Definitive Report - REPORT_NO382, June 2017

1. 584. The complaint is contained in a communication dated 23 November 2015 from the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF) and the Independent Tobacco Workers’ Union (SAT). The SAT sent additional information in communications dated 14 January, 4 February and 4 May 2016.
2. 585. The Government sent its observations in a communication dated 26 July 2016.
3. 586. Uruguay 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), the Workers’ Representatives Convention, 1971 (No. 135), the Labour Relations (Public Service) Convention, 1978 (No. 151), and the Collective Bargaining Convention, 1981 (No. 154).

A. The complainants’ allegations

1. 587. In a communication dated 23 November 2015, the complainants allege that the absorption into the National Integrated Health System (SNIS) of tobacco workers who were covered by a special health insurance scheme under a collective agreement constitutes interference with the exercise of the right to bargain collectively and a violation of Convention No. 98. Specifically, they state that: (i) since 1961, the SAT has had a health insurance scheme pursuant to a collective agreement; (ii) not only does this scheme meet the legal requirements for health benefits, but many of its benefits are better than those required by law since the numerous medical services offered to tobacco workers are totally free of charge; (iii) through Act No. 18211 of 5 December 2007, the Uruguayan Government established the SNIS, mandated the absorption into this system of conventional emergency and insurance schemes and empowered the executive branch to accord the same treatment to workers covered by schemes established through collective agreements; (iv) in a decree of 8 January 2008, the executive branch ordered the absorption into the SNIS of workers covered by the collective agreement that had established the health service for tobacco workers; (v) by Decree No. 421/010 of 30 December 2010, the executive branch postponed this absorption until 1 January 2016; (vi) Act No. 18211 does not require the absorption of tobacco workers into the SNIS; section 69 thereof merely empowers the executive branch to undertake such absorption where expedient; (vii) the continued existence of private health-care entities that are not absorbed into the SNIS is not incompatible with the aforementioned Act’s goal of universal coverage, nor does it hinder the functioning of the integration scheme implemented pursuant to it; and (viii) the argument that it is expedient to absorb tobacco workers into the SNIS is invalid since the costs of their specific health-care system are fully covered by contributions from the industry’s employers.
2. 588. In communications dated 14 January, 4 February and 4 May 2016, the SAT, relying on the legal opinion of a noted Uruguayan professor of labour and social security law, maintains that: (i) the tobacco workers’ conventional health-care system is egalitarian for all workers in the industry, whether in service or retired; (ii) conventional health benefits have an obvious advantage in terms of tobacco workers’ conditions of employment and wages because they entitle the workers to excellent health benefits at no cost; (iii) by contrast, the SNIS requires workers to pay contributions and offers a lower standard of medical care; (iv) Decree No. 421/010 of 30 December 2010, which postponed the tobacco workers’ absorption into the SNIS until 1 January 2016, recognizes that health benefits established in a collective agreement are a form of wage; (v) absorption into the SNIS would therefore be seriously detrimental to tobacco workers in two ways: their health benefits would be of lower quality and their wages would be reduced in so far as they would have to cover a portion of their medical expenses; (vi) attempted tacit abolition of a more beneficial scheme resulting from collective bargaining constitutes an act of state interference since intervention by the legislative or administrative authorities that results in repeal or modification of the provisions of freely agreed collective agreements is contrary to the principle of voluntary collective bargaining; (vii) the law may not modify more advantageous working conditions in peius and respect for the favourability principle which is inherent in labour law, implies that this collective agreement takes precedence over health legislation; and (viii) an order from the executive branch that repeals a collective agreement has an impact on both the workers’ and the employers’ organizations which, through that agreement, established sound labour relations in a climate of social dialogue.
3. 589. In its communication of 4 February 2016, the SAT provides an additional document dated 29 January 2016, signed by the SAT and the Association of Tobacco and Cigarette Manufacturers and Importers (AFITyC), in which the parties: (i) recall that their collective agreement provides that workers shall receive free, comprehensive health benefits as part of their wages with the costs covered by the enterprises; (ii) reiterate their desire not to modify the provisions of the collective agreement and to cooperate actively in combating any attempt to violate it; and (iii) request the Ministry of Health to keep the current scheme in force.

B. The Government’s reply

1. 590. In a communication dated 26 July 2016, the Government denies that the absorption of tobacco workers into the SNIS constitutes interference with their exercise of freedom of association or their right to bargain collectively. It maintains that: (i) the protection of freedom of association has been one of the key elements of the Uruguayan Government’s labour policy over the past ten years; (ii) the right to social security is a fundamental human right that is enshrined in the principal international human rights instruments; (iii) since 2005, Uruguay has made significant progress in expanding social security coverage, increasing equity in financing and improving the quality of health benefits; (iv) these efforts have focused on the establishment of the SNIS, which ensures equitable, universal health coverage; (v) the SNIS is financed through a single public fund to which the State, public and private enterprises and all households that receive benefits under the system are required to contribute; (vi) Act No. 18131 of 18 May 2007 established the National Health Fund (FONASA) and began the gradual inclusion of various groups into the SNIS; (vii) Act No. 18211 of 5 December 2007 established the guiding principles of the SNIS, which include universal coverage, solidarity in public financing, effectiveness and efficiency in economic and social terms and sustainability in the allocation of resources to comprehensive health care; and (viii) section 61 of the Act provides that the State, non-state public entities and private enterprises shall contribute 5 per cent of the total wages that they pay their workers to FONASA.
2. 591. The Government adds that, as part of the process of achieving universal health coverage through the SNIS, the aforementioned Act No. 18211 calls for the absorption into that system of workers currently covered by various conventional emergency and insurance schemes and that this was in fact done on 1 July 2011. Furthermore, section 69 of the Act empowers the executive branch to accord similar treatment to workers with insurance schemes agreed with private-sector employers through collective agreements or similar instruments. Pursuant to that provision, the executive branch has gradually absorbed into the SNIS various groups in situations analogous to that of the tobacco workers, including, as from 1 January 2009, members of the Retirement and Pension Fund for Members of the Professions and, as from 1 January 2010, members of the Bank Workers’ Retirement and Pension Fund, who had previously had health insurance pursuant to collective agreements. Thus, the tobacco workers were among the last groups to be absorbed into the system.
3. 592. The Government also states that: (i) far from constituting an act of interference with freedom of association and collective bargaining, the absorption of tobacco workers is the outcome of one the most important public policies of the past decade – the consolidation of a universal health-care system financed through contributions from all of the country’s enterprises and workers – and is thus fully consistent with the Medical Care and Sickness Benefits Convention, 1969 (No. 130), which Uruguay ratified in 1973; (ii) the purpose of centralizing all affiliates under the SNIS is to eliminate the extreme fragmentation of Uruguay’s health care system, within which the social sectors with the greatest potential for organization and the highest wages had established their own subsystems; (iii) in order for the SNIS to be economically and financially sustainable, it is essential for it to be financed by society as a whole in a manner proportionate to enterprises’ and citizens’ capacity to contribute; and (iv) it is therefore inconceivable that a large industry such as tobacco, in which wages are significantly higher than the national average, should not be absorbed into a national health care system in order both to share in the benefits of its consolidation and to make an equitable contribution to its financing.
4. 593. Lastly, the Government states that if the tobacco workers consider that absorption into the SNIS entails a reduction in their current benefits, there is nothing to prevent them from agreeing with their employer, through collective bargaining, to keep their additional benefits and that through such bargaining they can have the same benefits as before, but on the basis of the SNIS.

C. The Committee’s conclusions

1. 594. The Committee notes that this case concerns allegations of government interference with the exercise of the right to bargain collectively by the SAT, which comprises tobacco workers who had their own health insurance scheme, established through a collective agreement, and have been absorbed into the SNIS by decree.
2. 595. The Committee takes note of the complainants’ specific allegations that: (i) on 30 April 2016, on the basis of Act No. 18211 (2007), the executive branch absorbed the tobacco industry’s workers into the SNIS; (ii) this absorption repealed the conventional health insurance scheme that those workers had had since 1961; (iii) the tobacco industry’s collective agreement (which was revised in 2005 and has been tacitly extended since then) provides for better health insurance and benefits than the legal scheme since, in particular, it has offered free, high-quality comprehensive health coverage to tobacco workers, both in service and retired; (iv) the absorption of tobacco workers into the SNIS violates the independence of the parties to collective bargaining in the industry and those workers have expressly requested the Government to keep their conventional health insurance scheme in force; (v) the aforementioned absorption is also contrary to the favourability principle in so far as it gives precedence to health-care legislation that is less beneficial than that provided under the collective agreement and entails a significant reduction in tobacco workers’ wages; and (vi) absorption into the SNIS is not an automatic and mandatory consequence of Act No. 18211 (2007), which established the SNIS, since section 69 of the Act merely empowers the Government to absorb groups that are covered under a special conventional health insurance scheme.
3. 596. The Committee also notes that, according to the Government: (i) since 2007, the SNIS has been the primary tool for achieving universal health coverage in Uruguay with a view to full implementation of ILO Convention No. 130. This will require eliminating the fragmentation of the country’s health-care system and ensuring that all of its workers and employers, including in industries with wages higher than the national average, contribute to the SNIS; (ii) it is therefore inconceivable that a large industry such as tobacco, in which wages are significantly higher than the national average, should not be absorbed into a national health care system; (iii) tobacco workers were one of the last groups to be absorbed as part of the unification of the national health system in question, after other groups that had also had a conventional health-care system in the past; and (iv) the absorption of tobacco workers into the SNIS does not prevent the industry’s workers and employers from agreeing, through a collective agreement, to keep health benefits over and above those required by law; thus, their absorption fully respects the right to bargain collectively.
4. 597. The Committee observes from the documents provided by both the complainants and the Government that the tobacco workers were absorbed into the SNIS through the following steps: (i) in 2007, the SNIS was established through Act No. 18211; (ii) in 2008, an initial decree ordered that the tobacco workers be absorbed into the system; (iii) a second decree, dated 30 December 2010, postponed the aforementioned absorption until 31 December 2015; (iv) Decree No. 109-016 postponed this absorption for a second and final time until 30 April 2016 so that the workers “can conclude the ongoing bargaining with the employers in order to reach agreement regarding the coverage of health-care costs for their group”; and (v) the absorption became effective on 30 April 2016.
5. 598. The Committee also observes that: (i) the tobacco industry’s collective agreement, which was signed in 1961, was revised in 1986 and again in 2005, when it was extended by decree; (ii) the agreement itself states that it shall remain in force for one year and shall be renewed automatically for one-year periods unless it is terminated by one of the parties; (iii) in 2014, the signatories to the collective agreement confirmed that the conventional health insurance scheme established therein remained in force and on 29 January 2016, they jointly requested the executive branch not to absorb the tobacco workers into the SNIS and to keep their conventional health insurance scheme in force; and (iv) furthermore, the SAT has appealed the absorption order before the administrative court and the court’s decision is pending.
6. 599. In light of the foregoing, the Committee observes that the tobacco workers’ absorption by decree into the SNIS as part of a policy leading to a universal, unified Uruguayan health system terminates the specific conventional health insurance scheme that has covered the tobacco workers since 1961. The Committee understands from the Government’s observations and the various documents appended to the complaint that the financial contribution to the financing of the national health-care system made by the industry’s employers and workers is an important element of this absorption. On this point, the Committee would like to recall firstly that it is not within the mandate of the Committee to examine the opportunity of the establishment of a universal health insurance scheme that includes all of the country’s workers, including those groups previously covered by a special conventional scheme. It falls however within the mandate of the Committee to ensure that such a scheme is implemented in a manner consistent with the principles of freedom of association and collective bargaining, as it has had occasion to do in cases involving the establishment of a universal old-age pension scheme [see 349th Report, Case No. 2434, para. 661].
7. 600. In that regard, while noting that the tobacco workers’ absorption into the SNIS resulted in the elimination of their special conventional health insurance scheme, thus modifying the content of their collective agreement (which, unless new conventional provisions on health care are adopted, would entail a reduction in benefits that constitute wages for these workers), the Committee observes that Uruguayan law allows employers’ and workers’ organizations to agree, through a collective agreement, on health benefits over and above those required by law. The Committee therefore points out that the establishment of the SNIS does not exclude health insurance from the scope of collective bargaining and that the tobacco workers’ absorption into the SNIS does not result in the automatic elimination of conventional health-care benefits in this industry. The Committee also observes that the tobacco workers’ actual absorption into the SNIS was postponed on two occasions through the adoption of special decrees, as a result of which it occurred eight years after the adoption of the initial decree ordering the change in the insurance scheme, so that the signatories to the tobacco industry’s collective agreement, which remains in force for one-year periods and is renewed automatically, could adapt the health-related provisions of and benefits under their collective agreement to the new legislative and institutional framework through negotiation. Under these circumstances, the Committee considers that this case does not call for further examination.