Definitive Report - REPORT_NO291, November 1993

1. 54. In communications dated 12 January and 11 March 1993, respectively, the Trade Union of State Technical Managerial Staff (STE) and the Trade Union Front of the Public Administration (FESAP) submitted a complaint of violation of freedom of association against the Government of Portugal. The STE sent additional information on 25 February 1993. The Government sent its observations on this case in a communication dated 14 September 1993.
2. 55. Portugal has ratified the Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87), the Right to Organize and Collective Bargaining Convention, 1949 (No. 98), and the Labour Relations (Public Service) Convention, 1978 (No. 151).

A. The complainant organizations' allegations

1. 56. In their communications dated 12 January and 11 March 1993 respectively, the Trade Union of State Technical Managerial Staff (STE) and the Trade Union Front of the Public Administration (FESAP) claim that the attitude adopted by the Portuguese Government during bargaining on the working conditions of public employees for 1993 contravene Articles 7 and 8 of Convention No. 151 on labour relations in the public service.
2. 57. The STE states that under sections 5, 6 and 7 of Legislative Decree No. 45-A/84 of 3 February 1983, it formally proposed to the Government, on 31 July 1992, to upgrade the wages for 1993 of employees in the public administration. The STE adds that it had received the Government's proposal on the same day and submitted a counter-proposal on 26 August 1992. The FESAP, for its part, points out that it also received the Government's proposal on 31 July 1992 and that it submitted a counter-proposal in accordance with the above-mentioned Legislative Decree on 17 September 1992. According to the complainant organizations, bargaining only officially started on 13 October 1992 as the Government had pointed out during a meeting on 28 July 1992 with the Minister of Finance that "the date scheduled for the opening of talks is justified by the need to go more deeply into the bargaining".
3. 58. During the actual bargaining, which began on 13 October and continued on 10 and 15 December 1992, the Government, according to the trade union organizations, did not change its initial proposal or seek to reach a possible agreement through dialogue - in spite of actions carried out by public employees and the fact that the complainant organizations had always been willing to negotiate; what is more, the Government, during two meetings on 28 July and 28 October 1992, attended by the Minister of Finance, had presented the outline of its economic policy and budget for 1993.
4. 59. More specifically, the complainant organizations allege that during the meetings held on 10 and 15 December 1992 the Government would only discuss the upgrading of wages and refused to examine other matters of a financial nature - which, however, were contained in its initial proposal. Furthermore, the Government ended the bargaining process on 15 December 1992 and published, on 18 December, in the Official Gazette, Ministerial Order No. 1164-A/92 concerning the annual wage review of public administration employees. This text was only allegedly distributed on 21 and 24 December 1992.
5. 60. Having seen how difficult it was to reach an agreement, the complainant organizations requested on 21 December 1992 an additional round of bargaining, in accordance with section 8 of Legislative Decree No. 45-A/84 which stipulates that disputes arising during collective bargaining may be settled, at the request of trade union associations, during an additional round of bargaining. This bargaining is subject to the Government's approval of the grounds for the request; it must not exceed 20 days and aim at reaching an agreement. The consensus reached takes the form of a recommendation. The complainant organizations state that they wanted the Government, during the additional round of bargaining, to stipulate the exact rate of wage increases it had decided upon and to negotiate the other financial issues which had never been discussed - although they were contained in its initial proposal (review of daily foreign travel allowances and increase in pensions to keep up with the cost of living).
6. 61. The complainant organizations accuse the Government of having infringed Articles 7 and 8 of Convention No. 151 because it did not comply with their request for an additional round of bargaining in accordance with the provisions of Legislative Decree No. 45-A/84 which, in Portuguese law, regulates the right to collective bargaining of public administration employees. They also consider that the Government acted in such an arbitrary way that confidence no longer reigns during bargaining and that the letter and the spirit of section 8 of Legislative Decree No. 45-A/84 are not in accordance with the provisions of Convention No. 151 in so far as the disputes settlement machinery contained in the above-mentioned section does not inspire confidence; consequently, it fails to allow the Portuguese State and representative trade unions of public employees to overcome effectively and peacefully any differences arising during bargaining. They are of the opinion that this provision should be amended.
7. 62. In a communication dated 25 February 1992, the STE states that, on the same day, it attended a meeting with the Deputy Secretary of State responsible for the Budget on the present situation of the Portuguese public administration. It stresses that this meeting may in no way be construed as a response on the part of the Government to the trade unions' request for an additional round of bargaining, made on 21 December 1992.

B. The Government's reply

1. 63. In its reply of 14 September 1993, the Government starts by stressing that when it met its bargaining partners on 28 July 1992 before submitting its proposal, it made a point of explaining to them - having first insisted on the importance of establishing a climate of confidence - that the bargaining for 1993 should, in the same way as the previous year, take specific account of the preparations for and adoption of the state budget; this was necessary since the curbing of inflation in 1993 would mainly depend upon budgetary policy, in particular measures emphasizing public investment and the reduction of running expenses within the ministries. During this meeting, the Minister of Finance replied to all the questions put to him by the social partners; the FESAP, according to the Government, underlined the goodwill and spirit of collaboration shown by the Government.
2. 64. The Government states that it then started the bargaining process on 31 July 1992 by submitting its proposals concerning the upgrading of wages and social benefits for 1993 and the change of certain parts of the legal system regulating the public service - a process which had to end before the approval of the state budget by the Council of Ministers. These proposals confirmed what the Government had announced at its 28 July meeting. At the meeting held on 13 October 1992, the Deputy Secretary of State responsible for the Budget explained that the Government had not replied to the complainant organizations' counter-proposals because it had considered them so far removed from its own proposals that it believed it should first meet the trade unions once again to try and reconcile the different positions. The Government adds that it is difficult to understand the reservations of the STE and the FESAP concerning the date established for the first round of bargaining, given that these organizations only replied to the Government's proposal submitted to them on 31 July 1992 on 26 August and 17 September, respectively.
3. 65. With a view to bringing the positions closer together and clarifying its own, the Government called a meeting on 28 October 1992, during which the Minister of Finance explained the major outlines of the proposed budgetary legislation and asked the trade unions to take this into account when weighing up the Government's proposal. According to the Government, the Minister pointed out that the proposals should be in line with those submitted to the Council of Social Dialogue and bear in mind the objectives established for inflation; however, the figures proposed by the trade unions failed to take account whatsoever of these objectives. It also asked the trade union organizations to appoint representatives to set up a working group to discuss measures of restructuring of the public administration. Concerning wages, the Government once again pointed out that the trade unions' proposals were so far removed from its own, that any counter-proposal it might propose would be superfluous.
4. 66. During the meeting of 10 December 1992 between the trade union federations and the Deputy Secretary of State responsible for the Budget, the latter noted that the trade unions had not adjusted their wage claims (a 10-12 per cent increase) to the margin of increase (4.5-5.5 per cent increase) proposed by the Government, as she had asked them to do at the last meeting; the Deputy Secretary of State therefore decided to adjourn talks to be able to take account of developments in discussions on income policy taking place in the Council of Social Dialogue. As she noted that the trade unions failed to come forward with any other proposal that might bring the positions closer together, she saw no reason to amend substantially the Government's offer; the latter nevertheless decided to increase its proposal to 5-5.5 per cent, thus showing its willingness to have a dialogue. She stated that this official counter-proposal was the only reasonable and viable option.
5. 67. Having convened the trade union organizations on 15 December 1992 to voice their opinion on this counter-proposal, the Deputy Secretary of State of the Public Service stressed that although the adoption - now imminent - of the state budget for 1993 had somewhat slowed down wage negotiations, this did not prevent the social partners from continuing their discussions on all the other issues. According to the Government, these discussions took place in February and March 1993. As far as the wage negotiations are concerned, the Government points out that, in view of the discussions that had already taken place and the positions expressed by the trade unions and the failure of bargaining to reconcile the divergent positions, it decided that the only solution was to accept the impossibility of reaching an agreement in this area. The Secretary of State therefore considered that as far as wages were concerned, the talks were over but that this did not apply to other questions pending which could be discussed at a later meeting.
6. 68. The Government considers that bargaining on wages for 1993 was conducted in accordance with Legislative Decree No. 45-A/84, since, as provided for under section 7, the parties had submitted their duly established proposals. Furthermore, a schedule for talks had been established, various meetings had been held to try, through dialogue, to reach an agreement, and the parties had had the opportunity of submitting and backing up their proposals and counter-proposals. In its opinion, Ministerial Order No. 1164-A/92 of 18 December represents the outcome of the whole round of bargaining; indeed, the Government issued this Order after fully informing the trade union organizations that it contained the maximum wage increases it could propose in line with financial policy objectives.
7. 69. As regards the complainant organizations' request for a further round of bargaining, the Government explains that it can comply with this request if it is justified. However, in this case, the request did not contain any new factor leading to believe that such talks might be useful, given that it was impossible for the Government to change its most recent proposal - as it had stressed on many occasions. What is more, the continuing discrepancy between the Government's proposal and that of the trade unions made it clear that any hope of reaching an agreement was bound to fail.
8. 70. As regards the conformity of Portuguese legislation with Convention No. 151, the Government points out once again that Legislative Decree No. 45-A/84, in particular its section 8, had been drawn up with a view to respecting the international commitment that Portugal entered into when ratifying this Convention. It adds that the Committee of Experts for the Application of Conventions and Recommendations, when it examined this text, did not make any comment which might be interpreted that section 8 was not in accordance with the Convention because it provides that the opening of a further round of bargaining is contingent upon the Government's consent.
9. 71. Finally, the Government points out that the issues which remained pending in the discussions not covered by Order No. 1164-A/92 of 18 December were later examined during meetings convened by the Government with the trade unions on 25 February and 24 May 1993.

C. The Committee's conclusions

1. 72. The Committee notes that the allegations in this case concern the infringement by the Government of Articles 7 and 8 of Convention No. 151 as it allegedly acted in bad faith during bargaining in 1992 on the upgrading of the working conditions of public service employees for 1993; they also concern the failure of the disputes settlement procedure in the public sector - regulated under Legislative Decree No. 45-A/84 - to comply with the requirements l`id down in the above-mentioned Convention, since this procedure allegedly does not inspire the confidence of the parties involved.
2. 73. As regards the events leading up to the collective dispute between the complainant organizations and the Government which centres on the increase of wages and other social benefits in the public sector, the Committee believes that they might be summarized as follows. Following a proposal concerning the upgrading for 1993 of working conditions in the public administration, submitted by the complainant organizations in accordance with Legislative Decree No. 45-A/84, and the Government's proposal submitted on 31 July 1992, the STE and FESAP submitted a counter-proposal to the Government (that of the STE on 26 August and that of the FESAP on 17 September 1992). The Committee notes that bargaining in the strict sense of the term began on 13 October 1992 and continued on 10 and 15 December 1992.
3. 74. The Committee also observes that two other meetings were held with the complainant organizations on 28 July and 28 October 1992 and that, at these meetings, the Minister of Finance explained the broad outlines of the economic and budgetary policy for 1993. The Committee notes that the Government points out that these meetings were necessary in order to try and reconcile the different positions and to explain more clearly the proposal of the Government which had insisted on numerous occasions that bargaining for 1993 should take specific account of the preparations for and adoption of the state budget, given that the curbing of inflation in 1993 was mainly contingent upon the budgetary policy - in particular upon measures emphasizing public investment and the reduction of running expenses within the ministeries.
4. 75. The Committee notes that the complainant organizations allege that the Government never wished to change its initial position and that it only wanted to discuss the upgrading of wages and overlooked the other issues contained in its initial proposal; that it finally decided, on 15 December 1992, to break off wage negotiations; and that it adopted on 18 December 1992 Ministerial Order No. 1164-A/92 concerning the annual review of salaries of officials and employees in the public administration.
5. 76. The Committee also notes that, on 21 December 1992, the complainant organizations requested, following Ministerial Order of 18 December, the opening of a further round of talks in accordance with section 8 of Legislative Decree No. 45-A/84. The Committee notes that the Government states it was unable to comply with this request because it contained no new factor leading to believe that such talks might be useful, given that it was impossible for the Government to change its most recent proposal - as it had stressed on many occasions; and because the discrepancy between the Government's proposal and that of the trade unions made it clear that there was no hope of reaching an agreement. For their part, the complainant organizations state that the Government acted in an arbitrary way in so far as the letter and the spirit of section 8 of Legislative Decree No. 45-A/84 are not in accordance with the provisions of Convention No. 151 as the disputes settlement machinery contained in this section does not inspire confidence and therefore fails to allow any differences arising during bargaining between the Portuguese State and the representative trade unions of public employees to be overcome effectively and peacefully.
6. 77. As concerns the compliance of Legislative Decree No. 45-A/84 with Convention No. 151 - which the Committee has already had the occasion of examining (see 239th Report, Case No. 1315, paras. 77 and 78, and 284th Report, Case No. 1635, paras. 133 and 134) - the Committee reiterates that it considers, in the same way as the Committee of Experts on the Application of Conventions and Recommendations, that the procedure provided for by this Legislative Decree complies with Convention No. 151 as long as the parties maintain an attitude of good faith during the procedure.
7. 78. In this case, it would seem that the Government, by announcing on 15 December 1992 that it considered that bargaining on the upgrading of salaries in the public service was over, provoked a lack of confidence of the complainant trade union organizations in the procedure that was followed. The Committee nevertheless feels bound to point out some factors which it considers important in the examination of this case: (i) during bargaining, the Government convened the trade union organizations on several occasions to explain the reasons why it could not change its position and urged them to change their own positions; (ii) on 10 December 1992, the Government increased its proposal in order to show its willingness to have a dialogue; (iii) the trade union organizations were invited to appoint representatives to set up a working group to discuss measures of restructuring of the public administration; (iv) Ministerial Order of 18 December 1992 only ruled on one of the issues being negotiated (the upgrading of salaries for 1993) upon which the Government, given the constraints placed upon it because of its fight against inflation, was not able to change further its position; (v) the other questions were dealt with during subsequent talks; (vi) the Government's refusal to open a further round of bargaining only concerned the upgrading of salaries; and (vii) the complainant organizations themselves, once they had changed their initial proposal, maintained this proposal. In the Committee's opinion, all these factors show the Government's will to reach an agreement and do not prove that it acted in bad faith.
8. 79. Furthermore, the Committee would like to recall, in the light of the Government's statement that it had published Ministerial Order No. 1164-A/92 of 18 December after having fully informed the trade union organizations that its proposals for wage increases were the maximum it could offer in line with financial policy objectives, the following principle, formulated by the Committee of Experts (see Report III (Part 4A), 1989 and 1991, pp. 469 and 465 respectively) and taken up by the Committee (see 287th Report, Case No. 1617 (Ecuador), para. 64): "the Committee considers that in so far as the income of public enterprises and bodies depends on state budgets, it would not be objectionable - after wide discussion and consultation between the concerned employers' and employees' organizations in a system having the confidence of the parties - for wages ceilings to be fixed in state budgetary laws, and that neither would it be a matter for criticism that the Ministry of Finance prepare a report prior to the commencement of collective bargaining with a view to ensuring respect of such ceilings".
9. 80. In the light of the conclusions it has just put forward, the Committee considers that this case does not call for further examination.