REPRESENTATION (article 24) - PARAGUAY - C026 - 1995

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 Paraguay of the Minimum Wage-Fixing Machinery Convention, 1928 (No. 26)

Decision

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

Complaint Procedure

1. I. Introduction
2. 1. By a letter dated 21 April 1994, the Latin American Central of Workers (CLAT) made a representation under article 24 of the ILO Constitution, alleging the non-observance by the Paraguayan Government of the Minimum Wage-Fixing Machinery Convention, 1928 (No. 26).
3. 2. The Minimum Wage-Fixing Machinery Convention, 1928 (No. 26) was ratified by Paraguay on 24 June 1964 and entered into force in accordance with Article 7, paragraph 2, of this Convention, one year later, i.e. on 24 June 1965.
4. 3. The relevant provisions of the Constitution of the International Labour Organization concerning the submission of representations are as follows:
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 procedure to be followed in case of representation is governed by the revised Standing Orders adopted by the Governing Body at its 212th Session (March 1980).
10. 5. In accordance with article 2, paragraph 1, of the Standing Orders, the Director General brought the representation before the Officers of the Governing Body.
11. 6. At its 261st Session (November 1994), 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. Antonio Ducreux (Government member, Panama, Chairperson), Mr. Walter Durling (Employer member), and Mr. Richard Falbr (Worker member).
12. 7. In accordance with article 4, paragraph 1, clauses (a) and (c), of the Standing Orders, the Committee invited the Government to make its observations on the representation by 28 February 1995.
13. 8. The Government transmitted its observations by letter dated 10 April 1995. The Committee met in Geneva on 6 November 1995 to examine the representation and the observations received.
14. II. Examination of the representation
15. 1. Allegations made by the Latin American Central of Workers (CLAT)
16. 9. The Latin American Central of Workers (CLAT) alleges that the Government of Paraguay has failed to secure the application of the Minimum Wage-Fixing Machinery Convention, 1928 (No. 26), especially as regards Article 3, paragraph 2(3), which provides that "minimum rates of wages which have been fixed shall be binding on the employers and workers concerned so as not to be subject to abatement by them by individual agreement, nor, except with general or particular authorization of the competent authority, by collective agreement". On the basis of certain incidents at the coffee-producing enterprise EXIMPORA S.A., the CLAT believes that in Paraguay there have been repeated failures to comply with the obligation to pay the minimum wage, which is an infringement of workers' rights.
17. 10. According to the representation, the following is a description of the facts in question: in December 1992, based on information communicated to the CLAT by the National Workers' Central of Paraguay (CNT), there was a collective dismissal of 200 workers, including trade union members, at the coffee-producing enterprise EXIMPORA S.A., located in the Cuero Fresco (Horqueta) area. These workers were allegedly replaced by Brazilian workers, who in general received wages lower than those normally paid in the country. In the opinion of the trade union, since then the enterprise has continued to maintain a policy of dismissal and other infringements which, in 1994, resulted in the dismissal of the secretary-general of the Workers' Union of EXIMPORA. At the same time, and by way of enforcing compliance with the judicial decision of dismissal, on 21 March 1994 the local judge ordered the eviction of the dismissed workers and their families from the living quarters located on the enterprise's property.
18. 11. As a consequence of these events, on 13 April 1994 three of the evicted workers began a hunger strike in front of the Ministry of Justice and Labour to protest against the judicial measures taken and to call for the payment of the minimum wages by EXIMPORA.
19. 12. Together with this communication and as evidence of EXIMPORA's failure to pay the minimum wages, the CLAT has included the March pay slip for Mr. Roque Jacinto Arego, with the corresponding amount for the month of 146,847 guaranies, whereby the legal minimum wage for this date is 300,000 guaranies (the official exchange rate for the same date is 1 US dollar = 1,800 guaranies). According to the Central, not only is this amount in violation of Article 3, paragraph 2(3), of Convention No. 26, it also fails to cover the workers' basic needs.
20. 2. Observations of the Government
21. 13. In its communication of 10 April 1995, the Government points out that Chapter II of the Labour Code in force contains specific regulations relating to the minimum wage. Not only does it provide the existence of this wage and define it, the Code also sets forth the methods for fixing the wage and conditions for modifying it based on economic circumstances and variations in the cost of living. The Government accordingly notes that section 252 of the Code calls for the creation of a tripartite National Minimum Wage Council, which so far has not taken place due to the failure, according to the Government's observations, of the Unique Workers' Central (CUT) and the National Workers' Central (CNT) to appoint representatives to the Council. Nevertheless, the Government points out that according to legal provisions (section 256 of the Labour Code), and in view of the rise in the cost of living (exceeding 10 per cent), under Decree 4598 of 11 July 1994 the minimum wage was increased taking into consideration the decrease in purchasing power.
22. 14. Based on the preceding observations, the Government considers that it has complied with the provisions of Article 1, paragraph 1, of Convention No. 26.
23. III. Conclusions of the Committee
24. 15. In its communication of 10 April 1995, the Government states that its actions do not infringe legal labour provisions in force in the country. The Committee recalls that it is not competent to judge on matters relating to the Government's compliance with national legislation, but that its duty is to examine the application of Convention No. 26, ratified by Paraguay, in terms of legislation as well as in practice. The following is an examination of the situation vis-à-vis the Convention.
25. 16. As set forth in Article 1, paragraph 1, the purpose of Convention No. 26 is "to create or maintain machinery whereby minimum rates of wages can be fixed for workers employed in certain of the trades ... in which no arrangements exist for the effective regulation of wages by collective agreement or otherwise and wages are exceptionally low", in other words, to avoid the payment of exceptionally low wages. In order to do so, it is not enough to adopt legislation to create a wage system; such a system must also effectively establish rates of wages which are applicable to the workers in question. (Endnote 1) To comply with this objective, Convention No. 26 provides the following:
26. (a) binding nature of the minimum rates of wages, which cannot be abated by individual agreement (Article 3, paragraph 2(3), of the Convention);
27. (b) application of a system of supervision and sanctions, to ensure that the minimum rates of wages are known and that wages are not paid at less than these rates (Article 4, paragraph 1);
28. (c) very worker who has been paid wages below the minimum is entitled to recover the amount underpaid, within a determined period (Article 4, paragraph 2).
29. All these obligations are of a supplementary nature, compliance with which will ensure that workers actually receive at least a minimum wage.
30. 17. In the present case, the CLAT presented a representation for failure to comply with Article 3, paragraph 2(3), of the Convention, which is intended to guarantee the right to receive "minimum rates of wages which have been fixed" and which are not subject to an individual agreement.
31. 18. Upon examination of national legislation in force, and as reflected in the observations by the Government communicated to the Committee, both the National Constitution and the Labour Code have provisions whereby the Convention can be fully applied. Article 92 of the Constitution provides that "the worker is entitled to remuneration that ensures him and his family a free and dignified existence. The law establishes a minimum and adjustable living wage ...". This right is directly laid down in sections 249 to 260 of the Labour Code, which not only establish every worker's right to the minimum wage (section 257) but also that "the fixing of a minimum wage automatically modifies those employment contracts wherein a lower wage has been stipulated", and that "any contractual clause fixing a wage beneath that of the legal minimum shall be null and void" (section 259). In relation to this guarantee, the same section states that "workers who have been paid a wage less than the minimum shall be entitled to recover the amount underpaid from the employer. The Labour Administrative Authority shall summarily set a deadline of not more than 30 days for payment of this difference". Along these same lines and without prejudice to other actions established in the Code (section 384), section 390 sanctions "employers who pay their workers less than the legal minimum wage, or that set forth in collective labour contracts, with a fine of 30 times the minimum daily wage for each worker thus affected, which shall be doubled for repeated infractions". Under Decree No. 3286 of 4 March 1964, the Labour Inspectorate was given the task of ensuring compliance with the conditions established in labour laws and regulations, as well as compliance with the obligations laid down in the Labour Code. The Inspectorate is therefore the supervisory body responsible for making investigations required to detect infringements and taking the proper measures vis-à-vis the Labour Administrative Authority (Department of Labour) to achieve due compliance.
32. 19. As can be deduced from the above-mentioned sections, the Committee concludes that domestic legislation establishes the obligations and creates machinery for ensuring compliance with the provisions of Convention No. 26, in particular as regards Article 3, paragraph 2(3), the object of the representation. The Committee considers that this is not a problem of legal provisions, or an incompatibility between national legislation and the provisions of the Convention, but instead, as inferred by the CLAT's representation, it involves a failure to comply in practice with the provisions of the Convention.
33. 20. In this connection, the CLAT's representation contains documentary proof of its allegation (pay slip attached to its report) that EXIMPORA S.A. has failed to comply with national minimum wage standards, which also means an infringement of the provisions of Article 3, paragraph 2(3), of Convention No. 26. The Committee notes that, from various studies on labour relations in Paraguay, (Endnote 2) made under the auspices of the ILO, it seems clear that the situation denounced by the CLAT is illustrative of widespread infringements observed in other enterprises.
34. 21. According to the above-mentioned studies, various analysts believe that only 42 per cent of subordinate workers earn the minimum wage or more, and consider Paraguay to be the only MERCOSUR country which views the minimum wage as a desired goal rather than an actual right. By the same token, the legal minimum wage and effective compliance with it has turned out to be one of the most controversial points in the framework of labour relations. Thus the object of several strikes taking place in 1994 was to press for compliance with this obligation. One example was the strike by civilian workers at the Arsenal de la Marina (Naval Dockyard) in 1994, which was the result of an accusation that workers were being paid only 180,000 to 200,000 guaranies per month, that is 50 per cent of the official minimum wage in effect. (Endnote 3)
35. 22. On the basis of the foregoing information, the Committee considers that Article 3, paragraph 2(3), and Article 4 of Convention No. 26 have not been applied, since the minimum rates of wages fixed by law have been lowered by unilateral decision, and the procedure of sanctions has not been applied, which calls for fines for failure to pay the minimum wage by virtue of section 390 of the Labour Code.
36. 23. In this sense, so as to rectify this situation and in relation to the provisions of Article 3, paragraph 2(3), and Article 4 of Convention No. 26, the Committee urges the Government to take rapidly the necessary measures to ensure compliance with the prescribed obligations, and suggests that it effectively implement the measures established in its national legislation which, as regards supervision and sanctions, are in accordance with Article 4 of the Convention.
37. 24. Furthermore, as regards the Government's observations on this representation, with reference to the failure to establish the tripartite body provided for by law (the National Minimum Wage Council), in the light of the provisions of Article 3, paragraph 2, of Convention No. 26, the Committee urges the Government to ensure participation of worker and employer representatives in the fixing of minimum wages. The Committee considers that the actual creation of this Council as provided for by sections 252 and 253 of the Labour Code (Endnote 4) will not only facilitate the fixing of wage scales adapted to the current situation, but will also provide adequate information of the status of the minimum wage in the country.
38. 25. So as to verify progress made in achieving compliance with Convention No. 26, the Committee requests the Government to provide, in its next report on the application of the Convention, statistical and documental data relating to the compliance with this instrument. The Government should, in the same manner, indicate in its reports the measures taken at the national and sectorial level to ensure compliance with Article 3, paragraph 2(3), and Article 4 of the Convention.
39. IV. Recommendations of the Committee
40. 26. The Committee recommends that the Governing Body:
41. (a) approve the present report, and in particular the conclusions made in paragraphs 19 to 25, namely, that it has taken note of widespread non-observance of the obligation to pay workers the minimum wage, which infringes the provisions of the Minimum Wage-Fixing Machinery Convention, 1928 (No. 26);
42. (b) invite the Government of Paraguay, taking into account the conclusions given in paragraphs 23 to 25, to take the necessary measures:
43. (i) to ensure that pertinent legislation, in particular the provisions of the Labour Code relating to the minimum wages, be applied in accordance with machinery and procedures established in national legislation;
44. (ii) to ensure that national supervisory bodies responsible for monitoring compliance with minimum wage standards carry out their activities in accordance with national legislation;
45. (iii) to ensure that the Labour Administrative Authority take appropriate measures so that the difference should be paid to the workers who have been paid wages at less than the applicable minimum rates;
46. (c) invite the Government of Paraguay to include, in its reports submitted by virtue of article 22 of the Constitution regarding the application of Convention No. 26, full information on measures taken in accordance with the above-mentioned recommendations to ensure compliance with this Convention, so that the Committee of Experts on the Application of Conventions and Recommendations can continue the examination of the questions.
47. (d) declare the closure of the present procedure initiated as a result of this presentation.
48. Endnote 1
49. See Minimum wages: Wage-fixing machinery, application and supervision. Report of the Committee of Experts on the Application of Conventions and Recommendations, International Labour Conference, 79th Session, 1992, Report III (Part 4B), p. 19.
50. Endnote 2
51. viz., Chapter 1.3.1 of "El derecho laboral del Mercosur" ("Mercosur Labour Law"), Instituto de Derecho del Trabajo y Seguridad Social, Facultad de Derecho de la Universidad de la República, Montevideo, Uruguay, 1994. Published under the auspices and supervision of the RELASUR project. Also see the preliminary version of "Relaciones laborales en el Paraguay" ("Labour Relations in Paraguay"), prepared by RELASUR, pp. 9-10 and 200-202, relating to wages (mimeograph of the forthcoming publication).
52. Endnote 3
53. Informativo Laboral, No. 90, June 1994, p. 2.
54. Endnote 4
55. Section 253 of the Labour Code, among other provisions, authorizes the National Minimum Wage Council to ... (c) go as a body, or send delegated members, to any workplace to gather facts as it may see fit or deem necessary, and (d) grant public hearings so that interested parties can present their viewpoints, as well as being provided with the means of carrying out fact-finding investigations.