Definitive Report - REPORT_NO251, June 1987

1. 108. In a communication of 1 April 1986 the Federation of Bank, Savings Bank, Insurance and Office Employees (FEBASO) filed a complaint alleging violation of freedom of association in Spain.
2. 109. The Government sent its observations in reply to the allegations presented in this case in a communication of 15 December 1986.
3. 110. At its February 1987 meeting, the Committee noted in its 248th Report (para. 11) that the Government's reply had been received and that the complainant organisation had filed an appeal on the grounds that a provision of the State's General Budget Act regarding certain categories of workers was unconstitutional. The Committee reminded the Government that its involvement in this case was not conditional on the exhaustion of all internal means of recourse, and informed the Government that it would examine the substance of the case at its next meeting.
4. 111. Spain 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 complainant's allegations

1. 112. FEBASO, which states that it is an affiliate of the General Confederation of Workers (UGT), files a complaint against the Government of Spain alleging contravention of Article 4 of the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).
2. 113. According to FEBASO, the facts in the case are as follows: in negotiating the 13th Collective Agreement, the Banco Exterior de España is attempting to apply the State's General Budget Act (Act No. 50 of 30 December 1984); section 44 of this Act limits the pensions paid to the so-called passive categories of workers who are covered by social security or by any other scheme which is financed, wholly or in part, by public funds, to a maximum of 187,950 pesetas (corresponding to approximately 3,000 Swiss francs at the December 1984 rate of exchange, or 2,350 Swiss francs at the April 1987 rate of exchange). However, according to FEBASO, sections 179 to 186 of the 12th Collective Agreement of the Banco Exterior de España stipulate that the employees of this bank are entitled upon retirement to a pension equal to 100 per cent of their prior annual cash remuneration, including family allowances.
3. 114. According to FEBASO, the application of sections 44 and 46 of Act No. 50 to the bank's employees undermines their right to collective bargaining, which is recognised in article 37, paragraph 1, of the Spanish Constitution; article 37 stipulates that the law shall guarantee the right of collective bargaining between employers' and workers' representatives, as well as the binding nature of their agreements. Article 53, paragraphs 1 and 2, of the Constitution guarantees freedom of association and its derivative rights, including the right to free collective bargaining.
4. 115. FEBASO contends that Act No. 50 does not be apply to workers who are neither public officials nor workers in the so-called passive categories. In fact, the scope of the budgetary Act in question extends only to state enterprises that receive subsidies or other forms of financial assistance from the State, and this is not the case of the Banco Exterior de España.
5. 116. In conclusion, according to FEBASO, the application of Act No. 50 in the present case seriously undermines Article 4 of Convention No. 98, which Spain has ratified, by infringing upon the freedom of association and the right of collective bargaining of the workers of the Banco Exterior de España. Lastly, the complainant organisation attaches to its communication extracts from Budgetary Act No. 50 and from the 12th Collective Agreement.

B. The Government's reply

1. 117. In its reply of 15 December 1986, the Government notes that the complaint does not concern the application of an Act or of a collective agreement previously negotiated between the parties, which according to the Spanish Constitution (article 37, paragraph 1) is in fact binding, but concerns rather the existence of a legal framework established prior to the commencement of bargaining procedures, as a result of which the employer claims not to be able to meet certain demands of workers, owing to legal limitations which fall beyond its competence, but which nevertheless apply to the bargaining process.
2. 118. The complaint is based essentially on the alleged inapplicability of an Act to a given enterprise, on the grounds that it does not receive state subsidies or financial assistance. The Government considers this claim to be highly inaccurate, inasmuch as the Banco Exterior de España is a state corporation in which the State holds a majority interest.
3. 119. The Government agrees that article 37, paragraph 1, of the Spanish Constitution guarantees the right of collective bargaining between employers' and workers' representatives, as well as the binding nature of their agreements, but adds that article 131 of the Constitution also provides that the State, by means of legislation, may plan general economic activity in order to safeguard the public interest, to balance and harmonise regional and sectoral development, and to promote the growth of income and property and their just redistribution. Lastly, article 53 of the Constitution stipulates that the rights and freedoms in question concern the public authorities and that the exercise of such rights and liberties is subject to law.
4. 120. According to the Government, Budgetary Act No. 50 of 30 December 1984 regulating the national budget, which concerns the State's budget for 1985, and which is mentioned in the complaint, falls within this framework. For the first time, this Act addressed the issue of the income of state enterprises which receive state subsidies or other forms of financial assistance; the Act effectively institutes a reform of the pension system covering the so-called passive categories of workers. It stipulates that the pensions of the different social protection schemes must be considered as a whole with a view to limiting the constant rise in pensions.
5. 121. Act No. 46 of 27 December 1985, concerning the national budget for 1986, complements the earlier Act by refining the policy aimed at redistributing public revenue.
6. 122. The Government confirms that these two Acts established a ceiling of 187,950 pesetas per month for pensions received by a single person, regardless of whether the pension comes from a single source or from several public retirement schemes; it notes that the Banco Exterior de España, as a state enterprise, belongs to such schemes.
7. 123. In the opinion of the Government, Act No. 50 of December 1984 does not infringe the right of collective bargaining; it does, however, conform with the constitutional mandate for planning general economic activity with a view to achieving a fairer redistribution of income and property, and thus applies to the negotiation of collective agreements.
8. 124. The Government adds that the Constitutional Court has yet to rule on the applicability of the Budgetary Act as regards collective agreements already in force; according to the Government, however, this has no bearing on the present case.
9. 125. The Government also states that, as had been reported by the Under-Secretary of State to the President of the Banco Exterior de España in a communication of 6 May 1986 in reply to a question posed by the bank's Executive Committee, the Ministry of the Economy and Housing considers that it is not possible to invoke the acquired rights of future pensioners against Act No. 50, since the Act in question applies to the Banco Exterior de España, as a state enterprise which receives subsidies and other financial assistance from the State.
10. 126. As regards the allegation that Act No. 50 infringes the provisions of Article 4 of Convention No. 98, the Government considers that it has in no way infringed this Article, in the sense that the Government has complied with all pertinent provisions, namely by adopting all measures necessary to encourage and promote collective bargaining between employers' and workers' representatives, and that it has not undermined the exercise of freedom of association. In the case at hand, it is simply a question of bringing the substance of future collective agreements into alignment with economic policy guide-lines issued by the Government with a view to ensuring a more just redistribution of social benefits and costs.
11. 127. According to the Government, there has been no infringement of the right of collective bargaining, and the complaint is thus inadmissible.

C. The Committee's conclusions

1. 128. The Committee notes that the complaint essentially concerns the effects of restrictive budgetary legislation on the renewal of certain clauses of a collective agreement covering the retirement pensions of former employees of state enterprises that receive state subsidies or other forms of financial assistance.
2. 129. In the present case, the Committee notes that the Government itself acknowledges that Budgetary Act No. 50 of 30 December 1984, concerning the State's budget for 1985, as well as Act No. 46 of 27 December 1985, concerning the State's budget for 1986, set a ceiling of 187,950 pesetas per month as the maximum retirement pension that a single person may draw.
3. 130. The Committee also notes that sections 184 and 185 of the 12th Collective Agreement of the Banco Exterior de España expressly stipulated that the enterprise undertook to pay the difference between the social security pension, or that of any other public or private body to which the bank paid contributions, and 100 per cent of the total annual cash remuneration of staff having reached the age of 60 years and having 40 years of service in the occupation, or 35 years of service in the Banco Exterior de España, based on the wages of the 36 months preceding retirement. It also notes that the Government confirms that the new collective agreement (the 13th Collective Agreement) must conform with the provisions of Act No. 50.
4. 131. The Committee considers that, to the extent that Act No. 50 of December 1984, renewed in 1985, applies to pensioners covered by the 12th Collective Agreement by setting a ceiling of 187,950 pesetas per month for retirement pensions, this legislation undermines the previously negotiated contractual rights of former workers to receive 100 per cent of their annual cash remuneration after 40 years of service in the occupation, or 35 years of service in the Banco Exterior de España.
5. 132. The Committee takes note of the Government's arguments concerning its responsibility as regards a more equitable redistribution of income and property; nevertheless, the Committee recalls that governments must always prefer persuasion to constraint as regards collective bargaining, and permit the parties to reach their final decisions freely.