of 13 December 1960. Since these exceptional
194. circumstances arise in specific workplaces, then it is for the workers
195. concerned in each case to request an increase in the wage scale and not for
196. the higher-level trade union organisation, since the particular circumstances
197. do not affect all the workers in the textile industry or national federation.
198. The situation is quite different with grievances concerning conditions of work
199. which do concern all textile workers at the national level, and these are
200. submitted by the National Federation of Textile Workers of Peru. In other
201. words, there has been no unilateral decision but merely the implementation of
202. a system for which the workers and employers themselves opted.
203. 210. As regards the alleged suspension of the collective agreements by the
204. Government between 1976 and 1981 (it was during this period that the agreement
205. of 21 March 1945 concerning the automatic readjustment of remuneration in
206. accordance with the increase in the cost of living was suspended), the
207. Government stresses that the suspensions occurred while the country was under
208. military rule and during part of the presidency of Fernando Belaunde Terry and
209. not under the Government of President Alan Garcéa Pérez. President Garcéa
210. Pérez has not only fully enforced the system of automatic readjustment of
211. remuneration but, in addition, has adopted the following concrete measures in
212. favour of the textile workers:
213. - Ministerial Ruling No. 451-86-TR of 17 September 1986 formally
214. established that as from 1 May 1986 the standard scale for the cost of living
215. in the textile industry would be updated each month on the basis of the
216. general consumer price index for the Province of Lima. The Ruling also
217. provided for the creation of a tripartite committee to look into the
218. standardisation of the system of wages in the textile industry so as gradually
219. to do away with the so-called "standard scales", which tended to distort the
220. proper operation of the automatic readjustment system, and to bring that
221. system into line with the scope and objectives of the 1945 agreement.
222. - Ministerial Ruling No. 471-86-TR of 3 October 1986 determined that, while
223. the tripartite technical committee was engaged in this task, the textile
224. workers of the entire country should be granted a 6 per cent increase as from
225. 1 May 1986 over and above the standard scale for the cost of living in the
226. textile industry for the previous month, irrespective of the automatic monthly
227. cost-of-living increase; in this way the Government not only applied the
228. existing system but actually increased the real income of the workers
229. concerned.
230. - Ministerial Ruling No. 100-87-TR of 26 March 1987, which was issued after
231. the tripartite technical committee had submitted its report, contained a
232. number of important decisions, namely:
233. a) the standard scales for the cost of living in the textile industry
234. which had listed over 3,000 items up to 31 December 1986 ceased to exist as
235. from 1 January 1987 (this decision thus went beyond the intention expressed in
236. Ministerial Ruling No. 471-86-TR that their elimination should be "gradual");
237. b) the wage rates expressed in "soles" at 1945 prices which were
238. applicable on 31 December 1986, whether relating to fixed or to variable
239. remuneration, were to be brought up to date as from 1 January 1987 and
240. converted into "intis" units, based in each case on the cost of living in the
241. textile industry corresponding to the basic wage for each post and job in each
242. workplace;
243. c) the amounts reached by the foregoing method of calculation were to be
244. increased by a further 6 per cent, plus a fixed sum of I/.17 per day.
245. 211. The Government observed that it is abundantly clear that it has adopted
246. a series of decisions which, far from entailing the suspension of the system
247. of automatic adjustment of wages for textile workers, are designed to enforce
248. that system, to do away with features that distorted its proper application
249. and, by making allowance for more than the rate of inflation and thereby
250. improving on the system itself, to raise the real income of the workers by the
251. payment of amounts over and above those corresponding to the automatic
252. readjustment of their wages. The Government is somewhat surprised that, during
253. the period when the system of automatic readjustment really was suspended, the
254. General Confederation of Workers of Peru never lodged a complaint and that it
255. should do so now when the system is once again fully operational and when very
256. important decisions have been taken to improve it. The explanation is possibly
257. that the CGTP has not examined the problem in sufficient detail, especially as
258. it is a very complex matter and concerns a special system that calls for
259. expert analysis.

C. The Committee's conclusions

1. 212. The Committee observes that, in answer to the allegation that Decree
2. No. 5 of 1956 and No. 12 of 1960 prohibit wage negotiations in the textile
   • sector at the level of the branch of activity and permit such negotiation in
   • textile enterprises only in three exceptional sets of circumstances whose
   • common denominator is the non-fixing of the relevant wages, the Government
   • states that the 1945 collective agreement, which is still applicable,
   • established a system of automatic readjustment of remuneration for textile
   • workers based on the cost of living which places these workers in a privileged
   • position compared to all other workers, but excludes the possibility of their
   • submitting any wage claims. Although the Committee notes that in the 1945
   • collective agreement the signatories stipulated that "there shall in future be
   • no wage claims with respect to increases in the cost of living", it wishes to
   • point out that, although the clause specifically excludes wage claims "with
   • respect to increases in the cost of living", it does not exclude the
   • possibility of claims being submitted on other grounds such as the level of
   • productivity and profits in the textile sector.
3. 213. The Committee further considers that the legislative provisions
   • prohibiting the negotiation of wage increases beyond the level of the increase
   • in the cost of living are contrary to the principle of voluntary collective
   • bargaining embodied in Convention No. 98. Such a limitation would be
   • admissible only if it remained within the context of an economic stabilisation
   • policy, and even then only as an exceptional measure restricted to what is
   • absolutely necessary and limited to a reasonable period of time.
4. 214. With regard to the alleged suspension of the provisions of the 1945
   • collective agreement concerning the automatic readjustment of remuneration and
   • their replacement initially by a system of "standard scales" and currently by
   • a system of "conversion scales" pursuant to a ministerial ruling of 1987, the
   • Committee notes the Government's claim not only that it is respecting the
   • automatic readjustment system in full, but also that it has adopted a series
   • of measures in favour of textile workers that go further than that system in
   • terms of real income. Although it does not have sufficient facts at its
   • disposal to determine which automatic readjustment system (that provided for
   • in the 1945 collective agreement or that which currently applies) is more
   • advantageous to the workers, the Committee must draw attention to the fact
   • that the present system was introduced by ministerial rulings, that it does
   • not correspond to what was agreed upon in the 1945 collective agreement and
   • that it is objected to by the complainant organisations in this present case.
   • The Committee therefore calls on the Government to take, as soon as possible,
   • the necessary steps to ensure that the system of automatic readjustment of
   • remuneration provided for in the 1945 collective agreement, which is still in
   • force, is fully applied.
5. 215. As to the allegation that, according to the case law of the
   • administrative labour authority, the negotiation of working conditions other
   • than wages is prohibited at the level of the enterprise in the textile
   • industry, the Committee notes the Government's assertion that the National
   • Federation of Textile Workers of Peru is able to submit claims concerning
   • conditions of work - which cover all textile workers at the national level -
   • not by virtue of a unilateral decision of the Government but because it is in
   • keeping with a system for which the workers and employers themselves opted.
6. 216. Drawing attention to the contradiction between the explanations given
   • by the complainants and by the Government regarding the impossibility of
   • negotiating working conditions other than wages at the level of the
   • enterprise, the Committee emphasises that, according to the principle of free
   • and voluntary collective bargaining embodied in Article 4 of Convention No.
7. 98, the determination of the bargaining level is essentially a matter to be
   • left to the discretion of the parties (see 202nd Report, Case No. 915 (Spain),
   • para. 53) and that, consequently, the level of negotiation should not be
   • imposed by law, by decision of the administrative authority or by the case law
   • of the administrative labour authority.
8. 217. Finally, the Committee observes that the Government has not replied to
   • the allegation that since 1981 all claims presented at the national level by
   • the Textile Federation have been settled unilaterally by the Ministry of
   • Labour since the employers have not the slightest interest in reaching any
   • kind of agreement through direct negotiations. In this connection, the
   • Committee recalls that on another occasion (see 248th Report, Case No. 1367
   • (Peru), para. 169) it reached the conclusion that section 13 of Supreme Decree
9. No. 009-86-TR establishes unilaterally a system of compulsory arbitration by
   • the administrative authority following the failure of the negotiation and
   • conciliation stages, which in practice prevents the declaration or
   • continuation of a strike. The Committee reiterates, as it did on that
   • occasion, that provisions which establish that failing agreement between the
   • parties the points at issue in collective bargaining must be settled by
   • arbitration by the labour authorities do not conform to the principle of
   • voluntary negotiation contained in Article 4 of Convention No. 98 (see 116th
   • Report, Case No. 541 (Argentina), para. 72).

The Committee's recommendations

1. 218. In the light of the foregoing conclusions, the Committee invites the
   • Governing Body to approve the following recommendations:
     • a) With reference to Decrees No. 5 of 1956 and No. 12 of 1960 which
   • prohibit in principle the negotiation of wage increases in the textile sector
   • beyond the level of the increase in the cost of living, the Committee recalls
   • that such a limitation would be admissible only if it remained within the
   • context of an economic stabilisation policy, and even then only as an
   • exceptional measure restricted to what is absolutely necessary and limited to
   • a reasonable period of time. The Committee calls on the Government to take, as
   • soon as possible, the necessary steps to ensure that in the textile industry
   • the system of automatic readjustment of remuneration provided for in the 1945
   • collective agreement, which is still in force, is fully applied.
     • b) The Committee stresses that the determination of the bargaining level is
   • essentially a matter to be left to the discretion of the parties and that the
   • level of negotiations should not be imposed by law, by administrative decision
   • or by the case law of the administrative labour authority.
     • c) Bearing in mind that the system of compulsory arbitration established
   • unilaterally by Supreme Decree No. 009-86-TR does not conform to the principle
   • of voluntary negotiation embodied in Article 4 of Convention No. 98, the
   • Committee once again requests the Government to take steps to have the Decree
   • amended.
     • d) The Committee draws this case to the attention of the Committee of
   • Experts on the Application of Conventions and Recommendations.