Observation (CEACR) - adopted 2002, published 91st ILC session (2003)

The Committee notes the Government’s report and the extensive and repeated comments submitted by the Inter-Trade Union Assembly - Workers’ National Convention (PIT-CNT).

I.  Elements to be considered in fixing and adjusting minimum wage rates   (Articles 3 and 4, paragraph 1, of the Convention)

1. The Committee notes with regret that, despite its repeated observations, the Government has still not taken the necessary steps to fulfil its obligations under the Convention. In its report, the Government indicates that, in the interests of greater competitiveness and aligning of prices with those of its main partners in MERCOSUR, its policy has been to simplify markets and the factors of production and make them more flexible. Wage fixing by sector of economic activity by the tripartite bodies established in the Wage Councils Act has been abandoned in favour of wage negotiation at enterprise level. The Executive nevertheless retains responsibility for setting the national minimum wage by administrative decision and the minimum wages of rural workers and domestic workers. The Government indicates that the national minimum wage was fixed without reference either to cost-of-living studies or to economic factors, and that its value has declined in recent years in terms of purchasing power. On the basis of the prices of goods and services in the country and studies on household income and expenditure, the Government estimates that the level of the national minimum wage is somewhere between the indigence threshold and the poverty threshold and is sufficient to meet the most basic needs of workers but not those of their families. With regard to families, the Government indicates that workers on the minimum wage in the public sector and the private sector are entitled to family allowances amounting to 16 per cent of the national minimum wage for each dependent child.

2. Noting that there has been no significant change regarding the application of the Convention, the PIT-CNT reiterates its previous comments. It observes that most workers are of the view that there is no minimum wage that meets the criteria of this provision of the Convention, since where there are no collective agreements, the applicable minimum wage is the national one, fixed unilaterally by decree. According to the above organization, the Government’s assertion that the minimum wage is fixed "in reference largely to minimum rates which are applied only for the purpose of calculating social security, professional rates, etc.", shows that the minimum wage takes little account of social reality and is so inadequate as to be non-existent. The above organization also asserts that it can be inferred from the Government’s statements that macroeconomic measures to reduce inflation rates are incompatible with minimum wage fixing by free collective bargaining.

3. The Committee is most concerned by the failure to comply with the provisions of the Convention and its implications for some 875,000 workers and their families whose wages are fixed by administrative decision. It recalls that the ratification of a Convention entails adopting legislative and regulatory measures which must be strictly applied in practice. In the present case, conformity with the Convention means that the minimum wage established in the country must, pursuant to Article 3, as far as is possible and appropriate, take into consideration the needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits and the relative living standards of other social groups, as well as economic factors. Furthermore, the minimum wage must be adjusted from time to time, in accordance with Article 4, paragraph 1. While sympathetic to the Government’s goals of a more competitive economy and price levels in line with those of its main partners in MERCOSUR, the Committee is nonetheless of the view that the pursuit of competitiveness must not be to the detriment of the Government’s obligations under an international Convention which has been ratified and is in force, and even less to the detriment of minimum wages, which set the minimum standards of living for workers. The Committee notes that, according to the Government, the national minimum wage is by no means representative of the amount earned by someone entering the labour market since no workers are willing to work full time for such a low wage. It observes that such a situation could not arise if, as the Convention requires, account was taken of the real needs of workers and their families in terms of basic commodities and minimum expenditure on education, health and food. The Committee therefore urges the Government to adopt without delay all the measures required to bring national law and practice into line with the spirit and letter of the Convention and to fix the minimum wage taking into consideration, inter alia, the elements set out in Article 3 of the Convention so as to determine a level of minimum wages that is fair, as the Uruguayan constitution itself prescribes.

II.  Failure to consult fully with representative organizations of employers
  and workers concerned on the establishment, operation and
  modification of minimum wages (Article 4, paragraph 2)

4. The Committee recalls that it has been pointing out for years that the national minimum wage and the minimum wages of rural workers and domestic workers are set unilaterally by the Government and that it has accordingly reminded the Government repeatedly that, in connection with the establishment, operation and modification of the wage-fixing machinery, it has an obligation to consult representative organizations of employers and workers concerned or, where no such organizations exist, representatives of employers and workers concerned, as prescribed by Article 4, paragraph 2.

5. The Government indicates in its report that the tripartite system for establishing minimum wages at branch level established by the Wages Council Act has been abandoned in favour of collective or individual wage bargaining preferably at the enterprise level, in which the minimum wages set by the Executive in the various economic sectors must nevertheless be observed. In its last report, the Government states that the national minimum wage was fixed by the Executive without consulting employers’ or workers’ organizations. Regarding the fixing of the minimum wage for domestic work the Government indicates that it was impossible to organize consultations, there being no employers’ or workers’ organizations in this sector. Lastly, with regard to agriculture, the Government indicates that there are only representative organizations of employers in the agricultural and livestock sectors and a few organizations of workers in certain subsectors such as citrus fruits, sugar and tobacco, but none in the stock-raising sector. The Government adds that effective consultations with a view to fixing a minimum wage applying to all rural workers being difficult to organize in such circumstances, the only option was to notify the minimum wage to the one third-level central union, i.e. the PIT-CNT, and the three second-level employers’ organizations.

6. In its latest observations the PIT-CNT reiterates that in all instances where there is no collective agreement, the applicable minimum wage is the national one fixed by decree without consultation of organizations of employers and workers. It further asserts that such organizations do exist even if they do not have state protection for the exercise of their rights. It further states that not only has the Government not sought to encourage collective bargaining, it has also left the labour-related variables of economic adjustment to market forces in an attempt to do away with bargaining and protection of fundamental rights. It adds that the State has introduced a series of restrictions based on macroeconomic considerations without having consulted the occupational organizations concerned.

7. The Committee can but refer to its previous observations in which it recalled that the problem of the unilateral fixation by the Executive of the minimum wage for these categories has persisted for years, and in which it noted the Government’s argument, repeated time and again, that there are no organizations sufficiently representative of such workers. The Committee also notes in this connection the PIT-CNT’s assertion that such organizations do exist, although they have no state protection for the exercise of their rights. The Committee wishes once again to recall and emphasize that, under Article 4, paragraph 2, of the Convention, full consultation with organizations of employers and workers concerned is an obligation which applies both when determining the scope of the minimum wage system and in operating and modifying the wage-fixing machinery. The fact that there are no workers’ or employers’ organizations in a subsector of the economy affords no grounds for non-compliance with the obligation to consult; in such circumstances the obligation could be met by consultation of higher-level organizations of employers and workers concerned, such as federations. The Committee therefore expresses the firm hope that the Government will be in a position to indicate without further delay the measures taken to ensure full consultation with representative organizations of employers and workers concerned for the purpose of fixing the national minimum wage and the minimum wages of rural workers and domestic workers and any other workers in the private sector to whom the provisions on minimum wages apply.

8. According to the PIT-CNT, as well as ignoring national and international rules concerning collective bargaining, the Government also fails to encourage bargaining, invoking macroeconomic reasons and stabilization plans or policies which involve placing restrictions on minimum wage fixing by means of bargaining. The Committee notes in this connection that, according to the Government, in sectors with a widespread culture of collective bargaining such as the construction sector, the Executive can extend the collective agreement to the entire branch by means of regulations.

9. In view of the fact that minimum wages are fixed unilaterally and are very low, and that the system of tripartite councils convened by the Executive has been abandoned in favour of collective or individual bargaining, preferably at enterprise level, the Committee requests the Government to provide with its next report detailed information on the number and categories of workers whose wages are fixed by collective bargaining, together with information on the number of collective agreements concluded by enterprise and by branch, including in the public sector, indicating the sectors and the numbers of workers covered.

10. Lastly, the Committee asks the Government to provide information on the measures adopted to ensure consultation with organizations of workers and employers or, where no such organizations exist, the workers and employers concerned, in fixing the national minimum wage and the minimum wages of rural workers and domestic workers.

[The Government is asked to supply full particulars to the Conference at its 91st Session and to reply in detail to the present comments in 2003.]