Definitive Report - REPORT_NO284, November 1992

1. 108. In communications dated 18 February and 26 March 1992, the Trade Union of State Technical Managerial Staff (STE) submitted a complaint of violation of freedom of association against the Government of Portugal. The Government sent its observations on this case in a communication dated 1 September 1992.
2. 109. Portugal has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), the Right to Organise and Collective Bargaining Convention, 1949 (No. 98) and the Labour Relations (Public Service) Convention, 1978 (No. 151).

A. The complainant's allegations

1. 110. In its communications of 18 February and 26 March 1992, the STE alleges that the behaviour of the Portuguese Government contravenes Articles 7 and 8 of Convention No. 151 and the provisions contained in Legislative Decree No. 45-A/84 of 3 February 1984 on collective bargaining in the public sector, which sets out to regulate, in the national legislation, the principles contained in Convention No. 151.
2. 111. The complainant states that under section 8 of Legislative Decree No. 45-A/84, disputes arising during collective bargaining may be settled, at the request of the trade union organisations, by an additional round of bargaining. Bargaining commences when the administration accepts the grounds for the request made by the trade union. It must take place within a time-limit of 20 days and aims at finding an agreement; the consensus reached takes the form of a recommendation.
3. 112. The STE states that on 3 December 1991, with a view to overhauling the salaries and other benefits in the public service, it requested, under sections 6 and 7 of Legislative Decree No. 45-A/84, the Deputy Secretary of State responsible for the Budget to open collective bargaining.
4. 113. At a meeting on 11 December 1991, the Minister of Finance called upon the trade unions in the public service to help implement anti-inflationary measures so that the Government might fulfil its commitments towards the European Economic Community to bring down inflation. The STE informed the Minister that it considered, as a responsible trade union organisation, that this request was entirely compatible with its stated objectives. Given that eminent Portuguese economists had predicted an inflation rate of 9 per cent for 1992 and that - according to the same economists - this figure could be increased by 2 to 3 per cent without in any way undermining anti-inflationary measures, the STE considered that its proposal of a 12.5 per cent increase in salaries and other social benefits was a serious one. The STE also states that it stressed this proposal was negotiable.
5. 114. During the collective bargaining which ensued the Government changed its initial proposal of a 6.5 per cent increase to 7 per cent - and then to 8 per cent - whilst the STE reduced its own proposal to 12 per cent. The STE states that during a meeting on 24 January 1992 the Government declared that it would stand by its latest proposal. The complainant points out that it clearly indicated to the Government that its proposal of 12 per cent was negotiable, but that the Government, by reducing the salary level of employees in the public service, infringed the new system of remuneration in the public service, negotiated in 1989; this system sets out to upgrade the pay of managerial staff in the public service, keeping it in line with national minimum wage increases and making the necessary adjustments to the various grades of employees accordingly, as laid down in Legislative Decree No. 353-A/89 of 16 October 1988.
6. 115. According to the STE, the meeting of 24 January 1992 ended with an agreement under which it was entrusted with submitting a new proposal. The Deputy Secretary of State responsible for the Budget approved this agreement. However, after the STE had presented a new proposal on 29 January 1992, the Government unilaterally decided, by Decree No. 77-A/92 of 5 February 1992, to impose an increase of 8 per cent.
7. 116. Following this Decree, the complainant requested an additional round of collective bargaining, as provided for under Legislative Decree No. 45-A/84, to try and reach a settlement to the dispute between the trade union and the Government. According to the complainant, the Government did not reply to this request.
8. 117. The complainant states that the Government infringed the right to bargain collectively, and acted in bad faith and in a way that does not inspire confidence. It therefore requests that the process of collective bargaining which was interrupted should be resumed. The trade union is also of the opinion that section 8 of Legislative Decree No.45-A/84 is not in accordance with Convention No. 151 in so far as the machinery for settling collective labour disputes in the public sector arising in connection with the determination of conditions of employment does not, as established under this Decree, ensure the confidence of the parties involved - as proven by the present case.

B. The Government's reply

1. 118. In its letter of 1 September 1992, the Government first of all points out that the STE's allegations are correct as regards the facts described in the complaint.
2. 119. The Government nevertheless states that between the meetings of 24 January 1992 and 26 March 1992 - the date contained in the letter accompanying the official submission of the complaint to the ILO on 18 February 1992 - another meeting took place on 5 March 1992 between the Government, represented by the Minister of Finance and the Deputy Secretary of State responsible for the Budget, and trade unions of all tendencies, including the STE. It therefore concludes that when the complaint was formulated on 26 March 1992, there were new factors of which the STE was aware - and in which it had played a role - which are of importance for the analysis of this complaint.
3. 120. The Government states that during bargaining on employment conditions in the public service in 1992, attended not only by the STE but also the FESAP and the bargaining committee created to put forward the public administration's set of claims, it was guided by the following considerations:
   • - the implementation of the programme to prepare Portugal for economic and monetary union, and the inevitable accompanying austerity measures, required to bring about a cut in the budget deficit and inflation in 1992;
   • - the draft State budget for 1992, submitted to the National Assembly, which is based on a rate of inflation of 8 per cent; and
   • - the agreement on income policy for 1992, negotiated on 14 February 1992 between the Government and both sides of industry at the Standing Council on Collective Bargaining (of which the Government encloses the text).
4. 121. The Government points out that its last offer, which it made at the meeting on 24 January 1992 - an increase of 8 per cent in the wage scale - represented "the maximum effort that could be made with a minimum of social costs, because to increase pay to the level demanded by the trade unions would be to take a bet on unemployment". The Secretary of State confirmed that it was a final offer. The Government also states that this 8 per cent increase applied to the wage scale, combined with other changes in the pay structure of the public service that the Government had accepted during bargaining, represents an increase of about 15.5 per cent in the wages bill for 1992. In any case, the Government continues, the meeting of 24 January 1992 most certainly put an end to the bargaining for 1992, as is clearly stated in the minutes of this meeting.
5. 122. As concerns the issuing of Decree No. 77-A/92 of 5 February, which specifies the Government's final offer adopted during the bargaining which ran from 3 December 1991 to 24 January 1992 and during which there were three meetings attended by the STE, the Government states that the Decree was not issued during the discussions, since bargaining had been concluded on 24 January. It in no way implies a less favourable attitude - and even less an attitude of bad faith - on the part of the Government whose position did change during negotiations (from 6 to 8 per cent). Indeed, the Government explained why restrictions had to be placed on its scope of action and showed that the 8 per cent increase resulted, in fact, in an effective increase of 15.5 per cent in the wages bill of the public service.
6. 123. According to the Government, bargaining was resumed on 5 March 1992, a fact which the STE could not fail to know about when it submitted its complaint on 26 March 1992, with a meeting attended by the complainant and two other trade union federations. At this meeting, the Government, through the Minister of Finance, informed the trade unions present that, in view of the agreement on salaries for 1992, the Government guaranteed all workers in the public service an increase at least equivalent to 10 per cent of the remuneration paid in December 1991; it explained that, if this increase was not obtained by other means (promotion, in-service training, etc.) it would be granted in the form of a 2 per cent pay supplement to each worker in addition to the increase guaranteed under Decree No. 77-A/92. The Government states that the STE's only reaction to this announcement was to ask the Government about the nature of this supplementary pay. The Government then explained that it was a supplement of 2 per cent that would be introduced in 1992, with effect from 1 January; this measure was confirmed by Legislative Decree No. 61-92 of 15 April 1992.
7. 124. In the Government's opinion, it is unreasonable to state on 26 March 1992, that it had broken off negotiations on 24 January 1992, since subsequent to this date negotiations were resumed with a meeting on 5 March 1992. Furthermore, at this March meeting, the discussion centred not so much on the amount of remuneration but on the type of machinery that could guarantee this amount; and the trade union organisations were pleased by the Government's apparent willingness to engage in dialogue. Finally the Government had pointed out the constraints that dictated its approach in the discussions.
8. 125. The Government also feels that it is unreasonable to state that it is neither receptive nor open to dialogue with the trade unions, given that the Minister of Finance stressed his willingness to "back the trade unions' proposal, now reaffirmed, concerning the setting up in the near future of a higher advisory body of the administration and public service made up of representatives from the trade unions and the administration"; what is more, in a letter dated 6 March 1992, accompanied by the minutes of the meeting, the STE was invited to appoint a representative to this higher advisory body.
9. 126. The Government concludes by pointing out that bargaining in the public service is regulated by Legislative Decree No. 45-A/84 of 3 February 1984 and that the Committee of Experts on the Application of Conventions and Recommendations considered this bargaining to be in accordance with the Convention, provided that the Government and trade union organisations maintained an attitude of good faith during the bargaining. The Government considers that throughout the bargaining in 1992, it showed every sign of good faith: it changed its position concerning the pay scale (from a 6 to 6.5 per cent increase, then 7 per cent and finally 8 per cent and, when bargaining was resumed, the granting of a 2 per cent supplement in order to guarantee all workers a minimum increase of 10 per cent over and above the pay they received in December 1991); the Government explained the restrictions by which it was bound, namely its international commitments and the need to apply austerity measures to curb inflation while, at the same time, not sacrificing the level of employment; finally, the Government had pointed out that this 8 per cent increase, accompanied by other advantages, implied an increase of 15.5 per cent in the wages bill.
10. 127. The Government is of the opinion that it did not infringe the principles of good faith in collective bargaining by issuing Decree No. 77-A/92 of 5 February 1992 because by this date, the bargaining was considered to have been over since 24 January; the meeting of 5 March must be considered as a resumption of bargaining or an additional round of bargaining. The Government adopted a final position taking into account its commitment to the Standing Council on Collective Bargaining.

C. The Committee's conclusions

1. 128. The Committee notes that in this case, the complainant organisation alleges that the Government infringed Articles 7 and 8 of Convention No. 151 and acted in bad faith during bargaining on wage increases and other social benefits in the public service in 1992, and that the disputes settlement machinery in the public sector, regulated under Decree No. 45-A/84, is not appropriate because it does not inspire the confidence of the parties involved.
2. 129. As regards the events preceding the collective dispute between the complainant and the Government over the increase of salaries and other social benefits in the public service, the Committee understands the train of events as follows. In December 1991, at the request of the CTE - the complainant organisation - collective bargaining on salary increases for 1992 began. The STE started by asking for a 12.5 per cent increase based on inflation estimates for 1992. The Government, relying on its international commitments towards the EEC and the necessary austerity measures it had to adopt to curb the budget deficit, proposed an increase of 6 per cent. On 24 January 1992, after the STE had lowered its demands for an increase from 12.5 to 12 per cent and the Government had proposed 8 per cent, the Government declared that it would not change its position any more. After a further offer by the STE on 29 January 1992, the Government, by virtue of Decree No. 77-A/92 of 5 February 1992, maintained its last offer and fixed the increase at 8 per cent. The Committee notes that neither the Government nor the complainant contest these facts.
3. 130. As concerns the events which occurred after 5 February 1992, the Committee notes that the versions of the complainant and the Government are contradictory. First of all, the complainant states that, following Decree No. 77-A/92 and in view of the fact that the Government had not replied to its proposal of 29 January, it requested, on 10 February 1992, that there be an additional round of bargaining in accordance with section 8 of Legislative Decree No. 45-A/84, in order to reach a settlement of the collective dispute between it and the Government. The Committee notes that, according to the allegations contained in the STE's communication dated 26 March 1992, the Government never replied to this request.
4. 131. The Committee notes that the Government, for its part, mentions that on 5 March 1992 a new meeting took place and was attended by various trade union organisations including the STE. At this meeting, the Government, through the Minister of Finance, informed the trade unions present that, on the basis of the agreement on salaries for 1992, the Government guaranteed all workers in the public service an increase of at least 10 per cent of the amount of pay received in December 1991 and explained that, if this increase could not be obtained by other means (promotion, in-service training, etc.) it would be granted to reach worker in the form of a supplementary pay of 2 per cent in addition to the increase guaranteed under Decree No. 77-A/92. The Committee notes that the Government stated that the STE's only reaction to this announcement was to ask the Government about the nature of this supplementary pay.
5. 132. The Committee also notes that the Government considers that the issuing of Decree No. 77-A/92 of 5 February marks the end of the collective bargaining process considered closed as from 24 January 1992 and that the 5 March 1992 meeting was a resumption of collective bargaining or an additional round of collective bargaining.
6. 133. Having noted all this information, the Committee observes at the outset that the right to collective bargaining of public servants, with the exception of the armed forces, is recognised by Legislative Decree No. 45-A/84 of 3 February 1984 and that this Decree also provides for an additional round of collective bargaining in order to settle differences arising during bargaining on employment conditions. The outcome reached, either through bargaining in the strict sense of the term or through an additional round of bargaining, takes the form of a recommendation and in no way constitutes a collective agreement (sections 5 and 8).
7. 134. As regards the compliance of the Legislative Decree with Convention No. 151, the Committee feels bound to recall that under Article 8 of Convention No. 151: "the settlement of disputes arising in connection with the determination of terms and conditions of employment shall be sought, as may be appropriate to national conditions, through negotiation between the parties or through independent and impartial machinery, such as mediation, conciliation and arbitration, established in such a manner as to ensure the confidence of the parties involved". Whilst allowing a certain flexibility in the choice of machinery, this Article requires that the procedure chosen should ensure the confidence of the parties involved. The Committee shares the opinion of the Committee of Experts on the Application of Conventions and Recommendations that the procedure provided under Legislative Decree No. 45-A/84 is in accordance with Convention No. 151, provided, however, that the parties maintain an attitude of good faith throughout the procedure.
8. 135. In the present case, it would seem that the Government, by announcing on 24 January 1992 that it would no longer change its last offer made in the negotiations, caused at least one trade union organisation (the complainant organisation STE) to lose confidence in the procedure followed. However, the Committee notes that, according to the Government's reply, a further meeting was held on 5 March 1992 during which further salary increases were granted. In the Committee's opinion, this is tantamount to an additional round of bargaining showing the Government's willingness to reach an agreement with the trade union organisations.
9. 136. The Committee also notes with interest that the Government backed the trade union's proposal to set up a higher advisory body of the administration and public service, composed of representatives of trade unions and the administration, and that the STE has been invited to appoint a representative to this body. In these circumstances, the Committee considers that this case does not call for further examination.