Definitive Report - Report No 292, March 1994

Case No 1684 (Argentina) - Complaint date: 16-NOV-92 - Closed

1. 101. The complaint in this case appears in a communication from the General Confederation of Labour (CGT) dated 16 November 1992. In a communication dated 25 November 1992, the International Confederation of Free Trade Unions (ICFTU) endorsed the complaint made by the CGT. The Government sent its observations in a communication dated 29 January 1994.
2. 102. Argentina has ratified the Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87) as well as the Right to Organize and Collective Bargaining Convention, 1949 (No. 98).

A. Allegations of the complainants

1. 103. In its communication of 16 November 1992, the General Confederation of Labour (CGT) criticizes the content of Executive Decree No. 817/92 to deregulate port activities and Decree No. 1264/92, respecting the transportation by sea, river or lake of passengers, cargo and fish as well as all port activities in general. The complainant organization states that these decrees have suspended the force of 62 collective agreements in the sector, which will have to be renegotiated on lower terms than those established in the previous agreements and shall be made subject to the criterion of productivity.
2. 104. The relevant provisions of the two Decrees are as follows:
3. Decree No. 817/92
4. Section 37: (final paragraph): "... The force of collective labour agreements, acts, agreements or arbitration awards included in Annex III to the present text shall be suspended".
5. Section 35: "For a transitory period and until the conclusion of the new agreements to which reference is made in the following section, those clauses of collective agreements, acts, agreements, or any other standard-setting act which establishes labour conditions which are detrimental to productivity or which impede or make difficult the normal management and administration of the enterprise, in accordance with the provisions of sections 64 and 65 of the Act respecting labour contracts, as specified below, shall cease to have effect:
6. (a) clauses respecting the automatic adjustment of wages or allowances;
7. (b) the payment of contributions and subsidies for social purposes not established by the laws in force;
8. (c) standards which impose the maintenance of minimum staff levels;
9. (d) standards which restrict or condition the recruitment or promotion of staff to requirements other than the suitability, competence or capacity of workers;
10. (e) job stability schemes;
11. (f) payment of wages by periods of less than two weeks;
12. (g) standards imposing the recruitment of national staff;
13. (h) the obligation to recruit indirectly;
14. (i) the compulsory recruitment of delegates or the compulsory presence of delegates amongst staff;
15. (j) the recruitment of specialized staff when not required;
16. (k) deviation from the minimum conditions fixed by the Act respecting labour contracts as regards remuneration, paid leave, hours of work, rest periods, dismissal and supplementary annual wage, and as regards general legislation respecting occupational accidents;
17. (l) to give priority to specific categories of workers;
18. (m) any standard which is contrary to greater efficiency and labour productivity.
19. Section 36: "The Ministry of Labour and Social Security shall, within the ten days following the entry into force of this Decree, convene the bargaining committees of the collective agreements regulating the labour relations of staff covered by the present standards to bring such agreements into line with the provisions in force with the issuing of this Decree".
20. Decree No. 1264/92
21. Section 1: "The final paragraph of section 37 of Chapter V of Decree No. 817/92 shall be replaced as follows: "The force of collective labour agreements, acts, agreements or arbitration awards included in Annex III of this text shall be suspended".
22. Section 2: "Annex III of Decree No. 817/92 shall be replaced by Annex I of the present text". (The new Annex includes 62 collective agreements.)
23. B. The Government's reply
24. 105. In its communication of 29 January 1994, the Government states that as a result of the worldwide social and economic transformation, the Government must through its laws and acts restructure the capital-labour relationship. With respect to international labour standards the action of the Government has at no time resulted in any dysfunctionings affecting the principles governing freedom of association.
25. 106. It adds that the subjective right to the intangibility of collective agreements must be given up when the economic situation in which such clauses have to be applied shows that the latter have not only ceased to be relevant but, furthermore, have become a real source of distortion of the labour relationship which they are supposed to regulate, and when they become inapplicable because of the need for modernization and pose a real danger to the maintenance of the very sources of work in the sectors concerned. The realities in which the provisions of the said decrees must be considered concern not only the serious economic crisis which has affected the country and which led to the adoption by the National Congress of the Acts respecting administrative reorganization and economic emergency (Nos. 23.696 and 23.697), but the need to adapt the economic and productive structure of the nation to the new situation brought about by growing international competition and the country's recent adhesion to the regional integration process. All these factors, which cannot be dealt with by the public power as it would wish, have made it necessary to modify the structures in place in the country, including not only maritime and port activities, but all economic activities in general.
26. 107. The Government states that the complainant organization criticizes Decrees Nos. 817/92 and 1264/92 without challenging Acts Nos. 23.696, 23.697 and 23.928 which are the bases of these decrees. The preamble of Decree No. 817/92 expressly states that the legislative power established a process of economic transformation and for this purpose empowered the National Executive to take decisions to give effect to the guidelines established therein, including, inter alia, those resulting from the Treaty of Asunción respecting the free circulation of goods, services and production factors between the signatory parties. Within this system of regional integration a deregulation process has been established, in particular as regards maritime and river transport and port activities, which requires the decentralization of administration by the transfer of powers on a concessionary basis to the provinces, municipalities or the private sector. The purpose set forth in the preamble of the Decree as regards the labour relations system relating to port activities in general is to bring existing schemes into line with the above-mentioned modifications without - the text makes this quite clear - this resulting in any lack of protection for the workers.
27. 108. Act No. 23.696, in particular, establishes a real system to cope with the emergency through a process of transformation of the State and its public administration, a special feature of which is the privatization policy adopted and developed by Parliament. This Act is thus a statute for privatization. According to the legislation, the Executive Decree may order, when necessary, the exclusion of all privileges and/or monopolistic clauses and/or discriminatory prohibitions, including those deriving from legal standards, when their maintenance is contrary to the objectives of privatization or if they prevent the demonopolization or deregulation of the respective service; furthermore Act No. 23.697 empowered the Executive to revise employment schemes with a view to correcting the factors which may compromise the objectives of efficiency and productivity.
28. 109. The Government adds that in addition to specific economic aspects, the standards in question recognize another factor of particular and exceptional importance, namely the Regional Integration Agreement (MERCOSUR) which was ratified by the National Congress by Act No. 23.981. In this way and with the final objective of speeding up their economic development process on the basis of social justice, the States parties have established, amongst other objectives, the free circulation of goods, services and production factors, and the coordination of macroeconomic policies which expressly includes customs, transportation and communication.
29. 110. Thus the Decree in question is a regulatory standard to implement different laws on the matters established by Congress and the constitutional basis of which is to be found in articles 67(28) - powers of the Congress to grant competence to the Executive - and 86(2) of the same Constitution.
30. 111. Furthermore, the Government points out that this case concerns a situation similar to others which the Committee on Freedom of Association has examined concerning Argentina, namely Cases Nos. 1560, 1567 and 1639, which all involved acts by the administrative power as a result of the same situation of economic emergency which gave rise to the decrees being challenged in the current case. The Government mentions the conclusions of the Committee in its examination of Cases Nos. 1560 and 1567 concerning Decree No. 1757/90 - which temporarily suspended the application of certain clauses of collective agreements in the public sector which compromised the productivity and efficiency of enterprises in the sector until new collective agreements have been negotiated and adopted to replace those currently in force.
31. 112. As regards the situation of economic emergency and the imperative or exceptional reasons for the establishment of social dialogue in this sector of activity, the Government states that Decrees Nos. 817/92 and 1264/92 and Acts Nos. 23.696, 23.697 and 23.928 were issued in a context of very special circumstances affecting the country due to hyper-inflation. These texts were basically intended to overhaul the economy of the country which had been plunged into almost total chaos. Furthermore, the regional integration process (MERCOSUR) has also give rise to special circumstances in which the country finds itself at a unique stage in its economic and socio-political history.
32. 113. Decrees Nos. 817/92 and 1264/92 have a protagonistic role in this respect in that they regulate activities which are sensitive to the economic situation and the regional integration within MERCOSUR as well as the generalized restructuring of port activities. As regards the economic aspects it is claimed that water transport and port services are at present one of the most regulated sectors. It is in this context of compelling needs that the State believed it essential to take measures to overhaul the economy and preserve sources of work.
33. 114. The Government points out that very little can be done to improve the quality of life of workers if appropriate machinery is not established to increase commercial activity in the ports and that the Government finds itself in an extraordinary and exceptional situation which calls for the application of decisive measures. The ports of a country are a source of international trade and if effective corrective measures had not been taken, transporters would have opted for other ports and this would have resulted in a reduction of activity and the loss of sources of work. It is sufficient to mention the fact that many international transporters prefer to unload their cargoes in the ports of neighbouring countries and to transport them over land to Argentina, since this is cheaper than paying the costs of docking in the Argentinian ports. The attitude of the Argentinian Government was not in this context to cancel various collective agreements but to try and establish a genuine dialogue between the social partners with a view to renegotiating the clauses of the agreements in force to bring them into line with the new circumstances and thereby to guarantee on a lasting basis the maintenance of the respective economic activities and, by extension, the resulting sources of work. It should be noted that the extraordinary and imperative conditions to which the Committee's principles refer are fully substantiated in the above paragraphs especially if it is recalled that the regional integration process and the economic chaos affecting the country all occurred within the short period of less than five years, a situation which has rarely been faced by any nation.
34. 115. Furthermore, the Government states that the provisions of Decrees Nos. 817/92 and 1264/92 pose no danger to subjective rights since at no time do the standards in question mention a derogation. In the same way, section 36 establishes that the Ministry of Labour and Social Security shall within ten days of the entry into force of the decree convene the negotiating committees of the collective agreements to bring the latter into line with the provisions in force with the issuing of the said decree. It is clear in this case that there was no derogation of clauses of collective agreements but rather a transitory suspension of their force until the establishment of new standards. The suspension of the clauses is merely temporary and fully justified by the anti-inflation and stabilization policy of the Government. The Ministry of Labour, in resolution No. 489/92, convened the parties concerned and established a maximum limit of ten days for them to commence the process to conclude agreements.
35. 116. The bases of this resolution, which are set forth in the preamble, are furthermore specifically related to the subjects and matters to which reference has been made, namely: (a) the adaptation of bargaining to the need for economic transformation which has been fully explained; (b) the need to protect the general interest over that of sectoral interests; (c) the establishment of a harmonious set of standards to deal with the economic crisis.
36. 117. Unfortunately, over and above other simultaneous contingencies affecting the functioning of these joint committees, it was the lack of interest of the trade union sector which resulted in the fact that to date only one agreement has been concluded, which has been endorsed by this Ministry and which is now in force. However, the other bargaining committees have not been disbanded in the belief that the parties concerned will eventually negotiate and conclude agreements.
37. 118. In another context which is also related to the matter under examination, mention should be made of those circumstances which - in the acts in question - concern the preservation of the principles of freedom of association. Decree No. 817/92 itself did not in any way infringe the principles of freedom of association but at most temporarily limited certain powers and established appropriate means for the effective holding of discussions on an equal footing and with account being taken of the rights of the parties.
38. 119. Section 36 of Decree No. 817/92 stipulates as its central objective only that the signatory parties to the suspended agreements should renegotiate their clauses to "... bring them into line with the provisions in force from the issuing of this decree ...". These provisions in force are not, however, the minimum standards of the Act respecting labour contracts, but the guidelines and principles established by the new economic framework in force in the country from the time of the issuing of Acts Nos. 23.696 and 23.697.
39. 120. The references which section 25 of the above-mentioned decree makes to those conditions of work which must be suspended until their renegotiation on the ground that they are considered detrimental to productivity (paragraphs (a) to 11) do not mean that the renegotiation of these clauses must be subject to strict or minimum limits. The legal provision in question merely determines that such clauses should be renegotiated to bring them into line with the new economic situation and regional framework, and that they may remain in force if costs are absorbed. If section 36 itself invites the social partners to renegotiate the clauses of collective agreements, it leaves it up to them to decide the scope of the new conditions of work to be established, while taking account of the need to negotiate freely within the new framework applicable to all, including the administration, and the realities of modernization to which reference has already been made.
40. 121. In conclusion, the method of bargaining resulting from the above-mentioned legal provision is consistent with the guidelines repeatedly expressed by the Committee on Freedom of Association.
41. 122. For the same reasons attempts are being made at the wider regional level to promote discussion. The idea has been proposed for a collective agreement at the regional level, through sub-workgroup No. 11 of MERCOSUR (Committee No. 7), in which employers and workers in the region would themselves agree on the need to establish instruments to modify relations between both production factors.
42. 123. Finally, the Government points out that it was obliged to choose between the gradual and continuous reduction of sources of work in the sector and the renegotiation of conditions of work in the sector; the temporary suspension of the clauses of collective agreements in force was consistent with the seriousness of the economic situation affecting the country. The Government believes that the Decrees in question are consistent with Convention No. 98 and requests that the complaint be rejected.

C. The Committee's conclusions

1. 124. The Committee observes that the allegations made in this case refer to the promulgation of Executive Decree No. 817/92 to deregulate port activities and Decree No. 1264/92 respecting the transportation by sea, river and lake of passengers, cargo and fish as well as all port activities. Specifically, the allegations refer to: (1) the suspension of 62 collective agreements in the sector; and (2) the obligation to renegotiate the collective agreements and, in particular, those clauses, acts, agreements or any other standard-setting act in the sector, which establish working conditions detrimental to productivity or which impede or obstruct the normal exercise of management and the administration of enterprises.
2. 125. The Committee notes that to justify the decrees in question the Government points out: (1) that the authorities were facing a crisis situation which obliged them to choose between the gradual and continuous reduction of sources of work in the sector and the automatic renegotiation of conditions of work in the sector; (2) that under acts which predate the respective decrees and on which the latter are based, activities in the water transport sector and port services have been subject to privatization and/or decentralization through the transfer of powers to the provinces, municipalities or the private sector on a concessionary basis (Decree No. 817/92); (3) the need to bring the entire economic and production sector of the nation - and not only transportation by sea, river and lake and ports, the subject of this complaint - into line with the new conditions imposed by growing international competition; (4) that major international transporters prefer to unload their goods in the ports of neighbouring countries and then transport them to Argentina over land which is cheaper; and (5) the recent incorporation of the economy into a regional integration framework (MERCOSUR) which requires the free circulation of goods, services and production factors between the signatory parties (Decree No. 817/92).
3. 126. In this case, over and above the magnitude of the economic requirements to which the Government refers, the Committee would like to point out that on previous occasions (see, for example, 281st Report, Case No. 1586 (Nicaragua), para. 434), in examining allegations of the annulment and forced renegotiation of collective agreements for reasons of economic crisis, the Committee was of the view that "legislation which requires the renegotiation of agreements in force is contrary to the principles of free and voluntary collective bargaining enshrined in Convention No. 98" and insisted that the Government "should have endeavoured to ensure that the renegotiation of collective agreements in force resulted from an agreement reached between the parties concerned".
4. 127. In this respect, the Committee would like to emphasize that the suspension of the validity of the 62 collective agreements in question, along with the obligation to renegotiate them, were in fact tantamount to their derogation and, furthermore, that these requirements were imposed by a decree. In these circumstances, with account being taken of the principles set forth in the previous paragraph, the Committee cannot accept the derogation - without the agreement of the parties - of such collective agreements freely entered into by the parties and believes that such measures violate the principle of free and voluntary collective bargaining established in Article 4 of Convention No. 98. Therefore, it requests the Government to ensure that, in future, these principles are respected fully.
5. 128. The Committee requests the Government to ensure, if it wishes the clauses of a collective agreement to be brought into line with the economic policy of the country and the requirements resulting from the latter's integration into an international common market, that attempts are made to persuade the parties to take account voluntarily of such considerations, without imposing on them renegotiation of the collective agreements in force.
6. 129. As regards the matter concerning the need for future collective agreements to respect the productivity criteria, the Committee has already expressed its views on this subject in a previous case presented by the CGT, the complainant organization in this case (see 286th Report, Case No. 1639 (Argentina), paras. 90, 91 and 92) and it refers to the conclusions reached and the recommendation made at that time:
   • The Committee is aware that at times, when confronted with economic restructuring in general, and inflation in particular, governments may adopt measures which entail restrictions on the negotiation of wage rates in collective agreements. In this respect, the Committee wishes to point out that it has already had occasion to give its opinion on similar allegations to the effect that collective bargaining is being subordinated to the interests of the Government's economic policy in Argentina, and specifically to productivity criteria (see 279th Report, Cases Nos. 1560 and 1567 (Argentina), paras. 680-716). In November 1991, when it dealt with these cases, the Committee examined a Decree (No. 1757/90) under which "clauses of the agreements may be waived (by the administrative authority in the public sector) if they disrupt productivity, hinder or interfere with the administration of the enterprise" (see 279th Report, para. 707).
   • In these circumstances, the Committee restates the conclusions reached at its November 1991 meeting at which it recalls that both the Committee and the Committee of Experts on the Application of Conventions and Recommendations had insisted "that if within the context of a stabilization policy a government may consider for compelling reasons that wage rates cannot be fixed freely by collective bargaining (in the present case the fixing of wage scales excludes index-linking mechanisms and must be adjusted to increases of productivity), such a restriction should be imposed as an exceptional measure and only to the extent necessary, without exceeding a reasonable period and that it should be accompanied by adequate safeguards to protect workers' living standards. This principle is all the more important because successive restrictions may lead to a prolonged suspension of wage negotiations, which goes against the principle of encouraging voluntary collective negotiations" (see 279th Report, Cases Nos. 1560 and 1567 (Argentina), para. 714, General Survey on Freedom of Association and Collective Bargaining, 1983, para. 315, and 233rd Report, Cases Nos. 1183 and 1205 (Chile), para. 482).
   • Consequently, taking into account the specific nature of the system of collective bargaining in Argentina and noting that the limitations on collective bargaining go beyond a reasonable period, the Committee expresses the hope that the Government will be able, as soon as possible, to meet the objectives of its economic plan so as fully to restore the right to collective bargaining.

The Committee's recommendations

1. 130. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee requests the Government to ensure that, in the future, the principles of free and voluntary collective bargaining be fully respected.
   • (b) The Committee requests the Government to ensure if it wishes the clauses of a collective agreement to be brought into line with the country's economic policy and the requirements of the country's integration into an international common market, that attempts are made to persuade the parties to take account voluntarily of such considerations, without imposing on them renegotiation of the collective agreements in force.