REPRESENTATION (article 24) - CHILE - C035, C037 - 1999

Report of the Committee set up to examine the Representation alleging non-observance by Chile of the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35) and the Invalidity Insurance (Industry, etc.) Convention, 1933 (No. 37) submitted under article 24 of the ILO Constitution by the College of Teachers of Chile A.G.

Decision

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

Complaint Procedure

1. 1. By a communication dated 14 November 1997, the College of Teachers of Chile A.G., an affiliate of the Single Central Organization of Chilean Workers (CUT), referring to article 24 of the ILO Constitution, made a representation to the International Labour Office alleging that the Government of Chile has failed to secure the observance of the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35), and the Invalidity Insurance (Industry, etc.) Convention, 1933 (No. 37).
2. 2. The representation concerns two Conventions ratified by Chile and in force for that country.(Endnote 1)
3. 3. The provisions of the ILO Constitution relating to the submission of representations are as follows:
4. Article 24
5. 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.
6. Article 25
7. 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.
8. 4. The procedure to be followed for the examination of representations is governed by the revised Standing Orders adopted by the Governing Body at its 212th Session in March 1980 .(Endnote 2)
9. 5. In accordance with articles 1 and 2 of the Standing Orders, the Director-General acknowledged receipt of the representation, informed the Government of Venezuela thereof and brought it before the Officers of the Governing Body.
10. 6. At its 271st Session (March 1998), on the recommendation of its Officers, the Governing Body decided that the representation was receivable.(Endnote 3) It set up a committee to examine it, composed of Mr. J.M. I iguez (Government member, Argentina), Chairman, Mr. D. Funes de Rioja (Employer member, Argentina) and Mr. J.O. Miranda Oliveira (Worker member, Brazil).
11. 7. In accordance with paragraph 1 of article 4 of the Standing Orders, the Committee invited the Government to send its observations on the representation by 15 June 1998.
12. 8. The Single Central Organization of Chilean Workers (CUT) sent additional information concerning the representation presented by the College of Teachers A.G., in a communication dated 4 June 1998, a copy of which was transmitted to the Government.
13. 9. In communications dated 15 June 1998 and 28 October 1998, the Government sent its observations on the representation.
14. 10. The Committee met in Geneva for the first time in March 1998, then in November 1998, and lastly in March 1999 to adopt its report.
15. Examination of the representatrepresentation
16. A. Allegations
17. 11. In its communication the College of Teachers of Chile A.G. ("College of Teachers") alleges that the State of Chile is responsible for non-observance of ILO Conventions Nos. 35 and 37, affecting the rights of a substantial number of members of the organization.
18. 12. The complainant organization refers to the social security contributions of teachers which, according to the national legislation in force, are deducted from their gross remuneration and must be paid by the employer to the appropriate welfare institutions. It emphasizes that it is essential for employers to comply fully and on time with the obligation to pay contributions, if teachers are to be able to claim their social security benefits in full, in particular old-age and invalidity benefits.
19. 13. The complainant organization recalls that the administration and management of public education have been decentralized to the level of the municipalities or the bodies established by them (municipal corporations) which act as employers. It is the State at the central level which finances public education through the Ministry of Education, which regularly transfers the funds required for the functioning of the municipal public education system. This financing, expressed in Education Subsidy Units, includes funds that go to pay teachers' remuneration and social security contributions.
20. 14. According to the complainant organization, the Government of Chile has failed to discharge its obligation to safeguard the social security rights of teachers employed by the municipalities or the bodies established by them. It fails to supervise compliance with Legislative Decree No. 2 of 10 September 1997 respecting state subsidies to educational institutions,(Endnote 4) section 6(e) of which provides that the Ministry of Education must ensure that remuneration and social security contributions have been paid timely by the employers of teaching personnel before paying them the abovementioned education subsidy. In its opinion, this lax attitude on the part of the Government has led to the accumulation of social security arrears in the millions, to the direct detriment of teachers and their families. If the Government of Chile had observed and applied the abovementioned Legislative Decree, these arrears would not have been created.
21. 15. According to the complainant organization, the Government indicated to it that the State cannot be held responsible for these arrears, since these are the exclusive responsibility of the employers; the latter pointed out that they do not have sufficient resources to pay social security contributions; legal proceedings arising from attempts to bring the matter before the courts were hindered by the fact that, according to law, municipal assets are not subject to attachment. In these circumstances, the organization considers that the ILO is the only authority before which it can claim its legitimate rights.
22. 16. According to the complainant organization, the Government of Chile must be held responsible for the social security arrears owed by the employers of the municipal public education system, as the Government has infringed the institutional principles underpinning the public order in the sphere of labour and social security, as well as those deriving from ILO standards. While recognizing that employers are responsible for the declaration and payment of social security contributions, it considers that it is the Government of Chile which, by tacitly relinquishing its supervisory role, has allowed the evasion of social security contributions owed to the competent welfare institutions. This situation is to the detriment of thousands of teachers, denying them full and timely access to the social security benefits to which they are legally entitled, while the percentage corresponding to the social security contribution continues to be deducted every month from their salaries.
23. 17. The complainant organization considers that the Government's failure to act amounts to non-observance of several ILO instruments, including the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35), and the Invalidity Insurance (Industry, etc.) Convention, 1933 (No. 37), which have been ratified by Chile, as well as the Invalidity, Old-Age and Survivors' Insurance Recommendation, 1933 (No. 43). It asks that the Government, which is liable for the social security arrears owed by the employers of the municipal public education system, be required to take steps for the immediate settlement of the arrears and create an institutional legal framework in the field of social security which would guarantee workers' rights and be consistent with ILO standards.
24. 18. In its communication of 4 June 1998, the Single Central Organization of Chilean Workers (CUT) emphasizes that the situation, which has seriously affected teachers, is a direct consequence of the new private system of welfare administration established in Chile, which also affects private sector workers, since the total arrears resulting from failure to pay social security contributions are ten times higher than in the case of teachers. The CUT declares its support for the action taken by the College of Teachers of Chile and communicates a document stating official position of the organization with respect to the Chilean pension system. Having described the characteristics of the old pension system based on the pay-as-you-go (PAYG) scheme, the CUT outlines the defects of the private pension scheme established in 1980, based on individual funding and managed by companies administering pension funds (Administradoras de Fondos de Pensiones (AFPs)). In this connection, the CUT points out the problem created where employers failed to pay social security contributions while continuing to declare the contributions to the social security institutions. This practice amounts to misappropriation of the workers' money and is prejudicial to them, since it prevents them from having met the required minimum level of contributions at the time of retirement. It has also resulted in congestion of the courts, with 150,000 cases currently pending. According to the CUT, the social security contributions in arrears total more than 113,000 million pesos, i.e. around US$300 million. Lastly, the complainant organization puts forward a series of proposals which it believes would result in the improvement of the private pension fund administration system. It also refers, inter alia, to the need to implement an effective system for supervising contribution payments through the Labour Directorate, requiring employers to provide proof of payment of their contributions in order to obtain credits or licences or for tax purposes.
25. B. The Government's observations
26. 19. In its communication dated 15 June 1998, the Government first describes the legal framework governing the social welfare system and the rules applicable to the education system. It then outlines the initiatives taken in response to the arrears owed by certain municipalities as a result of their failure to pay the social security contributions for their teaching staff. In a further communication dated 28 October 1998, the Government transmitted a copy of a bill designed to solve the problem of arrears.
27. I. Legal framework
28. 20. As regards legal recognition of rights in the sphere of social security, the Government points out that the right of all persons to social security is recognized in article 19 of the Constitution of Chile and that the action of the State shall be aimed at guaranteeing the access of all inhabitants to uniform basic benefits, whether granted by public or private institutions. Before the welfare reform, pensions were administered by management bodies, the parastatal provident funds, under which there were several sub-schemes. After the reform, in an effort to streamline the system, the management bodies were merged under the Welfare Administration Institute (INP), which currently covers 300,000 persons who maintained their affiliation to the previous scheme. In 1980, Legislative Decrees Nos. 3500 and 3501 established a new system of old-age, disability and survivors' pensions based on individual funding instead of the PAYG system and managed by the AFPs. Under this system, it is the employer who must declare and pay the social security contributions of employees. These employee contributions, amounting to at least 10 per cent of taxable income or remuneration, are to be deducted by the employer, then paid to the management bodies. In the event of failure to pay, Act No. 17,322 of 1970 respecting recovery by legal action of social security contributions is applicable both to the private sector and to semi-public or autonomous state bodies. The Government points out that the legislation provides for a number of sanctions: fines for failing to declare contributions, readjustments and late penalties for failure to pay contributions on time and enforcement measures such as imprisonment for failing to comply with a court decision within a certain time limit. Moreover, under Act No. 17,322 and Legislative Decree No. 3500, in both schemes the sentences laid down for embezzlement apply to any person who embezzles funds derived from the social security contributions to be deducted from workers' remuneration. In addition, the management bodies are empowered to verify employers' accounting records in order to check the truthfulness of their declarations and impose fines, as appropriate. They also have to calculate the amount of contributions when they have not been paid in time. The Government states that all of these provisions prove that the Chilean legal system recognizes and guarantees workers' rights in the sphere of social security.
29. 21. As regards the national education system in particular, the Government points out that, in line with the principle of subsidiarity, which is the cornerstone of Chilean social and economic policy, the education system is decentralized. The administration for each educational institution is responsible for operating the institution and enjoys the necessary autonomy and powers to exercise direct control over the employment relationship with its staff, within the framework of the laws and regulations in force. The education system comprises three alternatives: private education, accounting for 13.3 per cent of teachers, subsidized private education, in which 24.8 per cent of teachers are employed, and the municipal system of education. The latter category consists of institutions subordinated to the education department of each municipality or to the relevant authorities established by these municipalities. They are financed by means of the Education Subsidy Units. Under article 6(e) of Legislative Decree No. 2 of 1997, in order to receive the subsidies, administering institutions must be up to date in their payment of the remuneration and social security contributions of their employees. Failure to discharge this obligation constitutes a serious offence which the Ministry of Education may sanction administratively by withholding subsidies. In the Government's view, this sanction is not effective, however, in that it generally jeopardizes the payment of employees' remuneration and thus has a disruptive effect on education. In most of the cases in which the Ministry suspended payment of the subsidy, it ultimately lifted this sanction at the teachers' request. The Government adds that, in the case of subsidized private education, these measures are supplemented by the fines laid down by the Labour Code and imposed by the Labour Directorate. The Government considers that, thanks to these measures, violations relating to the payment of social security contributions in private subsidized education are relatively infrequent.
30. 22. As regards the supervision of the social security rights, the Government states that, irrespective of the nature of the social security system, the primary task of the State is to supervise its functioning and secure the application of legislation guaranteeing workers' social rights through mechanisms created for this purpose including the Labour Directorate. Under the new pension system established by Legislative Decree No. 3500, the labour inspectors are responsible for verifying whether employers pay the social security contributions to the private sector pension funds (AFPs) to which workers are affiliated. This supervision is without prejudice to the powers vested in the General Financial Inspector of the Republic, the Social Security Superintendency and the Superintendency of AFPs, which exercise more technical supervision. According to the Government, this system shows that the legal framework provides for a range of administrative controls aimed at securing effective observance of workers' rights. It adds that, in 1997, the Labour Directorate organized 20 inspection programmes. These focused on private and semi-private establishments, since the Labour Directorate is not competent to supervise the departments of the education administration of the municipalities. These inspections revealed that, although failure to declare social security contributions was the most widespread offence, it only affected 8.2 per cent of the establishments, which the Government considers to be a fairly low rate (63 fines were imposed amounting to a total of 2,781,334 pesos). On the other hand, while carrying out its supervision of educational establishments subordinate to the municipalities, the Ministry of Education noted that a group of municipalities were not paying the management bodies the social security contributions of the employees of the educational establishments under their authority. The Government responded to this unacceptable situation by undertaking a series of measures intended to protect the social security rights of teachers in this sector.
31. II. Government initiatives
32. 23 . The Government states that, in October 1997, a special commission was set up under the coordination of the Ministry of Education in order to solve the problem of the social security arrears owed by certain municipalities with regard to the education sector. This commission recommended that the Ministry first identify the number of municipalities in arrears with regard to their social security contributions in order to set up machinery to enforce payment of outstanding social security contributions by employers. Initial results show that 13 municipalities account for 80 per cent of the arrears, 65.2 per cent of which are owed to the Welfare Administration Institute (INP) and 34.07 per cent to AFPs. With regard to the debt owed by municipalities and their municipal corporations to the INP, the Government states that out-of-court settlements have been reached regarding payment and that payments have been initially charged to the nominal capital in order to protect teachers' individual accounts and prevent them from being denied their right to a pension at the end of their employment. As regards the arrears owed to the AFPs, the municipalities concerned have committed themselves to paying the sums as part of the efforts to improve municipal administration, an initiative supported by the Ministry. The Government adds that, in the 1990s, the Education Ministry took a series of measures aimed at improving the administration of the municipalities in the education sector, accompanied by a considerable increase in education subsidies. As employers, the municipalities have thus been granted increasing resources in order to meet their obligations towards teachers, both with respect to labour law and in the social security sphere, and these resources have enabled real salary increases to be introduced, as well as improvements in teachers' working conditions and career development. Recalling that the municipal public education system is managed by over 350 municipalities and covers approximately 60 per cent of the student population, the Government points out that failure to pay social security contributions is an isolated phenomenon which is by no means widespread. Appropriate measures have been taken to ensure that the municipalities that are in arrears gradually settle their debt to the social security institutions. In this context, the Government has sent a series of statistics covering several regions, showing that arrears have been reduced or even entirely settled in certain communities. It adds that the teachers have declared that the government measures taken in response to the problem of social security arrears have been positive. For these reasons, the Government cannot agree with the assertions of the College of Teachers that it has failed to discharge its obligation by relinquishing its role of supervising observance of social security rights. The Government concludes by stating that all of the information given in its report shows that the Chilean legal system in the labour field protects social security rights, that supervisory mechanisms exist and that legal action has been taken to secure compliance with social security legislation, in particular in the sphere of education. Lastly, the Government points out that it has commissioned an internal study with a view to adopting the necessary legislative amendments to improve existing supervisory mechanisms in order to prevent a recurrence of the situation currently affecting teachers.
33. 24. In its communication dated 28 October 1998, the Government sent copies of a bill presented to the Chamber of Deputies and of the accompanying message from the President of the Republic. It emphasizes that this bill is intended to solve the serious problem caused by the social security arrears owed by certain municipalities on behalf of the workers employed by departments under their authority, including teachers. The Government states that the system will consist of paying advances to municipalities that are in arrears as a result of not paying their employees' social security contributions to the public system (INP) or the AFPs, so that these monies may be directly credited to the individual accounts of the teachers concerned.
34. C. The Committee's conclusions
35. 25. The Committee notes that the representation made by the College of Teachers does not concern the principle of conformity of the pension system established by Legislative Decree No. 3500 with Conventions Nos. 35 and 37,(Endnote 5) but, rather, relates to failure to pay teachers' social security contributions and the resulting liability of the public authorities. The Committee will therefore confine itself in its examination to this problem,which can arise both in the context of the old pension system administered by the INP - which still applies to workers who opted to maintain their affiliation - and under the new pension system established in 1980.
36. 26. The Committee notes that the situation referred to by the College of Teachers in which a number of municipalities have failed to pay the social security contributions of the teachers employed by them, primarily concerns the application of Article 10, paragraph 5, of Convention No. 35 and Article 11, paragraph 5, of Convention No. 37. Pursuant to these provisions, "self-governing insurance institutions shall be under the administrative and financial supervision of the public authorities". By ratifying these Conventions, the State recognizes its responsibility for the protection of workers in the sphere of social security. It is clear from the preparatory work for these Conventions that, when entrusting the administration of insurance to autonomous authorities, a State cannot remain separate from the results of this administration and must retain the right to exercise supervision. The principle of autonomous management has as its corollary the principle of financial and administrative supervision of the administration of social insurance by the public authorities. The organization of supervision is thus an essential feature of the general social insurance mechanism, without which the application of national and international law could not be guaranteed.(Endnote 6) Pursuant to the abovementioned provisions of Conventions Nos. 35 and 37, the Government is therefore responsible for the full application, in conformity with the law, of the provisions governing the social insurance system, including those concerning the payment of contributions, the principle of which is laid down in Article 9 of Convention No. 35 and Article 10 of Convention No. 37.(Endnote 7)
37. 27. The Committee notes that the Government does not contest the content of its international obligations, since it affirms that the State has the responsibility of ensuring that all persons have the right to social security. The Government's reply contains detailed information regarding the institutional framework for securing the application of legal provisions in the social security sphere. In this context, the Committee takes particular note of the investigatory powers vested in management bodies to verify the content of declarations, the supervisory functions entrusted to the labour inspectorate under Legislative Decree No. 3500, the recovery by legal action of unpaid contributions, and the imposition of fines and penalties for late payment. Penal sanctions providing for imprisonment may be applied in the event of failure to comply with judicial decisions and where the employer fails to pay the sums deducted or that should have been deducted from employees' remuneration (sections 12 and 13 of Act No. 17322). In addition, the Ministry of Education may suspend payment of subsidies to municipalities responsible for education if they have fallen behind in their payment of teachers' social security contributions (Legislative Decree No. 2 of 1997).
38. 28. In addition to general information on the means by which the State can ensure the proper functioning of social security, the Government cites various specific measures. In particular, 20 inspection programmes were carried out in 1997 for the private education sector and subsidized private education. Although these sectors are not covered by the representation made by the College of Teachers, the Committee would nonetheless point out that an 8.2 per cent rate of failure to declare contributions cannot be considered to be low. As regards the municipal education sector, the Committee observes that certain measures provided for by section 6(e) of Legislative Decree No. 2 of 1997 (consolidated text of Legislative Decree No. 5 of 1992), such as suspending subsidies to municipalities in arrears with their contributions, had proven to be ineffective in practice, and that in most cases they had to be lifted at the request of teachers who feared that the payment of their remuneration would be jeopardized. The Committee wonders, however, whether it would have been possible in such cases to apply section 42 of the abovementioned Legislative Decree No. 2, which provides that where the decision is taken, by means of a resolution, not to suspend subsidies so as not to jeopardize the guarantee of the right to education, the Ministry of Education shall withhold from the subsidy a sum equal to the unpaid contributions, which shall be ceded back once said contributions have been paid. The Committee also observes that, as the labour inspection services are not competent to supervise payment of contributions in the municipal education sector, it is the Ministry of Education which is responsible for supervising this sector. However, the Government does not provide any specific information on the manner in which this supervision is exercised in practice, the penalties that may have been applied to municipalities which failed to pay contributions, or the outcome of any legal action that may have been taken against the latter. Neither does the Committee have any information on the manner in which management bodies exercise the powers vested in them to verify employers' accounts and calculate the amount of contributions in the event of non-payment. The Committee therefore observes that, despite the existence of a legal framework which, according to the Government, enables workers' social security rights to be guaranteed, a number of municipalities have accumulated arrears owed to the welfare institutions, both private and public, to the direct detriment of workers' social security rights, a situation which the Government itself considers to be cause for concern. Although corrective measures have been taken as part of the programme to improve the administration of the municipalities following the establishment in October 1997 of a special commission to study and seek a solution to the problem of non-payment of contributions, which took the form of agreements and arrangements concluded with the INP and with the AFPs, nonetheless the statistics communicated by the Government show that, while some progress has been achieved in the payment of their arrears, a number of municipalities still owe sums to the welfare institutions.
39. 29. In addition to ensuring supervision and determining and applying appropriate sanctions, the Committee considers that the effective application of the Conventions presupposes the adoption of measures to compensate the damage sustained. In this context, the Committee observes that neither the complainant organization nor the Government has communicated precise statistics on the amount of contributions in arrears and the number of workers affected. According to the College of Teachers, the total arrears owed by the municipalities amount to a figure in the millions and affect thousands of teachers. As for the Government, it refers to measures taken by the special commission set up in October 1997 under the coordination of the Ministry of Education, whose first task was to identify the number of municipalities in arrears, but does not state the total amount of contributions in arrears. Moreover, while the Government indicates that the amount of the arrears owed by the municipalities and the bodies set up by them to the INP is entirely known, it is not clear from the information provided by the Government whether this is also true of the arrears owed to the AFPs. In any case, it appears that, prior to October 1997, the supervisory authorities did not have a clear idea of the number of municipalities in arrears with their social security contributions or of the total amount of the arrears. Neither does the information communicated by the Government on the amount of arrears already settled by the municipalities through out-of-court settlements with the INP or commitments made to the AFPs give any indication to the Committee of the total amount of the arrears settled or of those still outstanding, since the information provided by the Government only pertains to partial results. Moreover, some of the statistics concerning the arrears that have been settled are expressed in percentages, while others are given in absolute terms. The Committee observes further that, according to these statistics, while some municipalities have settled their debt in full both to the INP and to the AFPs, most of them have only made partial repayments which in some cases account for only a very small percentage of their arrears (the repayment percentages indicated in the table provided by the Government range between 1.5 and 40 per cent). As regards the number of municipalities in arrears with their contributions, according to the information communicated by the Government there appear to be approximately 30. The Committee points out that this figure represents 8.5 per cent of all the municipalities responsible for education (some 350 municipalities) - a far from insignificant proportion.
40. 30. The Government itself is aware of the gravity of the situation, since in the words of the presidential message issued on 1 October 1998, a bill was being submitted to the Chamber of Deputies in order to find a solution "to the serious problem" of the arrears in social security contributions owed by certain municipalities. In this context, the Committee notes with interest that this bill should enable the municipalities concerned, through agreements concluded with the competent authorities, to receive advances that must be paid directly to the management bodies. Moreover, under the bill the Ministry of Education is now obliged to withhold a sum equal to unpaid contributions from the subsidies paid to the municipalities. The bill also provides for more stringent sanctions. The Committee hopes that this bill will be adopted in the very near future.
41. 31. In conclusion, the Committee notes with concern the serious consequences that non-payment of social security contributions necessarily has on workers' rights, in particular with regard to their pensions and, in the long term, for the credibility of the social security scheme as a whole. It considers that, although the steps taken by the Government have improved the situation to some extent, further measures are necessary in order to ensure that the Conventions are fully applied in practice. In particular, it considers it essential that the competent bodies carry out their tasks and strengthen their supervisory activities and that appropriate sanctions be imposed and strictly applied so as to prevent the situation of arrears in contributions from recurring in future. Lastly, while noting that, according to the Government, the initial results of the agreements concluded between the municipalities and welfare institutions for payment of arrears were viewed as positive by teachers, the Committee urges the Government to continue to ensure that the outstanding social security arrears, the scale of which should not be underestimated, are settled rapidly and in full. It also draws the Government's attention to the situation of teachers who reached retirement age before the municipalities took the necessary corrective action by settling the contributions owed in respect of them. It recalls that the cases in which benefits may be forfeited or suspended in whole or in part listed in Article 8 of Convention No. 35 and Article 9 of Convention No. 37 do not contemplate non-payment of contributions on behalf of insured persons where these - and this point should be emphasized - have already been deducted from their remuneration.
42. 32. The Committee considers it essential that the Committee of Experts continue to follow up on the matters raised in this representation. Accordingly, it requests the Government, in its report under article 22 of the ILO Constitution, to communicate any relevant information on the measures taken or envisaged with regard to the foregoing conclusions and on the manner in which the situation has evolved as a result. It also considers it essential for the Government to supply precise statistics on the number of workers affected, the amount of contributions still in arrears and the number of municipalities involved, the amount of arrears already settled and the number and nature of penalties imposed.
43. The Committee's recommendations
44. 33. The Committee recommends that the Governing Body approve this report and, in particular, in the light of the conclusions in paragraphs 25 to 32 of the report:
45. (a) that it encourage the Government to continue its efforts aimed at ensuring the application of Conventions Nos. 35 and 37 by:
46. - taking all the necessary measures to ensure that the social security rights of teachers, including those who retired before their situation was regularized, are restored through the rapid payment of the social security contributions owed to the welfare institutions by certain municipalities (including the municipal bodies set up by them);
47. - continuing and strengthening the supervision of the effective payment of social security contributions by the municipalities;
48. - ensuring the effective application of deterrent sanctions in the event of non-payment of social security contributions;
49. (b) that it invite the Government to send a report under article 22 of the ILO Constitution no later than 15 September 1999, concerning the application of Conventions Nos. 35 and 37, containing detailed information, including relevant reports made by the competent authorities, on all measures taken or envisaged to secure effective payment of social security contributions to the welfare institutions by the municipalities (or the municipal corporations) and on the manner in which the situation has evolved as a result of these measures, indicating in particular:
50. - the number of checks carried out, in particular by the Ministry of Education, to verify payment of social security contributions by the municipalities, the number and nature of violations registered and the number and nature of penalties imposed;
51. - the number of municipalities remaining in arrears with regard to their payment of social security contributions, and the amount of such arrears, the number of workers affected and the amount of arrears settled;
52. - the outcome of the legislative procedure concerning the bill tabled before the Chamber of Deputies and aimed at solving the problem of arrears in social security contributions and, once the bill has been adopted, information on its implementation, including the number of municipalities requesting advances to enable them to credit the teachers' individual accounts;
53. (c) that it declare closed the procedure initiated before the Governing Body as a result of the representation made by the College of Teachers of Chile A.G. concerning the application by Chile of the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35) and the Invalidity Insurance (Industry, etc.) Convention, 1933 (No. 37).
54. Endnote 1
55. Conventions Nos. 35 and 37, ratified on 18 October 1935.
56. Endnote 2
57. See Official Bulletin, Vol. LXIV, 1981, Series A, No. 1, pp. 93-95.
58. Endnote 3
59. Document GB.271/18/1 and Minutes of the 271st Session, document GB.271/PV (Rev.), p. VIII/1.
60. Endnote 4
61. Legislative Decree, adopted on 10 Sep. 1996 and published on 15 Jan. 1997, consolidating Legislative Decree No. 5 of 1992.
62. Endnote 5
63. The communication sent by the Single Central Organization of Chilean Workers (CUT) in support of the representation made by the College of Teachers refers also to problems relating to the private administration of pension funds. In this respect, the Committee notes further that, at its 273rd Session (November 1998), the Governing Body had declared receivable (document GB.273/15/4) the representation made by a number of national trade unions of workers of the companies administering pension funds alleging non-observance by Chile of Conventions Nos. 35 to 38. This representation, which relates to the question of principle of conformity of the private system of administering social security, and in particular the private management of pension funds, with Conventions Nos. 35 to 38 of the ILO, will be examined by a committee set up for this purpose once the Government's observations on the subject have been received.
64. Endnote 6
65. ILC, XVIth Session, 1932, Reports, Vol. 2, Invalidity, old-age and survivor's insurance. (Available only in English and French.)
66. Endnote 7
67. Article 9 of Convention No. 35 and Article 10 of Convention No. 37 read as follows:
68. 1. The insured persons and their employers shall contribute to the financial resources of the insurance scheme.
69. 2. National laws or regulations may exempt from liability to pay contributions -
70. (a) apprentices and young workers under a prescribed age;
71. (b) workers who are not paid a money wage or whose wages are very low.
72. 3. Contributions from employers may be dispensed with under laws or regulations concerning schemes of national insurance not restricted in scope to employed persons.
73. 4. The public authorities shall contribute to the financial resources or to the benefits of insurance schemes covering employed persons in general or manual workers.
74. 5. National laws or regulations which, at the time of the adoption of this Convention, do not require contributions from insured persons may continue not to require such contributions.