REPRESENTATION (article 24) - COSTA RICA - C122 - 1996

Report of the Committee set up to examine the representation made by the Latin American Central of Workers (CLAT) under article 24 of the ILO Constitution, alleging non-observance by Costa Rica of the Employment Policy Convention, 1964 (No. 122)

Decision

1. The Governing Body adopted the report of the tripartite committee. Procedure closed.

Complaint Procedure

1. I. Introduction
2. 1. By a communication dated 24 September 1994 the Latin American Central of Workers (CLAT) made a representation under article 24 of the ILO Constitution to the Director-General of the ILO alleging non-observance by Costa Rica of the Employment Policy Convention, 1964 (No. 122).
3. 2. The Employment Policy Convention, 1964 (No. 122), was ratified by Costa Rica on 27 January 1966 and remains in force for that country.
4. 3. The ILO Constitution makes the following provisions for the submission of representations:
5. Article 24
6. In the event of any representation being made to the International Labour Office by an industrial association of employers or of workers that any of the Members has failed to secure in any respect the effective observance within its jurisdiction of any Convention to which it is a party, the Governing Body may communicate this representation to the government against which it is made, and may invite that government to make such statement on the subject as it may think fit.
7. Article 25
8. If no statement is received within a reasonable time from the government in question, or if the statement when received is not deemed to be satisfactory by the Governing Body, the latter shall have the right to publish the representation and the statement, if any, made in reply to it.
9. 4. The revised Standing Orders adopted by the Governing Body at its 212th (March 1980) Session govern the procedure to be applied to representations.
10. 5. In accordance with articles 1 and 2 of the Standing Orders, the Director-General acknowledged receipt of the representation, informed the Government of Costa Rica thereof and brought it before the Officers of the Governing Body.
11. 6. At its 261st (November 1994) Session, the Governing Body, on the recommendation of its Officers, decided that the representation was receivable and set up a committee to examine it, composed of Mr. F. Rosales Argüello (Government member, Nicaragua, Chairman), Mr. W. Durling (Employer member, Panama) and Mr. O. Martines Bargas (Worker member, Brazil).
12. 7. The CLAT sent additional information in a communication dated 22 November 1994, a copy of which was sent to the Government, which was invited to submit its observations on all the allegations before 28 February 1995.
13. 8. The Committee held its first meeting in Geneva on 5 April 1995. As it had received no response to its invitation, it decided to accord the Government an extension to communicate its observations.
14. 9. The Government submitted its observations in a communication dated 9 June 1995.
15. 10. The Committee held its second meeting in Geneva on 10 November 1995. It noted that the Government had replied to the initial allegations but not to the additional information submitted by the CLAT, and it therefore decided to grant the Government a further extension to enable it to communicate its observations on all the allegations.
16. 11. The Government submitted its observations in a communication dated 20 November 1995.
17. 12. The CLAT sent further additional information in a communication dated 26 January 1996, a copy of which was sent to the Government, which was invited to submit its observations.
18. 13. The Government submitted its observations in a communication dated 21 February 1996.
19. 14. The Committee met in Geneva on 14 June 1996 to discuss and adopt this report.
20. II. Examination of the representation
21. 1. Allegations of the complainant organization
22. 15. In its communication dated 24 September 1994, the CLAT alleged that the dismissals of public sector workers, both those that had occurred in August and September 1994 and those that were imminent, constituted an infringement of Article 1 of Convention No. 122. The Organization stated that the Government had dismissed 420 workers from the National Customs Service, citing the need to put an end to the corruption in that service, while proposing however that the affected workers set up self-managing customs enterprises; that 1,700 workers of the Banco Anglo-Costarricense had lost their jobs without the established procedure being followed and that they had been pressured to resign by the Minister of Labour; that 460 workers in the National Production Council were facing dismissal as part of a staff restructuring plan, and that the Ministry of Agriculture and Livestock Farming was facing a similar situation. The complainant organization requested guarantees that the dismissed workers would be reinstated, and that the right to work and the active participation of workers in decisions relating to the settlement of those disputes would be observed.
23. 16. In its additional communication dated 22 November 1994, the CLAT considered that the wave of widespread dismissals throughout the public service had aggravated the employment situation. A plan to radically reduce public sector employment had resulted in the removal from office of 255 National Production Council officials and the dismissal of 588 workers at the Ministry of Agriculture and Livestock Farming, 100 workers at the Ministry of Resources, Energy and Mines and 317 workers at the Costa Rican oil refinery. The organization professed to hold information showing that the Government's aim was to dismiss a total of 25,000 public officials in compliance with the third structural adjustment programme that it was currently implementing. The institutions targeted in the staff reduction plans were the Bank for Housing Loans, the Joint Social Assistance Institute, the National Scientific and Technological Research Council and the Institute for Municipal Advancement and Assistance.
24. 17. The complainant organization considered the dismissals already implemented and those scheduled by the Government in the framework of its state restructuring plan to be in contravention of the provisions of Article 1 of the Convention, given that the dismissal of thousands of workers could not "stimulate economic growth and development" or "raise levels of living". Instead of "promoting full, productive and freely chosen employment" with a view to "overcoming unemployment and underemployment", the measures being taken by the authorities were resulting in unemployment and zero productivity for dismissed workers, for whom it was virtually impossible to find alternative employment given the labour market's very low absorption capacity. In the absence of any support programmes to facilitate their reintegration into the labour market, thousands of public sector workers had found themselves marginalized and virtually condemned to unemployment.
25. 18. The CLAT specified that the sector most affected by the restructuring process was agriculture and livestock farming and that in spite of the efforts made by the Front of the workers' organizations of the agriculture and livestock farming sector (FOLSA), and by other organizations, to reach a democratic solution, workers from that sector had been excluded from the bargaining process. The CLAT referred to a letter dated 24 October 1994 sent by the FOLSA to the President of the Republic calling for true worker participation in developing an agriculture and livestock farming policy, and in restructuring the relevant institutions. The letter also inquired whether any provision had been made for organizations representing workers and users to be directly involved in the process, and whether the social, political and economic impact of the measures had been taken into consideration.
26. 19. In a further additional communication dated 26 January 1996, the CLAT informed that in accordance with the project for the structural and operation modernization of the Institute of Agrarian Development (IDA), adopted on 10 October 1995, 92 workers had been dismissed on 2 January 1996, including the secretary-general of IDA's employees' union (UNEIDA). The Agrarian Front of Welfare Organizations (FAOS) had presented counterproposals, but its right to bargain and to participate in the reform process was denied. In addition, to satisfy government demands the Costa Rican Electricity Institute (ICE) had not renewed 275 short-term employment contracts, and aimed to gradually phase out the 1,728 employees working under that type of contract.
27. 2. Government declarations
28. 20. In a communication dated 9 June 1995, the Government stated that the measures employed in the restructuring of the National Customs Service and the National Production Council, and also in connection with the dismissal and resignations of workers at the Banco Anglo-Costarricense (who enjoyed public sector guarantees of stability) were in keeping with legislation and did not undermine officials' rights. The Government cited constitutional, legal and regulatory provisions governing the employment relationship in the public service, which authorized the State to dismiss public servants in the event of insufficient resources or in order better to organize the services provided, and which stipulated the procedures to be applied in those cases (the prior decision of the Public Service Court and compensation for the dismissed officials). (Endnote 1) The stabilization of public finances was one of the conditions of its structural adjustment programme that the country had to comply with in order to receive funds to enhance social development, to boost employment creation in the private sector and to encourage medium-term economic growth. The need to reduce public spending and to provide the best possible services at the lowest possible cost had necessitated structural and organizational changes throughout the public service. The National Customs Service had been restructured and new customs legislation had been promulgated permitting improved monitoring and greater efficiency. The restructuring had caused the elimination of a number of jobs, but the relevant legal procedures had been respected and workers' rights had not been undermined. Regarding the National Production Council, the allegations related in fact to possible administrative action the Government might choose to take and not to any concrete decisions. As for the Banco Anglo-Costarricense, it had registered losses equivalent to several times its capital and the Legislative Assembly was to hand down its opinion on the Bill to reform the financial system, which included a provision for the dissolution of that bank. In the meantime, an agreement had been concluded on 23 September 1994 between the acting director and the bank's union, with the arbitration of the Minister of Labour and Social Security, granting staff the same benefits as those to which public servants were entitled under the civil service regulations. Furthermore, Decree No. 26963-T of 30 September 1994 provided that employees of the Banco Anglo-Costarricense who had resigned or been dismissed had the right to be re-employed in the public sector during their period of compensation, and the length of service they had accumulated at the bank would be transferred to their new post. Everything possible was being done to enable them to find employment in either public entities or private companies.
29. 21. In its communication dated 20 November 1995, the Government held that the CLAT's additional allegations were entirely unfounded, both in fact and in law, and provided its own data on the number of "voluntary departures" and "forced departures" that had occurred in some public establishments. (Endnote 2) The complainant organization had wrongly implied that the Government's aim was to eliminate 25,000 jobs; that had been the aim of the former presidency. The current presidency had a different policy and had persuaded the World Bank to lift that initial condition imposed under the structural adjustment programme. The more realistic aim agreed upon with the International Monetary Fund took into account the economy's absorption capacity; 5,000 of a total of 150,000 public posts were to be eliminated, i.e. a reduction of less than 3.4 per cent. The Government also emphasized that the aim of the state reform project was not to reduce employment, but instead to improve public services.
30. 22. In the Government's opinion, the allegations that Article 1 of the Convention had been infringed and the claim that no measures had been taken to facilitate the reintegration of public sector workers into the labour force should be disregarded. The Programme of Reintegration in Employment (PREL) made public on 26 June 1995 aspired to the same objectives as those outlined in Article 1 of the Convention. It fell clearly within the scope of the "general and selective measures" recommended in the Employment Policy Recommendation, 1964 (No. 122), to combat the recession, inflation and other imbalances (Paragraph 11 of the Recommendation), to prevent the appearance and spread of unemployment and underemployment arising from structural changes, and to encourage and facilitate the adaptation of employment to such changes (Paragraph 13). The Government believed that the job placement and vocational training opportunities provided in that programme, which it described, were in line with the measures provided for in Paragraph 14 of the Recommendation. The Government also enclosed the retraining programme for displaced workers (PROFOREM), dated October 1995, applied by the National Apprenticeship Institute.
31. 23. On a more general note, the Government stressed that the Convention did not specially provide for public employment. In its view, the primary objective of a policy to promote full, productive and freely chosen employment should be to correct the budgetary imbalances responsible for high interest rates. Trimming the cost of services provided by the State had meant staff cuts in some establishments, but there had been no reduction in the quality or scope of those services. Indeed, some fundamental welfare programmes had been expanded, such as those relating to education, health and safety.
32. 24. Lastly, the allegation of lack of worker participation in the restructuring process was not relevant any more, both in respect of the agriculture and livestock farming sector and the State in general, as demonstrated by the agreement concluded with the FOLSA on 27 October 1994 establishing a bipartite committee, the partial agreement of 5 December 1994, and also the agreements reached within the high-level committee. Further agreements had been concluded with the workers in the various institutions undergoing restructuring, such as the Banco Anglo-Costarricense.
33. 25. In response to the most recent allegations of the CLAT, the Government emphasized that the modernization project of the Institute of Agrarian Development was adopted following discussions with concerned organizations as provided for in the 17 April 1995 Agreement. The employment terminations at IDA were carried out pursuant to the applicable law, as was confirmed by the Supreme Court of Justice in its decision of 10 January 1996: the trade union leaders found themselves affected by the modernization project entirely on the basis of objective and technical criteria. Nevertheless, the Minister of Labour and Social Security intervened as a mediator when the National Federation of Public Service Workers asked that the dismissals be cancelled. With regard to the Electricity Institute of Costa Rica (ICE), these were not dismissals but were non-renewals of fixed-term contracts upon their expiry. In addition, the workers concerned can avail themselves of the provisions of Act No. 7404 on limited liability companies of workers, the purpose of which is to transfer to the private sector auxiliary activities that are not inherent to the public service nature of the Institution.
34. 3. The Committee's conclusions
35. 26. The Committee notes that a number of jobs have been eliminated in public services and establishments. While relatively few jobs have been affected, the cuts are part of an ongoing process to reduce public employment in the framework of public sector restructuring measures decided upon by the Government, which states that its aim is to cut 5,000 of a total of approximately 150,000 public posts.
36. 27. The jobs that have already been eliminated have led to either the dismissal or the negotiated resignation of the occupant. While noting the complainant organization's allegations and the Government's explanations as to the manner in which the jobs were suppressed, the Committee points out that the Convention does not include any provisions relating to the termination of the employment relationship, an issue which is dealt with in other international labour standards. (Endnote 3)
37. 28. Neither does the Convention include any provision obliging the Government to maintain or expand employment under its direct control. The Committee must however examine whether, and under which conditions, the implementation of a programme to reduce public employment is compatible with the obligation to declare and pursue, as a major goal, an active policy designed to promote full, productive and freely chosen employment (Article 1 of the Convention) and to decide on and keep under review the measures to be adopted to that end, within the framework of a coordinated economic and social policy (Article 2) and in consultation with the representatives of the persons affected (Article 3).
38. 29. The Government explains that public employment is being reduced in response to the need to balance public finances, an essential condition for economic growth and employment creation. The immediate suppression of a number of public posts is therefore reported as a part of a more long-term policy to promote employment throughout the economy. The Committee notes that to justify the priority given to restoring the budgetary balance, the Government refers to Paragraph 11(1) of Recommendation No. 122 which proposes, among other general short-term measures to take in the framework of employment policy, reducing, where appropriate, government current or investment expenditure. The Committee acknowledges these government declarations. It observes, however, that it does not have sufficient information to allow it to assess to what extent the restrictive budgetary policy currently being applied is actually part of "a coordinated economic and social policy" aimed at promoting employment "as a major goal". (Endnote 4)
39. 30. The Committee points out in this connection that, in its 1994 observation on the application of the Convention, the Committee of Experts on the Application of Conventions and Recommendations had recalled that it had for several years been requesting information relating to specific measures designed to compensate for restrictive macroeconomic policies and the reduction of the public sector, and had asked the Government to describe, in its next report under article 22 of the ILO Constitution, which procedures it had adopted to ensure that the effects of stabilization and structural adjustment programmes on employment were taken into account.
40. 31. The Committee notes the Government's description of employment and training measures to facilitate the reintegration of workers who have lost their public sector jobs into the private sector. It observes that the programmes described by the Government were adopted after the representation alleged that the lack of reintegration measures undermined the employment objectives contained in the Convention. The Committee duly notes that the Government recognizes the need for such measures, which it says are now implemented when redundancies occur.
41. 32. The Committee acknowledges the information provided on the procedures introduced, since the lodging of the representation, to involve the workers to be affected by public sector restructuring in relevant decisions. Recalling that the Committee of Experts on the Application of Conventions and Recommendations remarked in its 1994 observation that the Government's report did not mention any consultations held with representatives of the affected persons as required under Article 3 of the Convention, the Committee trusts that the Government will ensure the full application of this fundamental provision of the Convention which takes on particular importance in a climate of structural reform.
42. 33. On the basis of the above findings, the Committee is of the view that to respect fully its obligations under the Convention the Government must ensure that its programme to reduce public employment is compatible with a policy to promote overall employment, in particular by implementing effective compensatory measures and by involving the representatives of the persons affected in relevant decisions.
43. III. The Committee's recommendations
44. 34. The Committee recommends that the Governing Body should:
45. (a) approve this report;
46. (b) invite the Government to provide, in its next report under article 22 of the Constitution, comprehensive information on the application of the Convention, and to clarify in particular:
47. (i) the effect on employment, either recorded or anticipated, of the macroeconomic policies implemented as part of the structural adjustment programme to reduce public spending;
48. (ii) the number of workers affected by the programme to reduce public employment, the measures taken to facilitate their reintegration into the private sector and the results achieved;
49. (iii) the manner in which the representatives of the persons affected by the measures to be taken, and in particular employers' and workers' representatives, are consulted about employment policies;
50. to enable the Committee on the application of Conventions and Recommendations to continue its examination of these issues;
51. (c) declare the closure of the procedure initiated before the Governing Body as a result of the representation made by the Latin American Central of Workers (CLAT).
52. Endnote 1
53. Articles 191 and 192 of the Constitution; section 47 of the Public Services Act, No. 1581 of 30 May 1953; section 27 of the Executive Decree regulating the Public Service, No. 21 of 14 December 1954.
54. Endnote 2
55. The figures provided by the Government are as follows:
56. Voluntary Forced
57. departures departures
58. Ministry of Agriculture and
59. Livestock Farming 37 451 (a)
60. Ministry of Natural Resources,
61. Energy and Mines 141 23
62. National Production Council 87 259
63. National Commission for Emergencies 54 51
64. Costa Rican Railway Institute 362 800 (b)
65. Bank for Housing Loans 64 0
66. Joint Social Assistance Institute 57 0
67. National Scientific and
68. Technological Research Council 15 0
69. Institute for Municipal Advancement
70. and Assistance 27 0
71. Costa Rican Oil Refinery 62 0
72. (a) The agreement concluded with the FOLSA gave employees the opportunity to be included on the list of suppressed jobs if they wished; the actual number of forced departures is 69.
73. (b) Following the railway's ceasing of operations.
74. Endnote 3
75. With regard to the specific question of dismissal of responsible persons in trade unions, the Committee was informed that it had been brought to the attention of the Government in the framework of freedom of association procedures.
76. Endnote 4
77. The Committee draws the Government's attention to the Employment Policy (Supplementary Provisions) Recommendation, 1984 (No. 169), Paragraph 6 of which provides that economic and financial policies should reflect the priority to be attached to employment goals.