Definitive Report - REPORT_NO265, June 1989

1. 161. By communications dated 27 July and 17 August 1988 the Federation of
   • Christian Trade Unions (CNV) submitted a complaint of violations of freedom of
   • association in the Netherlands. The Confederation of the Netherlands Trade
   • Union Movement (FNV) and the Federation of Middle and Senior Staff Personnel
   • (MHP) submitted complaints in the same terms by communications dated 27 July
2. and 21 October 1988 (FNV) and 28 July and 29 November 1988 (MHP). The
   • substance of the complaints was set out in a joint letter from the three
   • organisations which was sent to the Office on 14 March 1988 for the attention
   • of the Committee of Experts on the Application of Conventions and
   • Recommendations.
3. 162. The Government responded to the complaint in letters dated 17 October
4. and 2 November 1988 and 16 January 1989.
5. 163. At its meeting in February-March 1989 the Committee decided to adjourn
   • its examination of this case until its next meeting, pending examination of
   • the relevant legislation by the Committee of Experts at its March 1989 Session
6. (262nd Report of the Committee, approved by the Governing Body at its 242nd
   • Session, February-March 1989, paragraph 10).
7. 164. The Netherlands has ratified the Freedom of Association and Protection
   • of the Right to Organise Convention, 1948 (No. 87); it has not ratified the
   • Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. Background to the complaint

1. Examination by the Committee of Experts
2. 165. The complainants allege that the Act concerning conditions of
3. employment in the national insurance and subsidised sectors (henceforth, the
4. "WAGGS Act") is inconsistent with the principles of freedom of association.
5. They specifically locate their complaint within the context of a series of
6. observations by the Committee of Experts on the subject of legisative
7. regulation of collective bargaining in the Netherlands.
8. 166. These observations date back to 1976, and culminated in a direct
9. contacts mission conducted by Professor J.P. Windmuller in 1984. In its
10. report, the mission detected increased signs of "awareness of the obligations
11. assumed by the Government of the Netherlands under ILO Convention No. 87, at
12. least so far as the market sector was concerned". This "increased awareness"
13. was reflected in amendments to the Wage Determination Act in 1986 which
14. provided for a much more limited form of government intervention in the
15. bargaining process in the market sector than had been the case hitherto.
16. 167. The situation in the "national insurance and subsidised" sector (also
17. referred to as the "trend-followers sector") was rather different (paragaph47):
18. While noting that the present situation of the "trend-followers" under the
19. Temporary Act on Conditions of Service in the Public Sector is the subject of
20. new proposals, the Mission considers that it is in a position to reach some
21. preliminary conclusions on this issue. First, from a reading of the Temporary
22. Act and from the examples of government action taken by virtue of it, it would
23. appear that the Government is not complying fully with the established
24. principle of allowing the social partners to negotiate freely, a principle
25. which is implicit in the terms of Convention No. 87 which the Netherlands has
26. ratified. The wide powers given to the Minister under the Temporary Act to
27. intervene in collective bargaining and to declare inoperative already
28. concluded collective agreements also do not comply with the criteria that have
29. been established by the ILO supervisory bodies for tolerable intervention in
30. this domain. Specifically, the Temporary Act was not an exceptional measure
31. imposed for a reasonable period of time - at least not in retrospect - and it
32. is at least arguable whether it was accompanied by adequate safeguards to
33. protect the workers' standard of living. Although called a Temporary Act, the
34. legislation in question was initially adopted in July 1979 and as a result of
35. several extensions and amendments will be in effect until at least 1 July
36. 1984. The Government argues that the legislation is necessary to control
37. bargaining outcomes which would otherwise result in the Government having to
38. pay for wage increases which it cannot afford. Representatives of other
39. parties, however, expressed the view to the Mission that before the Temporary
40. Act came into force the Government already possessed adequate indirect means
41. for encouraging responsible bargaining. The Mission was also told that the
42. social partners had continually striven to demonstrate that free collective
43. bargaining could result in responsible agreements. The "new proposals"
44. referred to in this passage eventually became law in 1985 as the WAGGS Act,
45. which is the subject of the present complaint.
46. 168. The Committee of Experts conducted a detailed examination of the WAGGS
47. Act at its meeting in March 1989. This examination was based upon the reports
48. of the Government, the observations of the complainants in this case, and the
49. Report of a Review of the operation of the legislation which was made
50. available to the Office by the Government in June 1988. As a result of this
51. examination, the Committee of Experts addressed certain observations to the
52. Government.
53. The legislation
54. 169. According to section 2(1) of the 1985 Act, the legislation applies to
55. the conditions of employment in force between such workers and employers and
56. categories of employers as may be designated in accordance with section 2(2).
57. Essentially, this means employers whose labour costs are met (wholly or
58. partly) out of grants from public funds, or out of social insurance funds.
59. Section 2(3) of the Act also contemplates that the Minister of Social Affairs
60. and Employment may conclude "a settlement concerning the payment of costs"
61. with certain employers - this constitutes the so-called "budgeted sector".
62. 170. Section 4(1) of the Act requires the Minister to "promote" annual,
63. centralised, discussions on "the development of conditions of employment and
64. consequent labour costs" of workers in the national insurance and subsidised
65. sector. This entails the Minister informing all employers, employer
66. organisations and worker organisations whom (s)he considers appropriate of
67. her/his "provisional view" of the bargaining parameters which are to be set
68. for the coming year. This is to be done at least two months before the
69. Government presents its annual budget to the Parliament.
70. 171. The relevant worker organisations are then given an opportunity to
71. "express their standpoint" on the Minister's provisional view (section 4(3)).
72. After that, the Minister invites the employers to participate in
73. "consultations ... to see whether agreement can be reached as to the standards
74. which are to be set by virtue of section 5" (section 4(4)). The Minister is
75. obliged to present a report on these discussions, and her/his conclusions
76. thereon, to the Parliament (section 4(6)). At least 20 days after this report
77. has been submitted, the Minister, acting with the agreement of any other
78. relevant ministers, is required to "set standards with regard to the financial
79. scope for the development of labour costs to be made available within the
80. framework of cost coverage and setting of rates of contribution resulting from
81. the modification of the conditions of employment" (section 5(1) ). In setting
82. these standards the Minister is obliged to take account of: the effect of wage
83. increases in the private sector; the Government's views on appropriate public
84. expenditure levels, and the extent to which the development of labour costs
85. has departed in previous periods from the pre-determined standards for that
86. year.
87. 172. Once the parameters have been set, the employers/employer organisations
88. and worker organisations are then free to enter into negotiations on the terms
89. and conditions of employment which are to apply over the next year.
90. 173. Section 4(1) of the Wage Determination Act 1970 requires the parties to
91. a collective agreement to notify the Minister "of its conclusion and of any
92. amendments thereto". The Minister is then required to "inform the parties in
93. writing as soon as possible of the date on which the notification is
94. received". The 1985 Act uses this provision as a means of securing compliance
95. with the predetermined bargaining parameters in the national insurance and
96. subsidised sector. It does this by stipulating (section 6(1)) that an
97. agreement "shall not enter into force until six weeks have elapsed" after the
98. transmission of the section 4(2) notice by the Minister. This six-week period
99. can be extended by up to four further weeks by written notice. Within this
100. six/ten-week period the Minister, acting in agreement with any relevant
101. ministers, may make a written declaration to the parties that their agreement
102. "will meet with objections if the labour cost development resulting therefrom
103. will not, according to reasonable expectation, conform to the standards set on
104. the subject" (section 7(1)). The effect of such a declaration is to prevent
105. the agreement becoming operative "for the time being", and the terms and
106. conditions of employment of those covered by the agreement remain as they were
107. before it was concluded (section 7(2)). Once a declaration has been issued,
108. the Minister is required to promote the holding of further consultations
109. between the parties (section 7(3)). These consultations are to take place not
110. later than three weeks after the making of the declaration. After these
111. consultations, the parties to the agreement may make a joint, written
112. declaration to the effect that "they still deem desirable the coming into
113. operation" of the agreement (section 7(4)). The Minister is obliged
114. immediately to affirm the receipt of this affirmation, and the agreement is to
115. enter into force on the day following its transmission.
116. 174. If the Minister, and any other relevant minister, are of the joint
117. opinion that the operation of an agreement which has been affirmed by the
118. parties in accordance with section 7(4) creates either a threat to the level
119. of service provided by the employer, or a danger that maintenance of the
120. necessary level of service would entail "an unjustified increase in costs at
121. the public expense" then (s)he may "order that those conditions of employment
122. shall apply ... which were effectively in force immediately before his
123. decision came into effect" (section 10(1)). In other words, the Minister can
124. freeze the terms and conditions of employment of workers covered by the
125. agreement. Before exercising these powers the Minister must first notify both
126. houses of the Parliament (section 10(4)). The "freeze" does not become
127. operative until ten days after service of this notice.
128. 175. Section 11 makes similar provision in relation to the "budgeted
129. sector".
130. 176. Even where there has been no freeze under section 10, a cost-overrun in
131. any given year may be taken into account in setting the parameters for the
132. next year (section 5(3)). In addition, grants, etc., which are intended to
133. cover labour and/or operating costs are calculated on the basis of the
134. parameters laid down under section 5 (section 12), rather than upon costs
135. actually incurred (or budgeted).
136. B. The complainants' allegations
137. 177. In their joint letter of 14 March 1988, the complainants set out their
138. concerns about these legislative arrangements under five interrelated (and, to
139. some extent, overlapping) headings:
140. - inconsistency with the principle of uniformity of ILO standards;
141. - denial of equal protection for the bargaining rights of workers in the
142. national insurance and subsidised and market sectors;
143. - the practical application of the legislation;
144. - inadequate protection for the living standards of workers in the national
145. insurance and subsidised sector; and
146. - the manner in which the consultative process has operated in practice.
147. Uniformity of ILO standards
148. 178. The complainants argue that the WAGGS legislation is inconsistent with
149. the long-established principle that "flexible interpretation" and "flexible
150. application" of ILO standards in order to take account of differing political,
151. socio-economic, cultural and other factors is permissible only where a
152. "flexibility clause" has expressly been incorporated in the standard itself.
153. This has not been done in the case of either Convention No. 87 or Convention
154. No. 98.
155. 179. The complainants point out that in the past the Government has
156. consistently adhered to this position in the Conference Committee on the
157. Application of Conventions. However, they go on to quote from a letter which
158. was sent to the Office by the Government in February 1984 in response to
159. criticisms of the Temporary Act on the part of the FNV and the CNV:
160. The Government, while fully subscribing to the principle of free collective
161. bargaining, and wishing the parties concerned to conclude collective
162. agreements, cannot help but look for such flexibility in the interpretation of
163. Conventions Nos. 87 and 98 as to allow application in different ways. Not in
164. any way it is asking to be treated as a special case; it wants to apply the
165. principle to all sectors of economy, but to vary the way of application.
166. (Complainants' emphasis.) This, say the complainants, is inconsistent with the
167. principle of uniformity of application of ILO standards, and with the position
168. hitherto adopted by the Government.
169. Equal protection
170. 180. The complainants go on to argue that the Government's search for
171. flexibility has caused it to adopt a legislative regime which denies workers
172. in the national insurance and subsidised sector the equality with those in the
173. market sector to which they are entitled.
174. 181. The complainants acknowledge that the 1985 legislation constitutes a
175. marked improvement upon its predecessors in this respect, but still feel that
176. it is incompatible with ILO principles relating to uniformity of application
177. and equal treatment. They find support for this proposition in paragraph 52 of
178. the report of the 1984 direct contacts mission, and in articles by two Dutch
179. academic commentators which they sent to the Office in March 1987.
180. Practical application
181. 182. The complainants raise a number of concerns about the practical
182. operation of the legislation, especially in relation to the setting of
183. bargaining parameters. First, they feel that they are accorded unequal
184. treatment vis-à-vis the employers. This is because the Act requires the
185. Government only to "hear" what workers' organisations have to say, whereas it
186. is obliged to "consult" with the employers before making its report to
187. Parliament. Furthermore, say the complainants, the evidence suggests that the
188. Government pays very little attention to the views of either employers or
189. workers in setting the parameters.
190. 183. The complainants also point out that the time-scales set out in the
191. 1985 Act are such that it takes substantially longer to conclude a collective
192. labour agreement in the national insurance and subsidised sector than in the
193. market sector. This in turn may serve further to widen the disparity between
194. employment conditions in the national insurance and subsidised sector on the
195. one hand and the public and market sectors on the other.
196. Protection of living standards
197. 184. According to the complainants, one of the effects of the Temporary Act
198. which operated between 1979 and 1985 was to break the nexus which had hitherto
199. existed between earnings in the national insurance and subsidised and market
200. sectors. Instead, a new nexus was established with the public sector. This
201. seemed to disadvantage workers in the national insurance and subsidised
202. sector: first, because conditions of employment in the public sector were
203. increasingly fixed without meaningful negotiations between the Government and
204. the relevant unions, and secondly, because the 1985 legislation operated in
205. such a manner that conditions of employment in the national insurance and
206. subsidised sector lagged behind even those in the public sector.
207. 185. This has resulted in a marked deterioration in the living standards of
208. workers in the national insurance and subsidised sector as compared with those
209. in other sectors. This, say the complainants, constitutes clear evidence of a
210. failure on the part of the Government to ensure adherence to the criteria
211. developed by the supervisory agencies of the ILO in order to assess the
212. legitimacy of government interference with free collective bargaining (Digest
213. of Decisions and Principles of the Freedom of Association Committee, Third
214. Edition, 1985, paragraph 641):
215. If, as part of its stabilisation policy, a government considers that wage
216. rates cannot be settled freely through collective bargaining, such a
217. restriction should be imposed as an exceptional measure and only to the extent
218. that is necessary, without exceeding a reasonable period, and it should be
219. accompanied by adequate safeguards to protect workers' living standards.
220. Consultation
221. 186. The complainants point out that the Government has consistently
222. emphasised its commitment to joint consultation as a means of finding
223. solutions to the problem of wage-fixing in the national insurance and
224. subsidised sector. They contrast this with what they see as a failure by the
225. Government adequately to consult either workers or employers in relation to
226. parameter-setting under the 1985 Act. They are also highly critical of the
227. adoption of a timetable for consultation which establishes a de facto link
228. between the parameter-setting process and negotiations about working
229. conditions in the public sector.
230. C. The Government's reply
231. 187. In its letter of 17 October 1988 the Government recalls how sharp
232. increases in labour costs in the mid-1970s caused it to intervene in the
233. bargaining process in both the market and national insurance and subsidised
234. sectors. It acknowledges that some of these interventions were not entirely
235. consistent with ILO principles. However, it claims that subsequent changes to
236. the Wage Determination Act of 1970 and the replacement of the "Temporary" Act
237. by the WAGGS legislation mean that there is now full conformity with those
238. principles in all sectors. In particular, it stresses that the WAGGS Act
239. adopts a fundamentally different approach from its predecessors. According to
240. the Government, the complainants have not taken proper account of this factor
241. in their assessment of the new legislation.
242. 188. The Government goes on to assert that in terms of adherence to ILO
243. standards the 1985 Act must be judged by reference to its practical operation
244. and not, as the complainants insist, by reference to its text. The Act
245. regulates the competencies of Government. In determining whether it is
246. consistent with the principles on freedom of association it is necessary to
247. examine the manner in which those competencies are utilised in practice.
248. 189. The Government claims that the Act creates absolutely no impediment to
249. the conclusion of collective agreements in the national insurance and
250. subsidised sector. The Government's involvement is largely confined to the
251. parameter-setting process which precedes the direct negotiations between
252. employers and unions. The fact that the parameters within which wage costs can
253. increase is determined in advance of negotiations is not at all unusual. Just
254. the same thing would happen in the private sector.
255. 190. Once the parties have concluded their negotiations, they then notify
256. the Government of the cost-implications of their agreement. If the costs
257. remain within the pre-determined limit, there is no problem whatsoever. The
258. agreement becomes operative, with retrospective effect, within six to ten
259. weeks after notification. Indeed, the agreement becomes operative even if its
260. costs exceed the predetermined limit, but in that case the Government may use
261. the objection procedures set out in section 7 to convene talks involving
262. itself and the parties. At this stage the parties may obviate the difficulties
263. by curtailing the trend in costs, or by proving that the cost overrun does not
264. have any adverse implications for the quality of service provided or for
265. public spending. If the parties decide to press ahead with an agreement which
266. does not conform to the pre-set parameters, then the Government has the power
267. to order a freeze in accordance with sections 10 or 11 (whichever is
268. appropriate).
269. 191. The Government points out that what it terms the "ultimate remedy" has
270. never been applied, and that policy "is and remains that the instrument should
271. only be used in practice if effects to a serious degree are being passed on".
272. 192. In 1987-88 the Government conducted a detailed review of the operation
273. of the legislation. This was done in consultation with both employers and
274. unions, and as indicated earlier, a copy of the report was sent to the Office
275. in June 1988. According to this report, there have been only two instances
276. where the Minister has even gone so far as to issue a formal notice of
277. objection under section 7 (pages 139-140 of the report):
278. The first, dated 5 March 1986 was for the health care sector collective
279. labour agreement 1985. It was prompted by the forecast of wage drift involved
280. in restructuring salaries, with inadequate financial scope being available.
281. Following the objection, there were talks with the parties. After the parties
282. adjusted the forecast and created guarantees to prevent the impending
283. overstepping, the statement of objection was withdrawn.
284. The second dates from 17 December 1986 and related to public libraries for
285. 1986. The costs under this agreement exceeded the set limits by more than 0.5
286. per cent, creating a cumulative overshoot of 0.3 per cent in 1985. In the
287. subsequent talks with the parties, it emerged that the overshoot amounted to
288. around 0.7 per cent. This was ultimately financed by the parties from the
289. amount available for 1987.
290. There were also a number of situations where there was 'a very small
291. overshoot of one or a few tenths of a per cent'. In these cases the parties
292. were given a written warning that the overshoot must not lead to any 'serious
293. encroachment' upon the level of service - with the implied threat that 'a
294. notification of objection may follow if such small overshoots are repeated in
295. the future'.
296. 193. As regards the impact of the legislation on wage costs, the Review
297. Report notes (page 41) that as of May 1985 the percentage gap between average
298. pay in the national insurance and subsidised sector as compared with the
299. market sector was estimated to be 13 per cent. In 1986 and 1987 the pay trend
300. in labour agreements in the market sector was 2.4 per cent as compared with 1.
301. 2 per cent in the national insurance and subsidised sector. In other words,
302. the gap was significantly widened during the first two years of the Act's
303. operation. The Review Report leaves no doubt that had it not been for the
304. legislation there would have been at least a partial catch-up of the gap (page
305. 42):
306. In the course of consultations parties have indicated on more than one
307. occasion that they wish to catch up on the backlog with the private sector.
308. 194. Further to the question of conformity with ILO standards, the
309. Government accepts that workers in the national insurance and subsidised
310. sector are not "public servants" (Review Report, page 160). This means that
311. their terms and conditions of employment "must be handled in such a way as to
312. do justice to the principle of freedom of association" (ibid.). However,
313. according to the Government, its role as paymaster for this sector means that
314. it must (ibid.):
315. ... indicate the financial limits. What funds can be made available and for
316. what service. Conditions of employment must be set within these limits. The
317. system of parameter-setting and review established by the 1985 Act maintains a
318. proper balance between these responsibilities as guardian of the public purse
319. and the principles of free collective bargaining (Review Report, page 161):
320. In summary, the new Act recognises two phases. In the first, the Government,
321. having listened to the employee organisations, decides in conjunction with the
322. employers how much change in conditions of employment can be financed from
323. public funds. In the second phase, the employers and employees negotiate on
324. changes to conditions of employment. According to the Government (ibid.):
325. International treaties concerning collective negotiations relate to the
326. second phase. The first phase is part of the Government's financial and
327. budgetary policy.

D. The Committee's conclusions

1. 195. Both the Committee of Experts and the Committee on Freedom of
   • Association have consistently taken the view that it is not compatible with
   • the principles on freedom of association for government approval to be a
   • precondition of the conclusion and implementation of a valid collective
   • agreement (see General Survey by the Committee of Experts, 1983, paragraph 311
   • and Digest of Decisions and Principles of the Freedom of Association Committee
   • of the Governing Body, 1985, paragraph 635).
2. 196. Both Committees have accepted that legislation "which permits the
   • refusal to approve a collective agreement on grounds of errors of pure form"
   • is not necessarily in conflict with the principles. However, if registration
   • may be refused on grounds such as inconsistency with government policy then
   • that would constitute a requirement of "prior approval", and would be
   • incompatible with the principles. By the same token, a provision which enables
   • a government to invalidate, or set aside, a concluded agreement because it is
   • inconsistent with the Government's social or economic policy would also be
   • regarded as incompatible with the principles.
3. 197. However, as indicated above, the Committees have recognised that some
   • degree of government interference in the bargaining process may be justified
   • "for compelling reasons of national economic interest". To be acceptable, such
   • interference should be imposed only as an exceptional measure and only to the
   • extent that is necessary, without exceeding a reasonable period, and should be
   • accompanied by adequate safeguards to protect workers' living standards
   • (Digest, op. cit., paragraph 641). The Committee would also point out that in
   • cases where collective agreements contain terms which appear to conflict with
   • considerations of general interest, it might be possible to envisage a
   • procedure whereby the attention of the parties could be drawn to these
   • considerations to enable them to examine the matter further, it being
   • understood that the final decision thereon should rest with the parties. The
   • setting up of a system of this kind would be in conformity with the principle
   • that trade unions should enjoy the right to endeavour to improve, by means of
   • collective bargaining, the conditions of living and of work of their members
   • and that the authorities should abstain from any interference which might
   • limit this right (see Digest, op. cit., para. 643 and General Survey, op. cit.
   • , para. 314).
4. 198. The 1985 Act does not make the conclusion or implementation of a valid
   • collective agreement in the national insurance and subsidised sector
   • conditional upon prior government approval. In the opinion of the Committee
   • there is, therefore, no inconsistency between the Act and the principles on
   • this ground.
5. 199. The Committee is also of the view that there is no inconsistency
   • between the principles on freedom of association and sections 6 and 7 of the
   • Act. Both the requirement that agreements be submitted to the Minister before
   • they become operative, and the Minister's right to require the holding of
   • further consultations appear to be consistent with the approach described at
   • paragraph 643 of the Digest.
6. 200. At the end of any consultations which are held in accordance with
   • section 7, the parties may make a joint declaration to the effect that they
   • want their agreement to become operative, notwithstanding the concerns raised
   • by the Minister. This, too, appears to be consistent with the approach noted
   • above. However, that is not the end of the matter. Sections 10 and 11 enable
   • the Minister to override any such declaration, and freeze the operation of the
   • agreement. The Minister may adopt this course when of the opinion that the
   • agreement creates either a threat to the level of service provided by the
   • employer or a danger that the maintenance of the necessary level of service
   • would entail an unjustified increase in costs at the public expense. The
   • Committee is of the view that this is tantamount to a stipulation that an
   • agreement may become (or remain) operative only where it is consistent with
   • government policy as represented by the parameters (and by the exercise of the
   • Minister's discretion). As indicated, both the Committee of Experts and the
   • Committee on Freedom of Association have taken the view that such a provision
   • has the same effect as a requirement of "prior approval". It follows that a
   • freeze imposed on the basis of sections 10 and 11 of the 1985 Act would be
   • incompatible with the principles of freedom of association - unless it could
   • be shown to be justified "for compelling reasons of national economic
   • interest", and that the legislation incorporated the safeguards which are
   • considered to be essential even where interference with the right to negotiate
   • is permissible.
7. 201. The Committee has not been presented with any evidence to suggest that
   • there are any compelling reasons of national economic interest to justify
   • continued interference with the right of workers and unions in the national
   • insurance and subsidised sector to promote and to protect their interests
   • through free collective bargaining. Furthermore, the legislation does not
   • incorporate the safeguards referred to in the previous paragraph.
8. 202. The Committee recalls that the so-called Temporary Act which preceded
   • the WAGGS Act operated for a period of six years. The Committee notes that the
9. 1985 legislation has already been in operation for a period of three years,
   • and that in May 1988 the Government announced that it would be extended at
   • least to the end of 1992. A measure of this nature cannot be regarded as
   • "exceptional", as remaining in force for only a "reasonable period", or as
   • operating only to the extent necessary to protect the national economic
   • interest.
10. 203. The Committee notes that according to the Review Report, the earnings
    • gap between the national insurance and subsidised and market sectors has
    • widened appreciably during the currency of the WAGGS Act. This inevitably
    • raises doubts as to whether the Act contains adequate safeguards to protect
    • the living standards of those to whom it applies. The complainants clearly
    • feel that it does not. Employers in the national insurance and subsidised
    • sector also appear to be unhappy about the overall effect of the legislation -
    • as is evidenced by their stated desire to narrow the earnings gap between
    • employees in this sector and those in the market sector if they were permitted
    • to do so.
11. 204. The Committee also recalls that in 1984 the direct contacts mission
    • expressed the view (Report of the mission, paragraph 52) that "the workers in
    • the non-profit sector are entitled to the same protection under Convention No.
12. 87 in their right to bargain collectively as are the workers in the market
    • sector". The Committee is of a like mind. The WAGGS Act accords less
    • favourable treatment to a group of workers in respect of whom there is no
    • warrant for such treatment in Convention No. 87 or Convention No. 98, or in
    • the jurisprudence of either the Committee of Experts or the Committee on
    • Freedom of Association.
13. 205. In light of these considerations, the Committee asks the Government to
    • amend the 1985 Act, in particular sections 10 and 11, in such a way as to
    • permit workers and employers in the national insurance and subsidised sector
    • to negotiate and to conclude agreements in full freedom in accordance with the
    • principles of freedom of association.
14. 206. The Committee is not persuaded by the Government's argument that it
    • should concern itself with the way in which the legislation has been applied
    • in practice, rather than with the text of the legislation. It is true that the
    • Committee can and should have regard to the practical application of
    • legislation which is the subject of a complaint. Self-evidently, legislation
    • which appears to conform to the requirements of the principles on freedom of
    • association may be applied in a manner which is inconsistent with those
    • principles. It is also possible, though less likely, that a piece of
    • legislation which appears to be at variance with the principles could be
    • applied in a manner which is in conformity with the principles. This is a
    • somewhat unlikely eventuality, if only because the mere existence of a law
    • means that it almost inevitably exerts some kind of normative effect,
    • irrespective of the manner in which it is applied.
15. 207. In the present circumstances, it is clear that the WAGGS Act is not
    • only intended to have a normative effect, but that it has actually had such an
    • effect. The very fact that the Government has not found it necessary to use
    • the "ultimate remedy" strongly suggests that the legislation has succeeded in
    • regulating the behaviour of those to whom it is directed. This is further
    • evidenced by the fact that the gap between earnings in the national insurance
    • and subsidised and market sectors has widened appreciably during the currency
    • of the legislation - notwithstanding the clearly articulated desire of both
    • employers and unions to narrow that gap if permitted to do so. Indeed, the
    • Government uses precisely this desire to reduce the gap as part of the
    • rationale for the legislation.
16. 208. The Committee would also observe that the Government may well have a
    • legitimate interest in seeking to control wage costs in the national insurance
    • and subsidised sector - as in the public and market sectors. As has been
    • pointed out by the direct contacts mission and by employer and worker
    • organisations, the Government has at its disposal various means by which it
    • can quite properly achieve these objectives: these include the Wage
    • Determination Act 1970, as amended by the law of 7 July 1987, which gives the
    • Government extensive powers to intervene in the bargaining process in both the
    • market and trend-following sectors for compelling reasons of national economic
    • interest.