Collective bargaining:A fundamental principle,a right, a Convention

Labour Education 1999/1-2Nos. 114-115

ILO Convention No. 98 1

Editorial 5

Foreword 11

From the guilds to coming of age: Collective bargaining prevails over other formsof negotiation due to its flexible character , by Muneto Ozaki et al. 13

ILO Convention No. 98: An instrument still topical 50 yearsafter its adoption, by Bernard Gernigon 26

Latin AmericaCollective bargaining: A comparative analysis, by Arturo Bronstein 31

Central AmericaStrong state presence to control conflict pervades labour law,by Elizabeth Tinoco and Mario Blanco Vado 41

The Andean countriesMany social sectors are today demanding that trade unions work out a commonposition in the framework of the social dialogue, by Marleen Rueda-Catry,Juan Manuel Sepúlveda Malbrán and María Luz Vega Ruiz 53

Mexico Collective bargaining: A fresh spurt of social and sectoral dialogueand some interesting findings, by José Ramírez Gamero 65

CanadaCollective bargaining and international obligations, by Shauna Olney 71

SenegalThe rigours of the economic crisis are not the sole explanation for the refusalto tackle the issues raised by trade union organizations, by Sette Dieng 78

IndiaCollective bargaining: Workers are less committed to any solidarity based onideology and will readily shift their allegiance if unions do not deliver results,by C.S. Venkata Ratnam 84

MalaysiaThe true challenge: To bring about equitable and meaningful incomedistribution in society, by A. Navamukundan 92

Republic of KoreaTowards industrial unionism: A grand experiment forthe twenty-first century, by Lee Won-bo 104

Economies in transitionTrade unions must carry the burden of the reform policies without any newresources to meet the challenges, by Pekka O. Aro 109

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Contents

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Central and Eastern EuropeA twofold objective: Model their countries’labour relations systems on thoseof the most developed countries of the European Union, taking into accountspecific national contexts, by Csaba Makó and Ágnes Simonyi 116

AnnexList of relevant ILO instruments on the right to organizeand collectively bargain 125

Convention No. 98

Convention concerning the Applicationof the Principles of the Right to Organise

and to Bargain Collectively1

The General Conference of the International Labour Organisation,Having been convened at Geneva by the Governing Body of the International

Labour Office, and having met in its Thirty-second Session on 8 June 1949,and

Having decided upon the adoption of certain proposals concerning the appli-cation of the principles of the right to organise and to bargain collectively,which is the fourth item on the agenda of the session, and

Having determined that these proposals shall take the form of an internationalConvention;

adopts this first day of July of the year one thousand nine hundred and forty-ninethe following Convention, which may be cited as the Right to Organise and Col-lective Bargaining Convention, 1949:

Article 11. Workers shall enjoy adequate protection against acts of anti-union discrimi-

nation in respect of their employment.

2. Such protection shall apply more particularly in respect of acts calculated to —(a) make the employment of a worker subject to the condition that he shall not join

a union or shall relinquish trade union membership;(b) cause the dismissal of or otherwise prejudice a worker by reason of union mem-

bership or because of participation in union activities outside working hours or,with the consent of the employer, within working hours.

Article 21. Workers’ and employers’ organisations shall enjoy adequate protection

against any acts of interference by each other or each other’s agents or members intheir establishment, functioning or administration.

2. In particular, acts which are designed to promote the establishment of work-ers’ organisations under the domination of employers or employers’ organisations,or to support workers’ organisations by financial or other means, with the object ofplacing such organisations under the control of employers or employers’ organi-sations, shall be deemed to constitute acts of interference within the meaning of thisArticle.

Article 3Machinery appropriate to national conditions shall be established, where nec-

essary, for the purpose of ensuring respect for the right to organise as defined in thepreceding Articles.

1 Ed.: This Convention came into force on 18 July 1951.

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3. Any Member may at any time by a subsequent declaration cancel in wholeor in part any reservation made in its original declaration in virtue of subparagraph(b), (c) or (d) of paragraph 1 of this Article.

4. Any Member may, at any time at which the Convention is subject to denun-ciation in accordance with the provisions of Article 11, communicate to theD i re ctor-General a declaration modifying in any other respect the terms of anyformer declaration and stating the present position in respect of such territories asit may specify.

Article 101. Declarations communicated to the Director-General of the International

Labour Office in accordance with paragraph 4 or 5 of article 35 of the Constitutionof the International Labour Organisation shall indicate whether the provisions ofthe Convention will be applied in the territory concerned without modification orsubject to modifications; when the declaration indicates that the provisions of theConvention will be applied subject to modifications, it shall give details of the saidmodifications.

2. The Member, Members or international authority concerned may at any timeby a subsequent declaration renounce in whole or in part the right to have recourseto any modification indicated in any former declaration.

3. The Member, Members or international authority concerned may, at any timeat which the Convention is subject to denunciation in accordance with the provi-sions of Article 11, communicate to the Director-General a declaration modifyingin any other respect the terms of any former declaration and stating the presentposition in respect of the application of the Convention.

Article 111. AMember which has ratified this Convention may denounce it after the expi-

ration of ten years from the date on which the Convention first comes into force, byan act communicated to the Director-General of the International Labour Office forregistration. Such denunciation shall not take effect until one year after the date onwhich it is registered.

2. Each Member which has ratified this Convention and which does not, withinthe year following the expiration of the period of ten years mentioned in the pre-ceding paragraph, exercise the right of denunciation provided for in this Article,will be bound for another period of ten years and, thereafter, may denounce thisConvention at the expiration of each period of ten years under the terms providedfor in this Article.

Article 121. The Director-General of the International Labour Office shall notify all Mem-

bers of the International Labour Organisation of the registration of all ratifications,declarations and denunciations communicated to him by the Members of theOrganisation.

2. When notifying the Members of the Organisation of the registration of thesecond ratification communicated to him, the Director-General shall draw the atten-tion of the Members of the Organisation to the date upon which the Conventionwill come into force.

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Article 13The Dire c t o r-General of the International Labour Office shall communicate

t o the Secretary-General of the United Nations for registration in accordance withArticle 102 of the Charter of the United Nations full particulars of all ratifications,declarations and acts of denunciation re g i s t e red by him in accordance with thep rovisions of the preceding Articles.

Article 14At such times as it may consider necessary the Governing Body of the Interna-

tional Labour Office shall present to the General Conference a report on the work-ing of this Convention and shall examine the desirability of placing on the agendaof the Conference the question of its revision in whole or in part.

Article 151. Should the Conference adopt a new Convention revising this Convention in

whole or in part, then, unless the new Convention otherwise provides,(a) the ratification by a Member of the new revising Convention shall ipso jure

involve the immediate denunciation of this Convention, notwithstandingthe provisions of Article 11 above, if and when the new revising Conventionshall have come into force;

(b) as from the date when the new revising Convention comes into force, this Con-vention shall cease to be open to ratification by the Members.

2. This Convention shall in any case remain in force in its actual form and con-tent for those Members which have ratified it but have not ratified the revisingConvention.

Article 16The English and French versions of the text of this Convention are equally

authoritative.

The foregoing is the authentic text of the Convention dulyadopted by the General Conference of the International LabourOrganisation during its Thirty-second Session which was heldat Geneva and declared closed the second day of July 1949.

I N FA I T H WHEREOF we have appended our s i g n a t u res thise i g h te e n th day of Au g u st 1 9 4 9 .

The President of the Conference,

The Director-General of the International Labour Office,

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ground over the past two decades (Bronstein). Supportive of this com-prehensive analysis are two subregional dimensions – Central America(Tinoco/Vado ) and the Andean countries (Luz Vega/Rueda/Sepúlveda)together with a national perspective (Ramírez Gamero) – which furtherenrich our understanding of how collective bargaining has been faring inLatin America and forecast developments for the future.

While in the Mexico experience, for instance, much store is set by the“new trade unionism” based on consensus and social dialogue, in starkcontrast is the collective bargaining experience of Malaysia where thep rocess appears more rigid, cast as it were in a straitjacket from which itcannot break through to rise to the present-day challenge of equitableincome distribution (Navamukundan). Similarly, in Senegal, the trammelsof history seem to run counter to any proper modern-day response to labourp roblems via the collective bargaining instrument (Dieng). In India, whenall is summed up, workers are far less ideological in their approach to tradeunion membership and far more vigilant in terms of what they expect fro mtheir trade union re p resentatives (Ratnam); but the author knowinglyleaves the reader to work out the puzzle that through collective barg a i n-ing, “workers’ interests can be further divided by offering more to theshrinking ‘core’ of workers who do less, leaving less to the growing num-bers of workers in the unorganized ‘peripheries’ who do more.” As forK o rea, workers have placed their trust in a massive shift towards indus-trial unionism after the turbulence of the past decade (Wo n - b o ) .

In the case of Canada (Olney), the shortcomings in the applicationof ILO Convention No. 98 are a source of concern for the ILO Committeeof Experts on the Application of Conventions and Recommendations:repeated complaints have been filed and are being examined by the Com-mittee on Freedom of Association; while still teetering on the threshold asthey prepare to cope with a market economy are the economies in transi-tion where trade unions first need to resolve their status as independententities not under the tutelage of the State (Aro and Makó/Simonyi).

Of special importance in this collection is the throwback we owe toBernard Gernigon who calls to mind the successive phases traversed inaddressing the question of the protection of trade union rights, in partic-ular the adoption of Convention No. 87, before Convention No. 98 actu-ally took shape, and then draws attention to the special status accordedConvention No. 98 which figures in the ILO Declaration on FundamentalPrinciples and Rights at Work because firstly, it is a major instrumentwhich protects a fundamental right: that of freedom of association; andsecondly, it provides what is still a satisfactory and present-day responseto the problems besetting workers and their organizations.

We are pleased to present this edition of Labour Education as a jointproject. Although the tableau is not as complete as we had hoped, we nev-ertheless propose the following selection for the benefit of our con-stituents, once again within our workers’ education thrust. As workersaround the world strive daily and universally to engage in what wouldalways be an unequal battle in defence of their interests, we hope that this50th anniversary of the adoption of Convention No. 98 will lead to arelease of the full potential of the collective bargaining institution. Morethan ever, we look forward to hearing the voices of the thirty-four mem-ber States which have still to be convinced of the interest and urgency ofratifying this Convention, and no doubt the 1999 Session of the Interna-tional Labour Conference will provide a choice opportunity. Lastly, it isour ardent wish that the potential of Convention No. 98 for nurturing

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social dialogue will be fully acknowledged and brought into the ambit ofthe ongoing efforts of the social partners to forge some new parameterswithin which social justice could make some strides.

Muneto Ozaki Ullrich FlechsenharChief Director a.i.ILO Labour Law ILO Bureau for Workers’Activitiesand Labour Relations Branch

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In plenary: the 32nd Session of the International Labour Conference, Geneva, June 1949.

Advisers with the Workers’ delegate of the United States to the 32nd session of the International Labour Conference, Geneva,June 1949. From left to right, Messrs. John P. Redmond, William Lane McFetridge, William J. McSorley, Martin P. Durkin( A d v i sers) and George Philip Delaney (delegate).

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Mr. Shamaldharee Lall, President of the Governing Body of the ILO and Government delegate of India to the Conference,chairing the inauguration of the 32nd Session of the International Labour Conference in 1949.

Thirty-second session of the International Labour Conference, Geneva, June 1949. Centre, Mr. David Morse, Director-Generalof the ILO; left, Mr. Víctor Casagrande; right, Mr. Luis Alvarado, both Government delegates of Peru.

Nos. 87 and 98. A few others are flouting boththeir obligations under the ILO Constitutionand these Conventions in attacking the collec-tive rights of trade unions and promoting bar -gaining with the workers individually instead.

On the other hand, it is gratifying to notethat some countries in Asia and Africa have, atlast, realized that the denial of trade unionrights would certainly give rise to violent situ-ations which can be detrimental to the interestsof society at large. They have recognized thevital and important role of trade unions in soci-ety – that of contributing to the promotion ofdemocracy, development and social justice.

Although the overall picture of inter-national standard-setting and application ofuniversal workers’ rights over the past fivedecades is encouraging, history will judge the

work of the ILO to the extent that the latter issuccessful in promoting trade union rights andsocial justice in all regions of the world.

If everyone agrees that the world in whichthe ILO is carrying out its work today has rad-ically changed since the fall of the Berlin Wall,then it should continue to devise practical waysand means of guaranteeing the right to orga-nize and to collective bargaining, and of pro-moting these and the other fundamental rightsand principles at work as the global platform ofrules governing the increasing globalization ofthe economy.

William BrettVice-Chairman

of the Governing Body of the ILOand Chairman of the Workers’group

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hostile government policies were those createdby the skilled workers: the craftsmen. Theywere the only ones with the material andadministrative resources and leadershipneeded to create solid institutions. Viable orga-nizations set up by semiskilled or unskilledworkers came at a later stage. The craftsmenorganized themselves in an attempt to regulatesupply by restricting market access for newcraftsmen and to create associations that couldprovide basic protection against the erosion ofworkers’ income. While not the only one, theregulation of wages and other working condi-tions was usually a key objective.

On occasion, it was the employers who tookthe bargaining initiative instead of acceptingconditions imposed by the trade unions; some-times the unions attempted to collaborateamong themselves in setting wages in the faceof opposition from employers, and at othertimes, though perhaps somewhat less fre-quently, the initiative came from both sides.Collective bargaining therefore did not stemfrom a single or uniform origin. Although itwould be unfair to disregard the role played byemployers and their associations in the incipi-ent stages of collective bargaining, the brunt ofthe burden was undoubtedly borne by theworkers and their unions, especially in indus-tries with unskilled or semi-skilled workforces,as employers were fiercely opposed to the lossof the advantages supposedly entailed by theestablishment of rules.1

The reluctance of many employers toengage in collective bargaining with the work-ers was further compounded by a powerfulpublic policy whose philosophical justificationwas rooted in the principles of economic liber-alism. Restrictive laws and the juridical impo-tence of the courts, designed to preserve theimmutability of the individual work contract(pacta sunt servanda), had a debilitating effect ontrade unions, especially those not belonging toprofessional organizations, and retarded thedevelopment of collective bargaining. Animportant shift in the attitude of the authoritiestowards a form of tolerance of trade unions andhence towards collective bargaining took placearound the end of the nineteenth century orshortly thereafter, when some countriesamended their laws to remove many of theobstacles to the formation of trade unions.2 Butlegislation was not the only means by whichtrade unions could acquire new rights. In Swe-den, it was by means of the collectively negoti-ated 1906 December Compromise that the mainemployer organization recognized the right to

organize trade unions, though that concessionwas made in exchange for trade union agree-ments to concede a more substantial package ofrights to company managements.

The inter-war years

The very first policies explicitly focussed onthe methods, whereas the pro c e d u res for col-lective bargaining in industrialized countriesw e re to emerge after the turn of the century andin the ensuing decades were to become the sub-ject of extensive legislation, particularly in theperiod between the two World Wars, in anendeavour to regulate and even pro m o t ecollective bargaining as a form of worker self-management. Those laws often includedclauses establishing the rights and obligationsof the parties, the legal status and applicationof the agreement, the main bargaining topics,and in some countries the rules of pro c e d u refor the parties. In some cases, provision wasmade for rules to be followed in case of failureto reach agreement and for dispute-settlementm a c h i n e r y.

In the lapse between the two World Wa r s ,collective labour agreements were deemed to bethe most normal way of setting wages and otherworking conditions and collective barg a i n i n gbegan to gather momentum and improve as ani n s t rument with the increasing prosperity of theindustrial organizations themselves affected bycollective bargaining. A c c o rd i n g l y, in 1939, thevast majority of workers in all the highly indus-trialized countries were covered by collectivea g reements, which began to replace the tradi-tional contractual relations between employersand workers in newly industrializing countriesand even those in the nascent stages of indus-trialization. Furthermore, a growing tre n dt o w a rds the negotiation of industry-wide agre e-ments began to emerge in many countries.

A system based on the willingnessof the parties

At the time, the governments of the indus-trialized countries perceived their role in collec-tive bargaining as crucial but subsidiary, asmeant for maintaining peaceful and stablelabour relations, easing the operation of the sys-tem of industrial relations, protecting employ-ees in the exercise of their right of associationand to bargain collectively, and applying the col-lective labour agreements. The parties werel a rgely responsible for making collective bar-gaining work.

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The system of collective bargaining wasstrictly voluntary and its effectiveness dependedessentially on the good faith of the parties. Theobligations arising there f rom were re g a rded asm o re moral than strictly legal in nature .3 T h e re-f o re, without this being expressly prescribed bythe law or the agreements themselves, the sys-tem of collective agreements entailed the oblig-ation on both employers and workers’ org a n i-zations and their members to observe theirrespective rights to organize and to negotiate,which constituted the very cornerstones of thesystem. As such, it was not considered necessaryto pass a specific law guaranteeing those rightsagainst possible infringement by parties to thelabour contract.

It should nevertheless be added that thelawmaker contributed indirectly to this absenceof specific laws in that regard, firstly, by grant-ing trade unions both immunity from criminalprosecution as well as a large degree of civilimmunity in the event of industrial disputes,and secondly, by setting minimum wages for“non-unionized” industries and professionsand for agriculture.

In some countries, as trade unions graduallyrid themselves of legal stumbling blocks, theywon increasing de facto recognition fromemployers and their organizations, with bothsides accepting the principle of collective bar-gaining. This was proof that the organizationsthemselves could effectively protect the exer-cise of the right to organize and to bargain col-lectively, free of any interference whatsoever bythe lawmaker.

Mutual recognition by the parties:The basic agreements

Such was the case, in particular, in the UnitedKingdom and the Scandinavian countries,w h e re employer and worker org a n i z a t i o n s ,having been free of legal impediments for sometime, were able to organize themselves intopowerful and unified associations. Their re p re-sentativity was never questioned, whether withrespect to the right to conclude collective agre e-ments, or to participate on an equal footing inpermanent joint bodies for the purpose of work-ing out collective labour agreements. In thecountries of Scandinavia, the rights of the org a-nizations re g a rded as re p resentative were fur-ther underpinned by the so-called “basic agre e-ments”, which were national agre e m e n t sconcluded between labour confederations andemployers. One of the main purposes of thosea g reements was to establish a uniform dispute

settlement pro c e d u re and establish rules toguide the diff e rent organizations in negotiatingcollective agre e m e n t s .

A number of basic agreements were agre e din Sweden, engendered by the “December Com-p romise” of 1906 and culminating in the BasicA g reement of 1938. Under those agreements, theconfederations set the guiding principles for col-lective bargaining, incorporating them into thea g reements reached in the various branches ofi n d u s t r y. These principles included mutualrecognition among the organizations concerned,a g reements for the setting of wages and otherworking conditions by means of a collectivea g reement worked out under the auspices of theconfederations, which pledged to take no dire c taction in advance of attempts at conciliation.

The first basic agreement concluded in Den-mark came in the September Agreement of 1899establishing the principle that collective agree-ments reached between the two confederationsconcerned should be respected and imple-mented by the affiliated associations. Theagreement further provided for other privi-leges and obligations with respect to employ-ers and employees; and, in the years when ILOConvention No. 98 was in the process of beingadopted, remained the basic instrument ofworker-employer relations in Denmark, whereindustrial relations were normally regulated bycollective agreements.

Similarly, an agreement was reached in Nor-way between the employer and worker con-federations in March 1935 setting the procedureto be followed in negotiating and concludingagreements.

The role of the law

In other countries, it was the lawmaker whohad to intervene to guarantee the exercise of theright of association and the right to organizeand to bargain collectively. Accordingly, theBelgian law of 24 May 1921 guaranteed “free-dom of association in all fields” and theSwedish law of 11 September 1936 prescribedthat no act could be undertaken against theright of association.4 In France, the law on col-lective agreements dated 23 December 1946made it compulsory for collective labour agree-ments to contain clauses on the right of associ-ation and freedom of opinion of workers andon conditions for hiring and dismissal of work-ers, without these provisions in any way under-mining the workers’ free choice of trade union.

The problems spawned by the SecondWorld War made it impossible for many coun-

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tries to publish annual statistics on the numberof workers covered by collective labour agree-ments, although some data was available forthe United States of America, the United King-dom and Sweden. In 1946 there were 14,800,000workers covered by collective agreements inthe United States; in 1945 there were 12,500,000in the United Kingdom; while in Sweden thecorresponding figure for 1944 was 1,063,000workers. Though limited, these statistics arehighly meaningful in terms of the progressmade in collective bargaining and the collectivelabour agreements reached in the countriesconcerned.5

In the wake of the Second World War

The adoption by the International LabourConference of a series of international instru-ments in the wake of the Second World Warundoubtedly gave fresh impetus to the devel-opment of collective bargaining, the maininstruments being the Freedom of Associationand Protection of the Right to Organise Con-vention, 1948 (No. 87), and the Right to Organ-ise and Collective Bargaining Convention, 1949(No. 98). These instruments influenced the atti-tude of many governments towards collectivebargaining in the wake of the Second WorldWar, a time when many countries were to wit-ness the confirmation of the system of collec-tive bargaining, especially in the FederalRepublic of Germany, Japan and Italy, whererestrictions of different types had impeded itsdevelopment.6

In many cases, the development of collec-tive bargaining coincided with a period of eco-nomic prosperity and industrial expansion.Nevertheless, the periods of fascism contra-dicted the notion that the policy of collectivebargaining was a function of a country’s eco-nomic development level. While some Euro-pean governments were displaying increasingtolerance towards or support for the develop-ment of collective bargaining, the fascist gov-ernments that were in place between 1920 andthe 1970s prohibited free bargaining. Instead,they compelled both employers and employeesto take part in government-established struc-tures that controlled all decisions concerninglabour relations.7

In several other countries, the post-waryears also favoured legal reform. In France, the1950 law on collective bargaining eliminatedsome of the restrictive controls imposed in 1946under the pressure of post-war economic prob-lems8 in an attempt to encourage the conclusion

of more collective agreements. In the UnitedStates, the National Labour Relations Actunderwent extensive amendments as from1947.

By the mid-1950s the phase of post-warreconstruction was almost complete in Japanand the European countries and the worldeconomy entered a phase of unprecedentedgrowth in production and trade that lasted untilthe second half of the 1960s.

During that period, collective bargaining inthe industrialized countries developed in a con-text marked by economic prosperity and afavourable attitude on the part of publicauthorities, albeit with considerable differencesin regard to the role of governments in the var-ious countries. Nevertheless, the end of the1960s witnessed profound social upheavalsthat culminated in the riots of 1968. That pointin history marked a sweeping change in tradi-tional concepts of the world of work, in partic-ular by raising questions about Taylorism andalso triggering substantial modifications inindustrial relations systems.

Collective bargaining and the socialand economic challenges (from the1970s to the 1980s)

Early in the 1970s, collective bargaining wasviewed as a rising phenomenon practised at alltimes and in all circumstances,9 having with-stood depression, recession, stagnation and thevagaries of inflation. Its regulatory function asa supplementary means of setting workingconditions was not questioned and the issuessurrounding its structure and diversificationbecame markedly more complex. Some NorthAmerican studies were outright euphoric inarguing that collective bargaining was at theroot of the prevailing social peace.10

The institutional framework

This decade brought noteworthy pro g ress inthe development of the institutional frameworkas most industrialized countries put in place asystem of rules and pro c e d u res designed tos t reamline it, whether by legislation (e.g. Swe-den) or by means of framework negotiations(Denmark or Norway). This notwithstanding,as late as the mid-1970s, Germany and Switzer-land still had very few provisions on the legalframework for collective barg a i n i n g .

The United Kingdom, still a unique case tothis day, nevertheless typified the reluctance to“legalize” the nature of the agreements and rec-

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ognize them as legal. Collective agreementscontinued to be considered as mere “gentle-men’s agreements” which, apart from a verysmall area of law, entailed no binding obliga-tions on the parties concluding agreementswithin their framework.11

At the same time, other countries evidenceda much more pressing need for the logisticalparticipation of government in smoothing theway for bargaining and peaceful settlement ofdisputes. There was also growing concern overp roblems of implementation. Hence, in Canada,the law prescribed that a complaints pro c e d u remust be included in all agreements while, inNew Zealand, it stipulated that all confli c t smust be submitted to arbitration. In the Nether-lands, it was the collective agreements them-selves that voluntarily provided for the cre a t i o nof bipartite dispute settlement tribunals.

It is noteworthy that the 1970s broughtagreements with much more substantial con-tent, which in Europe centred on three maintopics: job security, protection of the workingenvironment, and the investment plans of theenterprise.

Growth of bargainingin developing countries

During the decade in question, collectivebargaining was also making strides on othercontinents. Hence, in Latin America, where inmany countries it had been an exceptionalmechanism up to the 1960s or even the 1970s,12

it started to spread rather rapidly.13 The reasonsfor this stemmed from economic changes (aspart of the quest for economic development),political changes,14 and those within the tradeunion movement (swelling trade union mem-bership and the parallel rise of collective bar-gaining). Nevertheless, having set a trend thatwould continue through succeeding decades,collective bargaining practically never reachedall sectors or all workers and large numberswere usually excluded, either because of thelegal impossibility to negotiate or the difficul-ties of extending it to rural areas or small busi-nesses. Government intervention was alsoanother of its overriding features.

In Asia, agreements started to be widelyadopted during this period, in particular in tra-ditional industries and plantations (althoughmost of the bargaining was done at enterpriselevel) and brought substantial benefits, espe-cially to workers in India, Indonesia andMalaysia. Even though most countries in thecontinent drew up detailed laws in that regard

(above all regarding wages), the fact remainedthat in many countries trade unions faced dif-ficulties of recognition, especially under dicta-torial regimes, and of disintegration. At thestart of the 1970s, the problems connected withinflation and with possible bargaining withmultinational companies shifted to centrestage,15 as was also the case in other regions.

In English-speaking Africa, where bargain-ing was generally regulated in great detail, itspread at the same rate even in countries wherethere were no fully fledged unions. The prob-lems were basically related to wage policies andtrade union representation. 16 In French-speak-ing Africa,17 collective bargaining started togain ground shortly after the adoption of theOverseas Code (1952). After independence,most of these countries retained the old agree-ments and very few new agreements werereached.18 To crown it all, the State was inter-ventionist, preferring to regulate working con-ditions directly.

Inflation and the economic crisesof the 1970s

Despite the general optimism that bur-geoned in the post-war period, by the mid-1970s the first signs of economic crisis startedto “destabilize the social peace”, churning upafresh the debate as to the necessity for collec-tive bargaining. Questions therefore arose insome countries of Western Europe concerningdispute-settlement mechanisms and their effec-tiveness, as well as the coordination of the dif-ferent bargaining levels; in Eastern Europe, theproblems focused on coordination between theprovisions of labour agreements and state planswhile, in the United States, the central issue wasthe growing number of refusals by workerorganizations to sign new collective labouragreements. In all market economy countries,collective bargaining was hard hit by inflation.It was attempted to take this element intoaccount by shortening the term of labouragreements or by linking wages to cost of liv-ing indices, a practice known as indexation.19

Another issue that came to the fore was theimpact of collective bargaining on inflation,that is, the importance of reaching labour-man-agement agreement on the anti-inflation policyand its application, which was easier done incentralized structures.20 Government interven-tion in collective bargaining to contain theimpact of inflation also became significant insome Latin American countries: in Uruguay,Law No. 13720 created the Prices and Incomes

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Commission and invested it with broad pow-ers to control bargaining and establish wageadjustments by means of administrative acts.

Thus the 1970s and 1980s were set against abackdrop of deteriorating market conditionsand economic capacity. In the industrializedcountries, the gathering pace of inflation com-bined with the exchange rate crisis, the inap-propriate application of monetary and fiscalpolicies, and the oil crisis (1973 and 1979/80) tospawn rising numbers of jobless and of indi-vidual and collective labour disputes.

The recession brought the social players faceto face with the need for changes to the systemof industrial relations, as it exercised an impacton their role, their strength and ultimately ontheir bargaining power. In the circumstances,basic agreements once again come into theirown, having originated, as we have seen, in theNordic countries. Agreements of this kindbecame generalized across all regions, thanksboth to the positive influence of the Danish,Norwegian and Swedish agreements (espe-cially on European countries21) and to the trendtowards more centralized collective bargainingas of the 1970s. The importance and socialimplications of the Spanish and Italian agree-ments are cases in point.

Another common feature of this period wasthe centralization that came about as a way ofcoping with the complexities of a modern soci-ety in the grip of a crisis and as a result of theconcern on the part of governments to ward offthe undesirable macroeconomic effects of amultiplicity of bargaining rounds at variouslevels.22 Hence, a 1979 study by the EuropeanCommunity showed that national labouragreements had become more important inalmost all the countries of Europe, except forGermany, Luxembourg and the United King-dom.23 The move towards centralization wasalso evident in French-speaking Africa (thanksto the influence of the Overseas Code), in SierraLeone, Tanzania, Zambia, and in Singapore asa result of new wages and incomes policies, aswell as in some Latin American countries suchas Argentina.

Despite this trend, enterprise-level bargain-ing continued to predominate in countries suchas Canada, Japan, the United States and in mostcountries in Latin America and Asia.

Industry-wide agreements, although wide-spread in many countries, tended to be com-plemented by parallel enterprise agreements,in particular in those countries where negotia -tion was not conducted in the framework ofcentral agreements or regulated by coercive

government measures. The examples of Ger-many and the United Kingdom in the graphicarts sector or the metalworking industry arefairly representative in this regard.

Changes in content and systemsof labour relations

Crisis and joblessness led to changes in thecontent of agreements in a great many indus-trialized countries, with particular reference tosalaries in the United States24 and workinghours in Europe.25 For the first time in the in-dustrialized countries, “job market flexibility”was being mooted in some government circlesand employer organizations, inspired by theexamples of Japan and the United States wheremore jobs were created by means of increasedflexibility.

Moreover, the organization of workinghours appeared more frequently, although thisoften meant merely establishing new technicalmethods of production procedures withoutregard for the central objectives of the basicstructure of the organization, such as increasedproductivity, better product quality, greaterintra-enterprise cooperation and enhanced jobsatisfaction.

Together with the economic crisis, the ongo-ing political ups and downs had a defin i n gi n fluence on the evolution of labour relations insome countries. Hence, while some countries inE u rope were strongly anchored in democracyand in many cases in dialogue and modernlaws, others witnessed the emergence of a newsystem of labour relations after protracted peri-ods of dictatorship and corporatist re g i m e s2 6

(Spain, Greece and Portugal). Some Latin A m e r-ican countries were dismantling social systemsleft behind by military regimes of the 1970s( A rgentina, Chile, Paraguay and Uruguay). InChile, for instance, the military regime had over-regulated labour relations, leading to thefragmentation of trade unions and even to theestablishment of ad hoc areas for collective bar-gaining and to classifying as collective instru-ments those concluded between two or moreworkers and an employer. Asimilar trade uniondismantling took place in 1973 in Uru g u a y,w h e re although collective agreements existedafter that time, they were no more than a re fle c-tion of pre-existing practices. Asia’s authoritar-ian regimes had induced similar problems withrespect to recognition and bargaining power oftrade union org a n i z a t i o n s .

In A rgentina, the negative impacts of the lossof institutional status led not only to the abru p t

18

used to operate and make flexibility at theenterprise level essential for responding torapid product market changes. Enterpriseshave responded by transforming how theyorganize work and production. In the process,industrial relations structures have come underpressure to adapt.”31 The typical way of adapt-ing has been via the decentralization of collec-tive bargaining and, more broadly speaking, oflabour relations.

Accordingly, throughout most of the world,labour is becoming more diversified and theaverage size of enterprises is being reduced byrestructuring. This has placed greater pressureon traditional collective bargaining by erodingthe base of trade union organizations. All thesechanges have helped to shift the balance ofpower between management and workers,with the result that trade unions are losingpower while company managements arestrengthening and buttressing their position.

Nevertheless, even if the search for flexi-bility in a context of economic globalizationwould seem to be a widespread phenomenonspurred by international pressures, the way inwhich each country responds to these pressuresthrough its various institutions is dependent oneach national context.

Decentralization of collective bargain-ing in the industrialized countries

In the 1990 decade, the trend toward thedecentralization of collective bargaining be-came more pronounced, though varying inextent from country to country. Therefore,while in the United States and the United King-dom enterprise-level collective bargaining hadtypified labour relations, decentralization hasbeen gathering momentum over the pastdecade with the gradual disappearance of bar-gaining models in the United States,32 andthrough the implementation of certain policies(e.g. privatization) and new management mod-els in the United Kingdom. In New Zealand, thechange has been more sweeping, especiallywith the passing of the Employment Act pro-moting the use of individual contracts and cur-tailing the power of collective bargaining.

This process has not spared the Europeancountries, and the cases of France or Italy, toname but two, have also borne evidence to thistrend towards decentralization. In Sweden,where centralized economic bargaining hadbeen the norm, the traditional bases of nationalbargaining are being whittled away. Hence,although certain issues still fall into the ambit

of national-level bargaining, industry-wideagreements now largely prevail in determiningwage levels as well as in addressing the generalproblems of larger enterprises.

T h e re are also appreciable signs of decen-tralization in Germany, where industry-wideb a rgaining opens the way for more enterprise-level bargaining through works committees, onsuch matters as training, new technologies,o rganization of work and job fle x i b i l i t y, whicha re becoming increasingly important.3 3 A l-though traditional bargaining stru c t u res gener-ally preserve the neutrality of the enterpriseduring bargaining, a growing number of workscommittees are being created to encourage dia-logue and cooperation at the industry level andto implement human re s o u rce policies. The aimof these committees is most often to re s t ru c t u rework methods in the wake of technologicalchanges and in accordance with the demands ofcompetition, as well as job pre s e r v a t i o n .

In the same way, the French government’s1997 report on collective bargaining alsoshowed a more than 27 per cent increase in thenumber of enterprise-level agreements in com-parison with the previous figure.34 In Japan, thespring offensive or Shunto35 made up for theweakness of enterprise-level bargaining bycoordinating inter-union strategies for sectoraland national bargaining. Nevertheless, the cur-rent worsening of the economic situation andthe intensification of competition are placinggreat pressure in the Shunto and diminishing itscoordinative function.36

It should be mentioned, however, that enter-prise-level collective bargaining is still limitedin most countries of Western Europe. In fact,industry-wide agreements have much largercoverage than enterprise agreements.37 As ageneral rule, there has been no central disman-tling of labour relations in those Europeancountries with a tradition of participation bythe social players. In that regard, it is of inter-est to note that the aforementioned evolution ofcollective bargaining at the enterprise level inFrance is largely due to the impact of thenational agreement on working hours con-cluded in 1995 inviting the dialogue partners toengage in enterprise-level bargaining on thereorganization and reduction of workinghours.38 There is no doubt that central negotia-tion by industry has been somewhat weakened,as shown by the recent failures of consultationsor central negotiations or the paucity of theircontent, although they continue to play a sig-nificant role. Besides, practically all countries incontinental Europe have seen attempts in

20

recent years – generally by governments andsometimes by worker and employer organiza-tions – to conclude some form of “social pact”resolving labour issues. For instance, the via-bility of Austrian tripartitism was clearlydemonstrated with the adoption in 1992 and1993 respectively of the Declaration of Princi-ples of Social Association (bipartite) and theStability Pact (tripartite). In the Netherlands,where there was a period marked by severe eco-nomic and social problems from the late 1970sto the early 1980s, a major milestone wasreached with the 1982 signing of the tripartiteagreement (Wassenaar Agreement) in whichemployers and workers established a linkbetween standard of living (e.g. the level ofsocial benefits and wages, including socialsecurity benefits) and job creation. In Ireland,there was a move towards tripartite central bar-gaining and this has been shown to benefit thecountry’s economic development as reflectedin the low level of inflation and interest rates,the falling debt/GDP ratio and joblessness, aswell as the high economic growth rate. Let usnot forget that central bargaining and consul-tation continue to play a fundamental role incountries like Denmark and Norway, whereindustry-wide bargaining is still closely coor-dinated by the central organizations.39

Evolution and problems of collectivebargaining in developing or transitioncountries

The most significant changes in labour rela-tions systems have taken place in the countriesof Central and Eastern Europe as a result of themajor economic and political changes. Manycountries in transition have already passed newlaws along the lines of the Western Europeanmodel which allows for bargaining at variouslevels, that is, by enterprise, industry or occu-pation. Enterprise-level collective bargaining isbecoming increasingly important in thesecountries, although not on the same scale as inWestern Europe. Hence, in Poland, Hungaryand the Czech Republic for example, the num-ber of enterprise-level collective agreementshas increased significantly since the early 1990s.At this level, bargaining is relatively well estab-lished in state enterprises and to a somewhatlesser extent in large private companies. In con-trast, it is extremely rare among small andmedium-sized enterprises.40 Industry-wide col-lective bargaining is not sufficiently developed.In the Czech Republic for instance, collectivebargaining at that level regulates only the min-

imum social and working conditions and thenumber of agreements reached is falling as aresult of scant participation by employers andtheir lack of proper organization.41

In Latin America, where the tradition ofstate intervention is still thriving, collective bar-gaining plays only a limited role as a regulatorof working conditions. Although there is nodoubt that enterprise-level bargaining is on therise in Argentina, Brazil, Chile and Mexico, theformal regulation of working conditions iseffected predominantly through labour law.Broadly speaking, in these countries there is avacuum in the development of the law withrespect to enterprise-level bargaining.

In A rgentina, Brazil and Uruguay and to alesser extent Mexico, the predominant form ofb a rgaining is industry-level bargaining and ingeneral the coverage of those agreements is re l-atively high. In the remaining countries in theregion, industry-level negotiation is marg i n a land decentralized bargaining takes placemainly in the large enterprises. Another wide-s p read problem is that the agreements coveronly the stru c t u red sector of the economy andfocus on specific economic areas. So whatappears here is a dichotomous model of labourregulation in which the legislative system pre-dominates on the one hand and individualemployee-employer relationships on the other.4 2

Although collective bargaining in Asia con-tinues to vary considerably from one countryto the next based on differences of culture andeconomic development level across the region,some traits are common to all of them, for exam-ple the rare occurrence of bargaining and thepredominance of decentralized, enterprise-level bargaining. Several factors underlie thisrelative underdevelopment: trade union frag-mentation (countries in South-East Asia), res-trictions on the right of association in somecountries (until recently Indonesia and Korea),or the difficulties stemming from the process oftransition to the market economy (China, Viet-nam). Nevertheless, there is also little doubtthat in countries such as the Republic of Koreaor Indonesia where authoritarian regimes havebeen gradually replaced by democratic gov-ernments, the last decade has also brought acertain democratization of institutions, espe-cially in terms of a more widespread recogni-tion of freedom of association and collectivebargaining.43 Enterprise-level bargaining stillpredominates in the region.

Generally speaking, it should be borne inmind that there is an emerging trend towardshigher-level bargaining in the region. For exam-

21

ple, the Republic of Korea’s trade union move-ment is now launching sectoral negotiations inthe hospital and metalworking sectors. At thesame time, the labour-management partners inthat country are setting up national tripartitestructures in an attempt to come to grips withthe financial crisis.

The predominance of the informal and agri-cultural sectors in Africa limits the potentialimpact of tripartite and bipartite bargaining. A sin other regions, structural adjustment pro-grammes have seriously affected labour re l a-tions on that continent over the past decade,with cutbacks in the public sector workforc e ;and it was precisely in the public sector thattrade unions had the strongest presence andw h e re collective bargaining was most devel-oped. The privatization of the public sector wasto have a negative impact on the already enfee-bled bases of collective bargaining in those coun-tries. Apart from that sector, collective agre e-ments were reached in some major enterprises.As re g a rds sectoral bargaining, while it is indeedpractised, it concerns only a handful of compa-nies and agreements are not regularly re n e w e d .

Recent development of tripartitelabour-management dialogue

Over the past decade, it is the national-leveltripartite labour-management dialogue thathas displayed the greatest impetus within bar-gaining processes outside of Europe. A range offactors explain this development: the transitionfrom authoritarian regimes to democratic gov-ernments (in some Latin American countriesand South Africa); the changeover fromplanned to market economies (in Central andEastern Europe); and the economic crisis (inEast Asia and Mexico).

In Latin America, the recent development oftripartism has had a favourable impact on thetransition to democracy. The example of theagreement “Chile, a historic opportunity”(Chile, una oportunidad histórica), signed by bothsides of industry in April 1990, is undoubtedlyan eloquent example since it meant labour-management endorsement of the transitionfrom autocratic governance to political plural-ism: between 1990 and 1995 there were hardlyany industrial disputes or strikes. In this region,tripartitism was a basic instrument for accom-modating new economic conditions at a timewhen social cohesion had been strained bystructural adjustment policies.44 In this sameconnection, several tripartite agreements con-tributed significantly over the last decade to

social stability in Mexico, a country hard-hit bythe economic crisis. The Alliance for EconomicRenewal (Alianza para la renovación económica),signed in 1995, envisaged a series of tripartitemeasures to safeguard the purchasing power ofworkers: raising minimum wages; providingunemployment benefits; and ensuring supportfor enterprises in the form of fiscal incentives.In some countries in the region (e.g. theDominican Republic), tripartism has clearedthe way for discussion of legislative reforms.

Because of the weakness of the trade unionmovement in Asia, national-level tripartism hasbeen negligible or hardly more than a formality,except in some countries such as Singapore. Thisnotwithstanding, the recent economic crisish a s generated opportunities for stre n g t h e n i n gnational tripartite dialogue in some countries.Hence, in the Republic of Korea, the Tr i p a r t i t eA g reement (February 1998) eased the re s t r i c-tions on suspending employment for reasons ofeconomic re s t ructuring, though it simultane-ously improved social protection by expandingsocial security. In the Philippines, the laboura g reement on industrial harmony and stability(Acuerdo Social sobre Armonía Industrial y Estabil-i d a d) of February 1998 provided for a six-monthperiod during which the social partners wouldrefrain from dismissals and labour disputes. InS i n g a p o re, the Tripartite Panel on Retre n c h e dWorkers (February 1998) envisaged: (i) devel-opment of an information network on job off e r sthat could be of interest to workers being maderedundant; (ii) exploring alternatives in theevent of dismissal such as new placements,adjusted working hours and wages, and train-ing possibilities; and (iii) advice on trainingopportunities. In general, dialogue has seem-ingly increased the flexibility of the job marketwhile giving equal consideration to the need forworker protection and social stability.

The case of Africa is less promising when itcomes to tripartite social dialogue. Although thep roblems of economic adjustment tend to cre-ate new opportunities for developing national-level tripartite agreements, this rarely occurs inthe region. Limited re s o u rces, powerless tradeunions, a predominantly rural economy, a smallformal sector and political instability have beenthe overriding features of these countries andhave there f o re thwarted effective tripartitism.Nevertheless, there are some encouraging cases,such as South Africa and Mauritius, where tri-partitism and collective bargaining are showingsome dynamism. South Africa, for example, hasbased its re c o n s t ruction on these institutions. Itsdemocratic transition has been underpinned by

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a strong trade union presence, as manifested bythe creation in 1994 of the Tripartite NationalEconomic Development and Labour Council(NEDLAC). Besides, in the Labour RelationsAct of 1995, this institution “encouraged thes p read of industry-wide bargaining in barg a i n-ing councils, in which the social partners have,i n i t i a l l y, to define the coverage of future indus-try agre e m e n t s ” .4 5

The content of collective bargaining:Importance of flexibility andemployment

With rising unemployment in most coun-tries and the conviction that labour market flex-ibility is an essential condition for the compet-itiveness of both enterprise and country, it isprecisely these two topics – flexibility andemployment – that have dominated bargainingover the past decade.

In the United States, for example, the con-tent of bargaining has focused increasingly onthe conditions necessary for improving thecompetitiveness of enterprises and preservingjobs. These concessions initially went hand inhand with measures such as wage moderation,job flexibility, and agreements to bring downhealth insurance costs in exchange for job andtraining guarantees and/or assistance in plac-ing dismissed workers in new jobs. The samephenomenon can be observed in most countriesof Western Europe where high joblessness hasbeen the foremost concern of both sides ofindustry in recent years. For this reason, themain focus of interest has been bargaining onworking hours, which includes reducing andreorganizing them, job-sharing and early retire-ment agreements, as well as other steps relatedto job preservation. In France, for instance,working hours have been a central topic ofenterprise-level bargaining. Of the 6,100 agree-ments in force in 1997, some 2,500 (i.e. 80 percent) included clauses on working hours andemployment.46 In Belgium, a number of com-panies recently negotiated agreements combin-ing working time and flexibility clauses, thusreinforcing the trend towards job flexibility asa means of job creation.47 Working hours are notalways negotiated to guarantee employment;in Sweden’s 1998 collective bargaining round,the participants viewed working hours more asa matter of occupational health and safety andquality of life than a means of job creation.48

Naturally, the subject of wages continues totop the European bargaining agenda, althoughin dealing with it the dialogue partners do so

from the standpoint of guaranteeing employ-ment through wage moderation or even shorterworking hours with the corresponding wagecut. These provisions are accompanied by anumber of measures to facilitate access toemployment such as hiring with reduced wagerate or an increased quota for apprentices. Asregards employment and flexibility, a centraltopic has been the development of vocationalskills. In Sweden, for instance, this has been acomponent of most of the 1998 agreements,since the bargaining partners have been awarethat the upgrading of skills is fundamental tomaintaining workers’ vocational qualificationsand enhancing their eligibility for future jobs.49

In some Asian countries (Japan, Republic ofKorea and Thailand, to name a few), the eco-nomic crisis and the accompanying loss of jobshave made employment the central topic ofenterprise-level bargaining, while wages – hav-ing been the dominant subject before the crisis– have now become a subject of secondaryimportance. In some cases (Japan, Republic ofKorea) the benefit plans worked out at theenterprise level are being advanced as an alter-native to job flexibility, and include training,unpaid leave of absence or early retirement.

In Latin America, traditional topics such aswages, vacation and occupational safety andhealth are still on the bargaining agendas. Insome cases, new agreements merely reproduceformer ones, which is evidence of the weaknessof the bargaining bodies in the region. In the cir-cumstances, it is important to point out thatmost transnational corporations in the conti-nent have been able to set up stable collectivebargaining rounds and that agreements com-bining flexible working hours and work orga-nization to increase productivity in exchangefor job security have been concluded in theautomotive sector in Brazil and Argentina bycompanies such as Ford, Toyota or GM.50

From its beginnings over a century ago, col-lective bargaining has evolved to the point ofbeing today’s main vehicle for setting workingconditions and for worker participation in com-pany decision-making. The social, economicand political context of collective bargaininghas changed, bringing new challenges.

Several events have been milestones in thehistory of collective bargaining: the adoption ofthe ILO Right to Organise and Collective Bar-gaining Convention, 1949 (No. 98); the spreadof Taylorism in the industrialized countries inthe years following the Second World War; theviolent demonstrations of the late 1960s andearly 1970s, together with high levels of job

23

absenteeism, which mirrored workers’ discon-tent with the prevailing production model; andthe growing globalization of the economy in the1990 decade. Collective bargaining has demon-strated its full worth based on its considerablecapacity to adapt to changes in the contexts inwhich it has developed.

In recent years, collective bargaining hasfaced the challenges stemming from fallingtrade union membership, increasing individu-alization of labour relations and the difficultquest for greater competitiveness and flexibil-ity in a situation of economic globalization.Changes have taken place both at the level ofnegotiation and the topics covered. The abilityto adjust has endowed collective bargainingwith the virtues of an increasingly valuableinstrument for introducing changes into theenterprise and work organization.

Thus, in addition to its traditional role as aregulatory mechanism for labour relations, col-lective bargaining is now becoming a moreimportant factor in driving company competi-tiveness and pro d u c t i v i t y. Since the measure sdesigned to improve competitiveness oftenre q u i re sacrifices on the part of workers, at leastin the short term, the success of changes dependsl a rgely on the latter’s willingness to accept them.Thus, collective bargaining gives legitimacy tothe measures taken, since worker re p re s e n t a t i v e sparticipate autonomously in decision-making. Inthis re g a rd, collective bargaining offers a distinctadvantage over other methods of intro d u c i n gchanges, such as amendments of work contractsor unilateral decisions by employers. When itcomes to legislative changes, collective barg a i n-ing has the advantage of being more flexible, giv-ing the parties concerned the possibility of choos-ing the type of changes and deciding how quicklyand in what form they are to be eff e c t e d .

The role of collective bargaining todaytherefore differs considerably from that playedat the turn of the century and it is to be hopedthat it will grow in importance during the nextmillennium.

Notes

1 ILO: Collective bargaining in industrialised marketeconomies, Geneva. 1974.

2 In the United Kingdom, the Parliament passed theTrade Union Act of 1871 and the Conspiracy and Protectionof Property Act of 1875, and later the even more importantTrade Disputes Act of 1906, which all together granted immu-nity from persecution to trade union members and officers;in France the 1884 law allowed freedom of association; inImperial Germany, the Reichstag allowed the representativeanti-socialist law to expire in 1890.

3 Application of the principles of the right to organize and bar-gaining collectively, collective agreements, conciliation and arbi-tration, and cooperation between public authorities and employers’and workers’ organisations, Report VIII (I), InternationalLabour Conference, 31st Session, San Francisco, 1948.

4 Ibid., p. 9.5 Department of Labour, Bureau of Labour Statistics,

USA. 1947. Monthly Labour Review, Vol. 64, No. 5, May 1947,p. 765, cited in Report VIII (1) of the 31st Session of the Inter-national Labour Conference, San Francisco, 1948, p. 40.

6 Under its Basic Law of 1949, the Federal Republic ofGermany allowed freedom of association and reintroducedcollective bargaining by means of laws enacted in 1949 and1952; the Japanese Constitution of 1946 guaranteed workersthe right to organize, act and negotiate collectively as a basicand inviolable human right.

7 Adams, J.R.: 1993. “Regulating unions and collectivebargaining: a global, historical analysis of determinants andconsequences”, in Comparative Labour Law Journal, Vol. 14,No. 3, spring 1993, p. 279.

8 Law 50-205 on collective labour agreements and indus-trial dispute settlement procedures, 1950.

9 See Córdova, E.: “Collective bargaining in industrial-ized countries, recent trends and problems; Summary of dis-cussions”, Vienna Symposium, November 1977, Labour-Management Relations Series, No. 56, Geneva, ILO.

10 See Bronstein, A.: “Trade unions, critics and collectiveb a rgaining”, in Labour Law Journal, Chicago, 27 (10) October1976, pp. 614-622. The article states that 99 per cent of thea g reements in force in 1975 had been signed without con-flict and that they covered 20 million workers in the UnitedS t a t e s .

11 The Carr Act ratified this feature in the course of thedecade.

12 Bronstein, A.: 1985. La negociación colectiva en las rela-ciones de trabajo en América Latina, Geneva, ILO, 1985.

13 This could be observed (Bronstein, op. cit., p. 84) par-ticularly in Central America and above all in Honduras andPanama, as well as in Ecuador and Peru.

14 This is nonetheless a variable factor, for while somedemocracies were consolidated in the 1970s, it was also timeof military dictatorships in the Southern Cone in particular.

15 For further information, see Industrial relations in Asia,Labour-Management Relations Series, No. 52, Geneva, ILO,1975.

16 For further information, see Industrial relations and per-sonnel management in English-speaking Africa, Labour-Man-agement Relations Series, No. 40, Geneva, ILO.

17 Even though it had already been recognized by thelaw of 1937.

18 The situation did nonetheless evolve thanks mainly tonew legislation.

19 Technique used in Australia, Canada, Denmark, Italy,Norway, Switzerland and United States.

20 Hence, Austria and the Netherlands, which are highlycentralized and where wage policies are at the same time seton a tripartite basis, are examples of success.

21 Such was the case of Belgium’s social planning agree-ments (convenios de programación social), the general agree-ment on vocational training and job security in France, andHolland’s 1972 social agreements.

22 Opinions vary concerning centralization so that, whilein Italy and Sweden they are the outcome of pressure exertedby employer organizations, in France and Germany the lat-ter organizations reject them for fear that they may lead to

24

increased trade union power. In this regard, see Sisson, K.:Management of collective bargaining: an international compari-son, Warwick Studies in Industrial Relations, New York, 1987.

23 Commission of the European Communities: “Prob-lems and prospects of collective bargaining in the EEC mem-ber States”, in Collection Studies, Social Policy Series, OfficialPublications Office of the European Communities, Luxem-bourg, 1980, p. 14.

24 The so-called concession agreements (e.g. wage reduc-tion agreement between United Automoblile Workers(UAW), Ford and GM in 1982, or the agreement on the reduc-tion of wages and vacations in the steel industry of that sameyear, giving workers job security and income guarantees inexchange for wage cuts.

25 Trade unions demanded this reduction as an effectiveway of eliminating joblessness (although in reality they tookthe form of “classic reductions”, a far cry from the proposedjob-sharing). In this regard, see Pankert, A.: “Recent devel-opments in labour relations in the industrialized marketeconomy countries: some benchmarks”, in InternationalLabour Review (Geneva) Vol. 124 (5), Sep.-Oct. 1985.

26 Brazil could be counted among this group in the LatinAmerican region since it was only in 1967 that the collectiveagreement was introduced, breaking with the corporatistprinciple of bargaining by professional groups.

27 In Argentina the principle of extensive collective agree-ments is enshrined in the law.

28 Belgium (1974), Canada (1967), Finland (1979), Italy(1970), Sweden (1965), United States (1969), among others.

29 These discussions are recorded in the preparatory Con-ference documents for the adoption of Convention No. 151on labour relations in the public service. See Freedom of asso-ciation and procedures for determining conditions of employmentin the public service, Report VII (1), International Labour Con-ference, 63rd Session, ILO, 1977.

30 Although this characteristic had already obtained insome industrialized countries.

31 World Labour Report, ILO, 1997, p. 82.32 In the United States, the trade unions in some sectors

such as steel try to secure favourable collective agreementsfrom one employer, thus establishing a model to be used byother unions to exert pressure on other employers.

33 Locke, R.; Kochan, T.; Piore, M.: “Reconceptualizingcomparative industrial relations: lessons from internationalresearch”, in International Labour Review, Vol. 134, No. 2, 1995.

34 European Industrial Relations Review, London, Vol.No.296, Sep. 1998, p. 27.

35 At the end of the 1950s, “quasi-industrial” collectivebargaining was established in Japan vis-à-vis the predomi-nating bargaining structures, whereby bargaining roundswere launched simultaneously throughout the country andin all sectors and common demands put forward. This annualround is held in the spring, whence its name.

36 On recent changes in the Japanese system of labourrelations, see Sako, M. and Sato, H. (eds.): Japanese labour andmanagement in transition: Diversity, flexibility and participation,Routledge, London and New York, 1997.

37 In 1995, enterprise-level agreements covered only6 per cent of the private sector in the Netherlands (com-p a re d with 75 per cent in the case of industry-wide agre e-ments), 14 per cent in Spain (as against 70 per cent for indus-try) and 25 per cent in France (compared to 80 per cent byindustry). See in this connection ILO: World Labour Report,Geneva, 1997, p. 120.

38 European Industrial Relations Review, op. cit., p. 27.39 See “Negotiating flexibility: The role of collective bar-

gaining in labour market flexibility”, Geneva, ILO, forth-coming title.

40 On recent changes on the collective bargaining front inthese countries, see Casale, G.: Collectivebargaining and the lawin Central and Eastern Europe: Some comparative issues,Budapest, ILO, 1997, Report No. 20, as well as the WorldLabour Report, Geneva, ILO, 1997.

41 European Industrial Relations Review, op. cit., p. 21.42 World Labour Report, op. cit., p. 159.43 On recent changes in industrial relations in the Repub-

lic of Korea, see Chang-Hee Lee: “New unionism and thetransformation of the Korean industrial relations system”, inEconomic and Industrial Democracy, Vol. 19, pp. 347-373.

44 See Bronstein, A.: “Societal change and industrial rela-tions in Latin America: trends and prospects”, in InternationalLabour Review, Vol. 134, No. 2, 1995.

45 World Labour Report, op. cit, p. 171.46 European Industrial Relations Review, op. cit., p. 27.47 European Industrial Relations Review, Vol. 288, Jan. 1988,

p. 23.48 European Industrial Relations Review, Vol. 293, June 1998,

p. 30.49 World Labour Report, op. cit. p. 122.50 World Labour Report, op. cit. p. 159.

25

It was in 1948, some 50 years ago now, thatthe International Labour Conference in SanFrancisco adopted Convention No.87 concern-ing freedom of association and protection of theright to organize. The following year, the Con-ference adopted the Convention (No. 98) con-cerning the application of the principles of theright to organise and to bargain collectively.

As the first standards of paramount impor-tance as regards freedom of association, the twoConventions referred to are aimed primarily atp romoting the free exercise of the right to organ-ize while safeguarding the independence ofemployers’ and workers’ organizations. Themotive idea of ILO philosophy on freedom ofassociation – that of independence – has thusbeen posited. Independence, of course, butindependence in relation to whom?

Article 3 of Convention No.87 provides thatthe public authorities shall refrain from anyinterference that would restrict the rights oforganizations. This necessary absence of inter-ference entails a range of obligations for gov-ernments: no requirement of prior authoriza-tion in order to constitute organizations, thefree choice of their structure by workers andtheir organizations, the free election of leaders,the untrammelled drafting of the constitutionsof the said organizations, financial independ-ence and the protection of trade union fundsand goods – in short, respect for certain civil lib-erties essential to the exercise of the freedom ofassociation, in particular the right of assemblyand expression, and the right to demonstrate.

The imperative for organizations to be inde-pendent from government authorities was alsosolemnly recalled four years later (1952) by theInternational Labour Conference with theadoption of the resolution on the independenceof the trade union movement, which retainssuch relevance that the ILO supervisory bodiesstill very frequently cite it.

Yet Convention No. 87 did not cover allaspects of trade union independence. Indis-

pensable as it is with respect to public author-ities and political parties, the independence ofworkers’ organizations must be no less ensuredand safeguarded in their relations withemployers. After all, the genuine defence ofworkers’ interests would hardly be conceivableif the organization responsible for promotingtheir claims were created by the employer orowed its existence wholly to the latter’s sup-port. By the same token, fixing working condi-tions through collective bargaining implies notonly the independence of labour and manage-ment from each other, but also the possibility ofreaching collective agreements without undueintervention by public authorities.

This set of issues not covered under Con-vention No. 87 was therefore addressed a yearlater by Convention No. 98, whose title “Rightto Organise and Collective Bargaining” gives agood indication of its goals.

Like Convention No. 87, Convention No. 9 8simultaneously recognizes and protects an indi-vidual right vested in the worker (pro t e c t i o nagainst anti-union discrimination) and collec-tive rights attaching to employers’ and workers’o rganizations (protection against acts of inter-f e rence and promotion of collective barg a i n i n g ) .

Protection against anti-uniondiscrimination

In general terms, Article 1 of ConventionNo. 98 provides that “workers shall enjoy ad-equate protection against acts of anti-union dis-crimination in respect of their employment”.Paragraph 2 spells out the scope of such pro-tection: “Such protection shall apply moreparticularly in respect of acts calculated to:(a) make the employment of a worker subjectto the condition that he shall not join a union orshall relinquish trade union membership;(b) cause the dismissal of or otherwise preju-dice a worker by reason of union membershipor because of participation in union activities

26

ILO Convention No. 98: An instrument still topical50 years after its adoption

Bernard GernigonChief

Freedom of Association BranchILO

outside working hours or, with the consent ofthe employer, within working hours”.

This form of workers’ protection is a keyaspect of freedom of association, as acts of anti-union discrimination can in practice lead to adenial of the guarantees provided in Conven-tion No. 87. Clearly, it is of special importancein the case of trade union leaders and re p re s e n-tatives, who must be guaranteed not to suff e rp rejudice by reason of their trade union off i c e .

The full importance of the pro t e c t i o na ff o rded under Convention No. 98 is appre c i-ated when it is observed that acts of anti-uniondiscrimination, more specifically dismissals onaccount of trade union membership and activi-ties, together with violations of civil libertiesindispensable to the exercise of freedom of asso-ciation, constitute the most frequent source ofthe complaints filed with the ILO Committee onF reedom of Association and that the pro p o r t i o nof these cases is increasing steadily with time.

One of the major obstacles facing workersvictim of such acts is the difficulty of pro v i d i n gp roof of the anti-union nature of the measure staken with re g a rd to them. They happen to facea range of problems in determining in practicalterms the real nature of their dismissal or of therefusal to hire them, above all when there areblacklists, a practice whose strength lies pre-cisely in the secrecy shrouding it. While it isundoubtedly important for employers to obtaininformation concerning job applicants, it is noless important, as underlined by the ILO Com-mittee on Freedom of Association, that employ-ees who have been trade union members oractivists should be able to become privy to andchallenge information held about them, espe-cially if it is inexact and of unreliable origin.Considering this difficulty if not impossibilityon the part of the worker to prove that he or shehas been the victim of an act of anti-union dis-crimination, the obligation incumbent on theemployer to prove that the alleged anti-unionm e a s u re has to do with issues other than trade-u n i o n - related ones is undoubtedly the mostdeveloped form of protection in this re g a rd .

Aspecial and increasingly frequent problemis posed by dismissals dictated by the economicsituation which may entail disastrous conse-quences for unionized workers and their lead-ers if they are misused to perpetrate acts of anti-union discrimination against them.

The effectiveness of the protection accordedunder the law depends not only on the contentof the provisions concerned, but also on theway in which they are applied in practice and,in particular, on the efficacy and rapidity of

measures designed to ensure their application.It is this context that brings out the full mean-ing of Article 3 of Convention No. 98, whichstates that “Machinery appropriate to nationalconditions shall be established, where neces-sary, for the purpose of ensuring respect for theright to organise…”

In other words, governments should put inplace machinery designed to ward off acts ofanti-union discrimination or, where they can-not be avoided, to ensure the granting of suffi-ciently dissuasive compensation. Whether pre-ventive in nature (for example, obtainingauthorization from a government or indepen-dent agency prior to dismissing trade unionleaders) or compensatory, the procedures insti-tuted should be speedy, low-cost and impartialso as to forestall such acts or remedy them asrapidly as possible. An important element to betaken into account in this connection is a senseof proportion between the damages suffered bythe worker – particularly serious in the event ofdismissal, above all in a situation of general eco-nomic crisis – and the compensation the saidworker may expect. As any act of anti-uniondiscrimination is a violation of a fundamentalworkers’ right, any compensation awardedshould be full and comprehensive. This notionunderlies the position of the ILO supervisorybodies which consider as insufficient, withinthe meaning of Article 1 of Convention No. 98,laws which in practice allow the employer toterminate a worker’s job simply by accordingthe statutory compensation payable in cases ofunjustified dismissal, when the real motive isthe worker’s trade union membership or activ-ities. The reinstatement of the dismissed workerwith retroactive compensation is in this contextclearly the most appropriate means of redress-ing acts of anti-union discrimination. Thisshortcoming motivated the Committee on Fre e-dom of A s s ociation to adopt the practice, incases of duly proven anti-union dismissals, ofrequesting the governments concerned to takeaction to reinstate the workers concerned. Theapplications made by the Committee in thisregard have borne fruit, as the reinstatement ofthe workers dismissed on account of tradeunion activities is among the more frequentpositive outcomes of its recommendations.

Once the protection of trade union rights wase n s u red, the next step was to guarantee theindependence of trade union organizations vis-à-vis employers and their protection against actsof interference. That was the goal being pursuedby the International Labour Conference with theadoption of Article 2 of Convention No. 9 8 .

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Protection against acts of interference

Article 2.1 of Convention No. 98 states that“ Workers’ and employers’ organisations shallenjoy adequate protection against any acts ofi n t e r f e rence by each other or each other’s agentsor members in their establishment, functioningor administration.” Paragraph 2 of the samearticle then describes the examples of certains p e c i fic acts of interference “designed to pro-mote the establishment of workers’ org a n i s a-tions under the domination of employers oremployers’ organisations, or to support work-ers’ organisations by financial or other means,with the object of placing such org a n i s a t i o n sunder the control of employers or employers’o rganisations…” Convention No. 98 thus cov-ers a particularly important aspect of fre e d o mof association: the protection of the free exerc i s eof the rights conferred upon employers’ orworkers’ org a n i s a t i o n s .

The most obvious types of interference asenvisaged under Convention No. 98 are the cre-ation of workers’ organizations that have beendescribed as “house unions” or “yellow unions”or the establishment of corporatist systems inwhich employers and workers are re p re s e n t e dby one and the same body under public law.N a t u r a l l y, these are forms of organization unre-servedly condemned by the ILO.

Without going to such extremes, there aremore insidious instances of acts of interferencethat can undermine the guarantees provided inConvention No. 98. The numerous complaintsthe ILO has had to examine in this connectionare a good illustration of this phenomenon inpractice. We may cite the example of two steer-ing committees existing side by side in a singleunion, one of them allegedly being manipu-lated by the employer; the presence of a paral-lel union that is understood to have been cre-ated under pressure from the management; thedismissal of trade union leaders in a mannerprejudicial to the existing union and favouringthe formation of another trade union organiza-tion; and the dual function of a member of thegovernment who also heads an organization ofcivil servants.

The ILO supervisory bodies have also hadto address the specific problem of solidaristassociations set up in some Central Americancountries. These are workers’ associations setup dependent on a contribution from theemployer and which are financed in keepingwith the principles of mutual benefit societiesby workers and employers for the social andeconomic purposes of material welfare (sav-

ings, credit, housing and educational pro-grammes, etc.) and unity and cooperationbetween workers and employers. The organs ofthese associations must be composed of work-ers, but an employer representative may par-ticipate in them without the right to vote.

In the view of the ILO supervisory bodies,the fact that these associations are partiallyfunded by employers while their membershipis comprised of workers, senior managers andstaff members taken into confidence by theemployer and are often created at the initiativeof employers means that they cannot functionas independent organizations and thereforepose problems for the application of Conven-tion No. 98. The governments concerned shouldtherefore take steps to eliminate any inequalityof treatment between solidarist associationsand trade unions and to ensure that the formerdo not engage in trade union activities inparticular, and do not participate in collectivebargaining.

As it happens, observance of the principleof the independence of the parties and the vol-untary nature of negotiations is indispensableto a genuine process of collective bargaining. Ifthis condition were no longer met, the agree-ments reached at the end of the process wouldnot regulate working conditions in any valid orobjective way, contrary to Article 4 of Conven-tion No. 98.

Promotion of collective bargaining

Article 4 provides that “Measures appropri-ate to national conditions shall be taken, wherenecessary, to encourage and promote the fulldevelopment and utilisation of machinery forvoluntary negotiation between employers oremployers’ organisations and workers’ organ-isations, with a view to the regulation of termsand conditions of employment by means of col-lective agreements.” This provision thereforecarries two components: the action needed onthe part of the public authorities to promote col-lective bargaining, and the voluntary nature ofbargaining, which in turn presupposes theindependence of the parties with respect to oneanother as well as with respect to the publicauthorities.

The promotion of collective bargaining obvi-ously presupposes the presence of the parties atthe bargaining table and there f o re the designa-tion of the organization(s) that will re p resent theworkers. The main problem arising in this con-nection is that of trade union re p re s e n t a t i v i t y. Indiscussing Convention No. 98, the International

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Labour Conference examined this matter anda g reed that pre f e rential rights could bea c c o rded to the most re p resentative org a n i z a-tions for the purposes of collective barg a i n i n g .F u r t h e r m o re, the designation of trade unionsfor this purpose should be based on objectiveand pre-established criteria so as to avoid anypossibility of bias or abuse. The ILO supervisorybodies have established some guarantees thatshould be respected in deciding on the org a n i-zation acting as bargaining agent: (a) the grant-ing of this status by an independent body;( b ) the choice of a re p resentative org a n i z a t i o nby a vote among workers in the units consid-e red; (c) the right of an organization that failedto obtain sufficient votes at previous trade unionelections to request a new election after a statedperiod; (d) the right of a new organization otherthan the certified one to request the holding ofnew elections after a reasonable period.

The institution of specialized bodies orprocedures often usefully supplements thepanoply of provisions and mechanismsdesigned to promote collective bargaining.These methods may take a wide variety offorms ranging from conciliation to the prohibi-tion of unfair labour practices that hamper thecollective bargaining process. These systemsshould be set up in such a way as to facilitatebargaining, possibly even creating an ad hoclegislative framework, though without goingas far as interventionism which would jeopar-dize the voluntary nature of the bargaining.

In the cases submitted to the ILO Commit-tee on Freedom of Association, one of the prob-lems encountered in recent years has been theestablished trend in certain countries towardsreverting to a certain individualization oflabour relations which, should it becomeentrenched, could of course seriously endangerthe promotion of collective bargaining andbeyond that the very development of workers’or even employers’ organizations.

Another relatively recent phenomenon thatprompted the Committee of Experts on theApplication of Conventions and Recommen-dations to express its concern is the fragmen-tation of bargaining units and the consequentfragmentation of the collective bargainingexercise often concomitant with structuralchanges in the economy, especially in cases ofprivatizations. From the ILO standpoint, it isobviously desirable to ensure that these devel-opments are not used to weaken trade unionorganizations. To safeguard the independenceof the parties to collective bargaining, it wouldeven be better for them to decide by common

agreement on the level at which the negoti-ations should take place or at least to entrust atruly independent body with settling the issue.

So the issue of intervention by the publicauthorities in collective bargaining has at thisstage been mooted. And the issue is raised lessoften in regard to procedures than to the actualcontent of the collective agreements. This isindeed a domain in which the public authorit-ies are very often inclined to take steps to limitthe autonomy of the parties. They may do so byrequiring the approval of agreements prior totheir entry into force or through more targetedinterventions designed to limit or curtail thefree determination of working conditions andof salaries specifically by collective bargaining.This latter type of restriction has been used bya growing number of governments in recentyears as part of economic stabilization or struc-tural adjustment policy packages. The ILOsupervisory bodies believe that such restric-tions should be applied only in exceptional cir-cumstances as a strict necessity, should notexceed a reasonable time frame and should beaccompanied by appropriate guarantees of pro-tection of the standard of living of the workersconcerned, especially those at greatest risk.Failing this, governments would be denyingworkers and management what is undoubt-edly the most flexible and suitable means ofadapting to the circumstances of time andplace. It is owing to this very virtue that collec-tive bargaining has retained its character ofbeing the most appropriate means of deter-mining working conditions.

By guaranteeing protection against acts ofanti-union discrimination and acts of interfer-ence and by promoting collective bargaining,Convention No. 98 had fortunately completedthe work started one year earlier with the adop-tion of Convention No. 87.

Admittedly, some grey areas still persistedeven after the entry into force of the two Con-ventions: no special protection was given toworkers’ representatives, nothing was envis-aged to facilitate the accomplishment of theirmission and public servants in governmentdepartments excluded from Convention No.98were not protected against acts of anti-uniondiscrimination, nor were the provisions on bar-gaining applicable to them. It was only muchlater that these shortcomings were remedied bythe Workers’ Representatives Convention, 1971( N o . 135), and the Labour Relations Convention,1978 (No. 151).

In spite of these lacunae, Convention No.98remains a major instrument in the body of inter-

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national labour standards. It is a major instru-ment because it protects a fundamental right,that of freedom of association, and because itprovides what is still a satisfactory and present-day response to the problems besetting work-ers and their organizations. So it is hardly sur -prising that Convention No. 98 came to be thepreferred instrument in the ratification cam-paign launched by the Director-General of theILO in 1995 and that the recognition of collec-tive bargaining figures in the Declaration onFundamental Principles and Rights at Workadopted by the International Labour Confer-ence in 1998.

The large number of ratifications of Conven-tion No. 98 – 140 to date, currently the second-l a rgest number for any ILO Convention – isp roof, if needed, of the importance attached to itby all the parties involved – governments,employers and workers. Thirty-four memberStates are still to be convinced of the interest andu rgency of ratifying this Convention: to con-vince them is one of the priority tasks which theInternational Labour Office and its Freedom ofAssociation Branch particularly wish to addre s sin the early years of the next millennium.

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Definition

Collective bargaining refers to the process ofnegotiations between a group of workers, usu-ally represented by one or more trade unions,in exceptional cases by ad hoc delegates, on theone hand, and one or more employers oremployers’ organizations, on the other, with theset purpose of determining the working condi-tions and terms of employment applicable to anenterprise or industry. It may also aim at regu-lating relations between the parties involved incollective bargaining. The anticipated outcomeof bargaining is the conclusion of a collectivelabour agreement to govern working condi-tions. Throughout Latin America the instru-ment as defined is known by various Spanishterms, including: convención colectiva de trabajoin Argentina, Costa Rica, Nicaragua, Panama,Peru and Venezuela; contrato colectivo de trabajoin Bolivia, Chile, Ecuador and Paraguay, andconvenio colectivo de trabajo in Cuba, Uruguayand the Dominican Republic.7

Importance of collective bargainingin the industrial relations system

In the early 1980s, an ILO publication high-lighted the fact that collective bargaining in

Latin America played a role whose significancecould neither be ignored nor exaggerated.8 Thatassessment was made at a time when a largepart of the continent was governed by author-itarian political regimes, or was just barelyemerging from such regimes. One would havehoped that almost 20 years later – in a demo-cratic environment more open to freedom ofassociation – collective bargaining would be infull bloom. However, that expectation has notbeen met. Collective bargaining has definitelymade some headway, but it has also experi-enced setbacks to the point where, at present,its importance in the industrial relations systemof most countries must at least be qualified.

On one hand, it cannot be denied that thereturn of a number of Latin American countriesto a democratic system of government and a cli-mate fostering greater respect for human, civiland political rights has created more room forfreedom of association which, in theory, mighthave permitted the exercise of collective auton-omy under conditions unthinkable a shortwhile before. Nevertheless, while Latin Amer-ica was shedding its authoritarian regimes itwas also suffering the onslaught of the externaldebt crisis and its economy went into decline.The 1980s are called the lost decade in terms ofits economic development (but not its political

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Latin America

Collective bargaining: A comparative analysis

Arturo Bronstein1

DirectorILO Multidisciplinary Technical Advisory Team

San JoséCosta Rica

The following article takes the form of a comparative presentation of collective bargaining in Latin Amer-ica. The ILO’s treatment of this topic is not new: almost 40 years ago it was addressed in an Inter-Ameri-can Study Conference on Labour-Management Relations (Montevideo, 1960).2 In Caracas in 1977, the ILOconvened a Latin American seminar on the promotion of collective bargaining which gave rise to a re v i e wof collective bargaining in the re g i o n .3 Then in 1986 the topic appeared on the agenda of the Twelfth Con-f e rence of American States Members of the International Labour Organisation, within the broader frame-work of the function of industrial relations in economic and social development.4 Since that time, it has notbeen selected for consideration at the regional level, but subregional studies have been conducted in the Com-mon Market of the Southern Cone (MERCOSUR) countries and Chile,5 and in the Andean countries,6

re s p e c t i v e l y. This article has drawn on the studies re f e r red to and other available information; it seeks to pro-vide the most current portrayal of the main features and trends in collective bargaining in Latin America.

maturity). That period was followed by one ofneo-liberal economic programmes whoseeffects on the composition and structure of theworkforce were dramatic. The workforceshrank significantly in the sectors with a strongtrade union presence, particularly in the pub-lic, industrial and commercial sectors of theState and the manufacturing industries of theprivate sector. At the same time it grew in theinformal sector in terms of non-wage work, andin emerging industries such as in-bond assem-bly industries where organized labour encoun-tered serious obstacles. Simultaneously, unem-ployment rates tended to rise and even themore formal economic sectors proved ratherinclined to favour precarious forms of employ-ment by resorting increasingly to atypicalemployment contracts.

Those factors had a demobilizing effect onworkers, reflected in the weakening of tradeunions which lost their bargaining capacity. Inmost countries, after a phase of expansionwhich came in the wake of the democratizationof society, collective bargaining came to a stand-still due to the impact of the economic crisis andstructural adjustment programmes. In severalcountries, without exception, it lost ground,sometimes considerably. Within this generalscenario we can note that collective bargaininghas greater relative importance in Argentina,Brazil, Mexico, Uruguay and Venezuela andsubstantially less in the other countries. Inplaces such as Costa Rica, its presence couldalmost be considered symbolic. Cuba is a caseapart because trade union membership isalmost total, and practically all labour organiza-tions have collective agreements. Nevertheless,both Cuba’s economic model and the role of itstrade unions and collective bargaining differsignificantly from the rest of the continent: nei-ther can be compared.

Origin and development

In its broadest sense, collective bargaininghas been practised in Latin America for almosta century and its history goes even further backin time. Around 1895 in Uruguay, negotiationswere held to limit the working day in the con-struction, marblework and printing industries.9

Although such negotiations were not con-cluded in the form of documents grouping theformal requirements of a collective agreementin the legal sense of the term, they neverthelessreflected a new approach to regulating condi-tions of employment through self-appointedcommitments on the part of employers and

groups of workers, in as much as their featureswere distinct from individual contracts and het-eronomous regulation. In Argentina a collectivesectoral agreement was concluded in theBuenos Aires printing industry in 1906. Thefirst collective agreement in Mexico – in the tex-tile industry – dates from 1913; in 1918 Boliviaand Colombia each engaged in collective bar-gaining in mining centres and the port of Bar-ranquilla respectively. The first collective agree-ment in Venezuela dates from 1919 and coveredlabourers and workers on the Gran FerrocarrilCentral.10

The common denominator of those negotia-tions was their close relationship with confli c t ,which historically has been the main feature ofrelations between capital and organized labourin Latin America. In fact, conflict also pre d a t e strade unions since in general the main re a s o nfor dispute is trade union recognition. Collec-tive bargaining was there f o re originally consid-e red a conflictual relationship, and the first col-lective agreements on re c o rd acquired the formof dispute settlement protocols. Such a perc e p-tion of collective bargaining has been graduallychanging, to the extent that labour legislationhas been shaped to recognize the proper role ofcollective bargaining as a medium for re g u l a t-ing working conditions. In this sense the pio-neer laws were probably the Chilean LabourCode and the Mexican Federal Labour Law,both of which were passed in 1931 and re p re-sent the first attempts at codification of labourlegislation in Latin America. Shortly there a f t e r,similar legislation was adopted in almost all theother countries.11 H o w e v e r, the perception ofcollective bargaining as a conflictual process hasnot yet been altogether banished, as is evi-denced by the fact that in the majority of coun-tries the pro c e d u re for collective bargaining fol-lows the same course as conflict resolution. Ithas been only through a painstaking pro c e s sthat there has emerged an acceptance of thenotion that the purpose of collective barg a i n i n gis to resolve conflicts, not create them.

Current practice: Full of contrasts

Available statistical information shows therather uneven development of collective bar-gaining. For Central America, a Costa RicanLabour Ministry report for 1994-97 made nomention of the signing of new collective labouragreements, in contrast to the 42 and 55 collec-tive agreements registered in 1975 and 1976respectively.12 In El Salvador, the Ministry ofLabour registered 308 collective agreements in

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force in 1995, of which 229 applied to the con-struction industry and 49 to manufacturing. In1993, 1994 and 1995, the Guatemalan Ministryof Labour registered 21, 34 and 31 collectiveagreements on working conditions (“pactoscolectivos”), respectively. In Honduras, 60 col-lective agreements were registered in 1994 and28 in 1995, but the actual number of collectiveagreements in force was far greater, namely 279,covering a total of 79,715 workers. During theperiod 1993-95 Panama concluded 206 collec-tive agreements, covering slightly fewer than70,000 workers. Between February 1990 andJune 1993, the “Dirección de NegociaciónColectiva” (Office of Collective Bargaining) inthe Nicaraguan Ministry of Labour registered339 collective agreements. Of that figure, 275resulted from innovative and unprecedentednegotiation, 48 were revisions of earlier agree-ments and 13 were attached as addenda toexisting agreements;13 almost three-fifths of the275 agreements had been signed in the publicsector, and only 30 per cent in the private sec-tor. In comparison with a study conductedsome years previously, the importance of col-lective bargaining had greatly diminished,probably as a consequence of the change in thepolitical environment in 1989.14

Drastic decline in the Andean countries

With re g a rd to the Andean countries, theinformation available shows that in Colombia in1996, 607 collective agreements were concluded,206 in Ecuador, 623 in Peru and 594 in Ve n e z u e l a .In some of these countries the actual number ofa g reements in force is probably higher, sincem o re than a year has elapsed. Furthermore, thea g reements remain in effect even when the dura-tion of their terms has expired, as long as the par-ties have not revoked or replaced them.

Nevertheless, as described in the study fromwhich these data have been taken, in all thesecountries the decline of collective bargaininghas been drastic.15 This opinion is corroboratedby a comparison of data published 20 years ear-lier: in 1976 there were 1,123 collective agree-ments in Colombia, 222 in Ecuador, 1,596 inPeru and 1,446 in Venezuela.16

Extensive industrial coveragein Argentina

In contrast to the situation described above,collective bargaining enjoys a healthier statusin the Southern Cone. Undoubtedly, it is inArgentina that collective bargaining is most

prevalent, due to the extremely ample coverageof its industry-level domestic collective agree-ments. After a period of near freeze during themilitary regime (1976-83), collective bargainingregained impetus upon the restoration ofdemocracy. It received further stimulus at thebeginning of the 1990s with the adoption ofstandards such as the National EmploymentAct which enhanced labour flexibility in so faras it was possible to do so through collectivebargaining. In addition, a 1995 law was passedstipulating collective bargaining in determin-ing specific working conditions in small andmedium-sized enterprises, thus encouragingbargaining at that level. Collective bargainingalso gained ground in public administrationand education through the passage of laws oncollective bargaining in those sectors, adoptedin implementation of the ILO Collective Bar-gaining Convention, 1981 (No. 154), ratified byArgentina in 1993.

Brazil: More autonomy with regardto the State

There has also been notable progress inBrazil where collective bargaining was practi-cally non-existent for much of the rule of themilitary government (1964-85), largely as a con-sequence of legal provisions which prohibitedthe negotiation of salary increases which wereincompatible with the economic thrust of theGovernment. Another restriction stemmedfrom the dissidio colétivo procedure, whichallowed any of the parties to a negotiation torequest a labour court to set salaries and work-ing conditions through a sentencia normativa(legal ruling), similar in effect to an enforceablearbitration award. However, towards the endof the 1970s the situation began to change as aresult of the appearance of the “new tradeunionism” (novo sindicalismo ) which providedgreater autonomy from the State, and by 1988a total of 75 per cent of urban trade unions wereengaged in collective bargaining.17 At present,although the dissidios colétivos have not entirelydisappeared, they have lost much of their ear-lier dominance to the benefit of bilateral collec-tive bargaining.

Uruguay: Bilateral negotiation hasdisplaced tripartite wage boards

Collective bargaining in Uruguay has madegiant strides after many years of virtual paraly-sis during the military regime (1973-85). Uponthe restoration of democracy, the new govern-

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ment reopened wage negotiations in tripartitewage boards which had existed since 1944 butwhich had not met since 1968. That practiceremained in force for several years while at thesame time bipartite collective bargainingbetween workers’ and employers’ organiza-tions began to gain strength. Around 1991, 86per cent of the workers in enterprises employ-ing more than 50 workers were covered bysome form of collective labour agreement and79 per cent of the enterprises were covered byan industrial agreement.18 In other words,bipartite collective bargaining has ousted tri-partite wage boards, which the Governmenthas stopped convening.

Progress only with the restorationof democracy

Collective bargaining in Chile has notreached levels comparable to those of its neigh-bours in the Southern Cone, but it cannot bedenied that it has grown since the restorationof democracy in 1990. Consequently, in 1993,9.7 per cent of contractual workers and 15.5 percent of the total number of salaried employeeswere covered by a collective agreement; thisproportion rose to 36.1 per cent in enterprisesemploying more than 50 workers, but stood ata mere 1.3 per cent in smaller enterprises.19 Amore recent survey has shown that collectivebargaining had reached 75.7 per cent of thelarge enterprises (200 or more workers), butonly 5.4 per cent of micro-enterprises (one tonine workers).20

Similarly, collective bargaining in Paraguay,which nonetheless is the MERCOSUR memberwith the least relative development, may besaid to have picked up some momentum. Themost significant leap occurred between 1989,the date of the fall of the dictatorship, and 1994,a period in which 250 collective agreementscovering 31,494 workers were concluded, a fig-ure representing a 400 per cent increase over theprevious period.21

Main features

In Latin America, as in the rest of the world,collective bargaining is one of the means whichbinds the actors in industrial relations: theemployers and their organizations on onehand, and one or several groups of workers onthe other, usually, but not always, representedby a trade union. As shown earlier, there arevery few countries, if any, in which collectivebargaining is the main mechanism for interac-

tion between the actors in the industrial rela-tions system. Nevertheless, it applies in thoseenterprises or industries in which workers havebeen able to form solid trade unions.

A well-defined frameworkfor legislation

The central feature of collective barg a i n i n g ,with the sole exception of Uru g u a y, is thati t takes place within a framework which isstrictly demarcated by legislation. This in prin-ciple offers the advantage that in almost allcountries legislation, and often the Constitu-tion itself, enshrines the right to collective bar-gaining in emphatic terms. Besides, the exis-tence of a legal framework allows for theformulation of clear and precise “rules of thegame” which, at least in theory, makes the bar-gaining exercise easier.

State interest or control mechanism?

It might then be surmised that the existenceof such a detailed legal framework re flects thei n t e rest of the State to promote collective bar-gaining, a re q u i rement of some internationali n s t ruments such as the Collective Barg a i n i n gConvention, 1981 (No. 154).2 2 Yet legislationhas also in day-to-day practice functioned as adevice to control the bargaining autonomy ofthe parties to collective bargaining, due to theinquisitorial way in which the public authori-ties interpret and apply its rules. The matterdeserves very special attention because if thesubject is approached from a historical per-spective it would have to re flect rather accu-rately the traditional mistrust that Latin A m e r-ican governments have displayed towards theworkers’ movement, which they often severe l yre p ressed when they could not win it over fortheir own purposes. That was why the State atone and the same time restricted freedom ofassociation and enacted generous legislation infavour of the individual worker, perhaps in anattempt to send workers a message that their wel-f a re depended on the State rather than on tradeunions; those governments had no confid e n c ein the political submission of the unions.

In spite of all impediments

P e rhaps the most surprising aspect of it allis not so much the relatively low prevalence ofcollective bargaining, but rather the fact that ithas survived in spite of all the obstacles theState has erected. An eloquent testimony to

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these impediments is the remarkable numberof complaints, handled by the Committeeo nF reedom of Association, which relate to col-lective bargaining restrictions imposed bymost countries on the continent at one time ora n o t h e r.

Trend towards legislatingthrough restrictions

In contrast with the rest of the countries,Uruguay offers, as said earlier, the uniqueexample of a country lacking legislation on col-lective labour relations, to the point where itsmain sources of regulation are ILO Conven-tions Nos. 87 and 98, both of which it ratified in1954, and a 1968 Act, which is now partiallyobsolete.23 If the truth were to be told, thisabsence of a legal framework has not hamperedthe development of collective bargaining. Infact, self-regulation of collective labour relationshas been the position traditionally defended byUruguayan trade unions, which often interpretthe term regulation as a synonym for restrictionof freedom of association. The experience inLatin American countries, with their tendencyto legislate through restriction, including theexperience of Uruguay whose only regulationof collective bargaining (and trade unions) wasadopted during the military regime (1973-85)and quickly annulled after the restoration ofdemocracy, tends, at least to a certain extent, toprove the trade unions right. However, as anILO mission observed during a 1986 visit tostudy the country’s industrial relations, theabsence of a legal framework could also proveharmful because it translates into a lack of clearrules of the game which would facilitate andpromote negotiation.24

Goal to promote consensusand stimulate social dialogue

The main issue is not so much establishingwhether collective bargaining should be subjectto rules or not, but rather, knowing their con-tent and, particularly, whether they will pro-mote collective bargaining or restrict it de facto.Sometimes collective bargaining is conceivedas a conflictual process, when in reality its aimshould be to promote agreement, through con-ciliation and reciprocal concessions, and notconflict. The promotion of collective bargaining– and this should be the goal of regulation –means promoting consensus and stimulatingsocial dialogue, which can only be beneficial forindustrial relations, and more generally for the

economic development of the countries inquestion and strengthening of their democraticand pluralist governments.

Structure of collective bargainingand its actors

Trade unions and coalitions

Legislation invariably designates tradeunions as the representative of workers, butsuch representation is often not exclusive. Infact in several countries, a coalition of non-unionized workers is also a possible participantin bargaining, but is almost always subject tosafeguards established to prevent anti-tradeunion discrimination. Therefore, as a generalrule, the coalition may engage in negotiationsonly when there is no trade union in the enter-prise in question. Furthermore, it will alwaysnegotiate as an agent, and not as a collectiveactor, because agreements signed with a coali -tion may apply only to those workers who havespecifically given the coalition the mandate torepresent them. This differs from the case of thetrade union whose representational power isextended normally (but not always, as we shallsee later) to the whole bargaining unit. In addi-tion, in several countries such as Argentina,Mexico and Venezuela, the law purely and sim-ply does not recognize collective bargainingwith coalitions of non-unionized workers.

Chile is an exception: coalitions and tradeunions enjoy the same rights, either of themmay engage in negotiations, and in both casesthey represent only their respective members.It would perhaps be more appropriate in thisinstance to speak of pluri-individual rather thancollective bargaining.

Separate mention should be made of the con-flict which has arisen in countries such as CostaRica, where workers have often pre f e re n t i a l l ynegotiated d i rect agre e m e n t s with solidarity a s s o-ciations instead of collective agreements withtrade unions. Such associations, created to pro-vide benefit and enhance material welfare, arefinanced by employers’ contributions, and donot have the features of independence typical oftrade unions. As ILO supervisory bodies havepointed out, the negotiation of d i rect agre e m e n t swith “asociaciones solidaristas” is likely to cre a t ediscrimination against trade unions, re n d e r i n gthe practice incompatible with freedom of asso-c i a t i o n .2 5 Reforms of the 1993 Labour Code pro-hibited the negotiation of d i rect agre e m e n t s in theevent that workers were re p resented by a tradeu n i o n .

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w o r k f o rce be unionized for there to be an oblig-ation to negotiate. In Mexico and Paraguay thereis no specific membership re q u i rement for thenegotiation of an enterprise-level collectivea g reement, but there must be membership of atleast two-thirds for a c o n t r a t o - l e y (law governingthe contract). Likewise, there is no minimummembership re q u i rement in Honduras, Panamaor Chile where, in any event, the collectivea g reement applies only to trade union members.

Employer as bargaining partner

The employer is a party to enterprise-levelnegotiations, whereas the employers’ organi-zation carries out that function during indus-try-level negotiations. As shown earlier, nego-tiation at this highest level is prevalent only inArgentina, Brazil and Uruguay while in theother countries it rarely occurs, if at all. In short,apart from these exceptions, employers’ orga-nizations do not usually have a direct leader-ship role in collective bargaining, even thoughthey may provide indirect leadership by givingtechnical advice to their members.

Centralized bargaining: a formof negotiation not covered by law

One outstanding aspect of collective bar-gaining in Latin America has been the conclu-sion of centralized national agreements, usu-ally tripartite, between the government andemployers’ and workers’ organizations. Thisform of negotiation has not been covered byany of the Labour Codes of the region, but para-doxically, it becomes increasingly prevalentwhen bilateral collective bargaining falters. It iscloser to the realm of social consultation andsocial (and political) dialogue than to collectivebargaining proper. Centralized bargaining wasscarcely practised until the 1980s, even thoughits precursors have been studied by the ILO.29

However, once democracy was restored, col-lective bargaining became the object of grow-ing interest and favour, a trend that was per-haps influenced by Spain’s experience.

Transition without excessivesocial upheaval

The extremely positive results of Spain’sFramework Agreements during the transition todemocracy following the dissolution of theFranco regime, and their quite favourableimpact on the strengthening of democracy,would suggest that the negotiation of central-

ized agreements in Latin America could havesimilar effects, fostering an orderly transitionfrom dictatorship to democracy without exces-sive social upheavals. Centralized bargainingwas therefore practised in one form or anotherin the various countries, leading to agreementswhich combined firm commitments with politi-cal statements in support of democracy andsocial dialogue.

Practically no strike action in Chile

Perhaps the best-known example of thispractice is the tripartite agreement called Chile:an historic opportunity, which was concludedbetween the new democratic Government andcentral employers’ and workers’ organizationsjust after the end of the regime led by GeneralPinochet. That document not only set someminimum social commitments (among others,the raising of the minimum wage), but it alsoreaffirmed political commitment to democracy.This episode of centralized bargaining andnegotiations in the following two years were,without a doubt, instrumental in ensuring thatthe transition to democracy in Chile would takeplace without industrial action. By contrast, inmany other countries the passage from dic-tatorship to democracy was accompanied byviolent social conflict, and that was largely dueto the release of social frustrations in reactionto a protracted period when the ruling author-ities virtually equated strikes with subversion.

Important agreements concludedin other countries

Examples of centralized bargaining can alsobe found elsewhere, such as in Paraguay andColombia, where centralized bargaining indis-putably played a key political role, but it alsooccurs in A rgentina, where in 1994 an importantFramework A g reement for Employment Pro-ductivity and Social Justice was signed, and inMexico, where the conclusion of the 1987Economic Solidarity Pact was followed by along cycle of tripartite negotiations aimed atprice and wage stabilization.3 0 It is also worthmentioning the experience of Venezuela, whereP resident Caldera succeeded in securingt h e 1997 “Acuerdo tripartito sobre seguridadsocial integral y política salarial” (tripartitea g reement on social security and wage policy)with the Confederation of Venezuelan Wo r k e r sand the employer organization, the Ve n e z u e l a nFederation of Chambers of Commerce and Ma-nufacturers’ Associations (FEDECAMAR A S ) .

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Consensus was thereby reached on the intro-duction of important reforms in labour legisla-tion (in the areas of wages and severance pay)and in social security. Those areas had beenpolitically frozen for many years and could beunblocked only through social dialogue andtripartite negotiation.

An atypical form of negotiation:The State as beneficiary

We could conclude that while traditionalcollective bargaining experienced a period ofrelative decline, another form of negotiation,centralized and tripartite bargaining, emergedand evolved. This form of bargaining could beplaced midway between the industrial rela-tions system and the general political system,drawing on the objectives of both systems. Itdoes not deal with what is strictly understoodas conditions of work, and its direct beneficiary isnot the employer, but the State and the socialpartners in abstract. It is a difficult concept todefine because it does not fall within the every-day dynamics of working relations. Neverthe-less, it requires the full participation of tradeunions and employers’ organizations, and awillingness on the part of the actors to negoti-ate. It also has an impact – at least indirect, butoften very direct – on the living and workingconditions of workers; therefore even though itis a form of atypical negotiation, it also has itsproper place within the practice of collectivebargaining in Latin America.

Content of collective bargaining

The degree to which collective bargaining issubstantive is influenced by the general contextof the industrial relations system, and in partic-ular by factors such as the nature and stru c t u reof the bargaining unit; the trade union’s compe-tence to negotiate and its interest in negotiatings p e c i fic issues; the economic and general politi-cal climate; economic capacity on the employer’ sside and the room for manoeuvre the law grantsto the social partners. All these factors may comeinto play favourably in collective barg a i n i n g ,and this renders the collective agreement ahighly dynamic and re c i p rocally useful instru-ment for employers and workers. On the con-t r a r y, they may limit collective bargaining to afew points which almost always relate to wages,unless they are limited – as is done in some col-lective agreements – to re p roducing alre a d yexisting legal provisions or confirming that theemployer is obliged to observe the law.

A list of bargaining topics

While wages and pay systems are ever-pre-sent topics in collective bargaining, the othermain issues which are likely to be negotiatedappear with much less frequency. However,they are not totally unheard of and a short listof them deserves mention at this point.

Work organization and jobclassification

The second main bargaining item is generalconditions of work, in particular workinghours, public holidays and leave even if thesesubjects may already be elaborately covered indetail by legislation. In addition, there are pro-visions related to work organization, such asshift work or work teams, which also arise fre-quently in collective bargaining. It should alsobe pointed out that in certain countries, such asArgentina, job classification is given muchemphasis in collective bargaining.

Social benefits, medical attention,facilities

Another topic covered by bargaining issocial benefits, a topic of great interest to work-ers due to the generally unsatisfactory socialsecurity coverage, in both quantitative andqualitative terms, and the scarcity or insuff i-ciency of social welfare distribution networksin Latin America. There f o re in a country suchas the Dominican Republic, the coverage ofpersonnel by regular medical fees a p p e a r salmost invariably on the collective barg a i n i n gagenda involving a medium-sized enterprise.In all the other countries, whenever possible,b a rgaining is held on issues such as medicaland dental care, childcare facilities, canteens,cultural and sports re c reation, and so on. It isnonetheless obvious that very few or none ofthese subjects will be negotiated in small enter-prises, or in enterprises which are not on asound financial footing. Once again we arefaced with the inadequacy of enterprise-levelcollective bargaining to meet the needs of themajority of workers.

Relations between the trade unionand employer

F i n a l l y, it would be fitting to mention the pro-visions referring more specifically to re l a t i o n sbetween the trade union and the employer oremployers’ organization signing the collective

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a g reement. This topic is of prime importance,since the first step would be the recognition of thetrade union as a legitimate bargaining partner inthe enterprise, thereby eliminating the maincause for conflict. Next in line are trade unionfacilities, which could include union licences,meeting rooms, space for trade union announce-ments, and most importantly, payroll deductionsfor union dues, to which is added in some coun-tries, especially in A rgentina, the cuota de soli-daridad (social contribution) or agency shop fee.

Administration of the agreement,recruitment and duration

T h e re are other issues related to the admin-istration of the collective agreement often han-dled by a joint commission. For example,dispute settlement may be put before an inter-nal complaints committee, and even involvehighly sophisticated complaints mechanismsi n s p i red by “grievance pro c e d u res” as prac-tised in the United States. Trade union inter-vention in the re c ruitment of workers isanother related topic. In Venezuela some col-lective agreements include provisions whichgrant privileges or at least priority to tradeunions in the area of labour supply. In Mexico,collective agreements specify the groups ofworkers embraced within the scope of appli-cation and whose trade union affiliation will beless than automatic, because of the possibilitythat the union could demand “union shop”dismissal. The final issues negotiated are thep rovisions specifically related to the durationof the collective agreement and the formalitiesfor its possible re n e w a l .

Final considerations

At the beginning of the 1980s, the outlookfor collective bargaining in Latin Americaaugured well for the future.31 Almost 20 yearslater it has become inevitable to check the toneof optimism expressed earlier since the scenehas indeed changed. Although collective bar-gaining has gained in importance in somecountries, in others, perhaps in most cases, ithas declined perceptibly, even though there isno reason to presume that its survival is threat-ened. The question is not so much whether itwill disappear, but rather, how much it willcount in the world of organized labour.

H o w e v e r, on a brighter note, we must re c a l lthat 20 years ago, collective bargaining wasstill questioned ideologically, sometimesbecause it was considered as a prelude to strike

action or an expression of the class stru g g l e ,and at other times because it supposedly hada negative impact on the behaviour of pricesand wages whose stability was a goal con-stantly pursued and rarely achieved by pre-vious governments. In contrast to that period,today such ideological questioning has van-ished. Although labour legislation – called“ regulation of the labour market” nowadays –is the focus of many neo-liberal attacks, mostof these concentrate more on the individualthan on the collective aspects of industrial re l a-tions. Furthermore, attempts are even beingmade to empower collective bargaining as ameans of introducing greater flexibility intolabour legislation, which is expected to pro v euseful in improving the international compet-itiveness of enterprises now facing the chal-lenge of globalization. Perhaps the best exam-ple of this focus is the 1998 Brazilian labour lawre f o r m3 2 which allows enterprises to stre a m l i n ethe distribution of working hours between thehigh and low periods of the business cycle, andto re c ruit part of their manpower under fix e d -term employment contracts, provided thatsuch measures to create greater flexibility areestablished through collective bargaining. Thismay offer a new dimension to collective bar-gaining, and thereby open up its possibilitiesand enhance its usefulness.

A new form of collective bargaining hasappeared and its future at present seems quitepromising: national tripartite bargaining, orconsultation, as mentioned earlier. Throughthis form of bargaining, economic, social andpolitical commitments may be adopted and atthe same time legitimize the social and politi-cal rights of representation of the partners in theindustrial relations system.

A less disheartening conclusion may there-fore be drawn than that which would emergefrom a mere study of the quantitative evolutionof collective bargaining. It is no longer beingperceived as a form of conflictual relationshipbetween capital and labour, and increasingemphasis is being placed on its potentialinstead of its limitations. This is not sufficientto conclude that its relative decline is simplytransitory, but it can encourage the formulationof a more optimistic forecast, based on therecognition that the potential of collective bar-gaining has so far been underutilized and thetime has come to use it to better advantage.

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Notes

1 Director, ILO Multidisciplinary Technical AdvisoryTeam for Central America, Cuba, Haiti, Mexico, Panama andthe Dominican Republic.

2 The documents and discussion of this symposium werepublished in Some aspects of labour-management relations in theAmerican region, Labour-Management Relations Series, ILO,Geneva, No. 11 (1961) and No. 11a (1962).

3 Documentation for this seminar was published in Lanegociación colectiva en América Latina, ILO, Geneva, 1978.

4 See Labour relations and development in the Americas,Report III to the Twelfth Conference of American StatesMembers of the International Labour Organisation, Mon-treal, March 1986.

5 Labour relations in the Southern Cone: Comparative study ,RELASUR Reports, 1995.

6 M. L. Vega Ruiz, et al.: Tendencias y contenidos de la nego-ciación colectiva: fortalecimiento de las organizaciones sindicalesde los países andinos, Working document, No. 88, Field Officeand ILO Multidisciplinary Technical Advisory Team for theAndean countries, Lima, 1998.

7 It is also called convenio colectivo in Spain. In the othercountries: convención colectiva in Brazil when its scopeincludes industry or branch of activity and acuerdo colectivowhen it covers the enterprise; contrato colectivo in Mexico atthe enterprise level, and contrato ley at the level of industry.In El Salvador it is called contrato colectivo when it is negoti-ated with an employer, and convención colectiva when thenegotiation is conducted with an employers’ organization. InGuatemala the expression pactos colectivos de condiciones detrabajo is used. Colombia in turn says convención colectivawhen negotiations are held with a workers’ organization andpacto colectivo when it is concluded with a group of non-unionized workers. In Honduras, the Labour Code appar-ently uses the terms contrato, convención and convenio colectivode trabajo interchangeably.

8 A. Bronstein: “La negociación colectiva”, in Las rela-ciones colectivas de trabajo en América Latina (E. Córdova, ed.),ILO, Geneva, 1981.

9 For the evolution of collective bargaining in Uruguay,see ILO: Relaciones de trabajoen el Uruguay: informe de una mis-ión de la Oficina Internacional de Trabajo, Labour-ManagementRelations Series, No. 66, Geneva, 1987.

10 ILO: La negociación colectiva en América Latina, op. cit. 11 For information on the evolution of labour legislation

in Latin America, see A. Bronstein: “Societal change andindustrial relations in Latin America: Trends and prospects”,International Labour Review, Vol. 134,No. 2, 1995/2, pp. 163-186, and “Labour law reform in Latin America: Between stateprotection and flexibility”, International Labour Review,Vol.136, No. 1, spring, 1997, pp. 5-26.

12 Since then the practice of concluding collective agree-ments in state enterprises has ceased and trade unions in theprivate sector have almost disappeared.

13 Pablo Aznar, Mercedes Fonseca; Auxiliadora Leal: Laconvención colectiva, Ministry of Labour, Centre of LabourStudies, Managua, 1996.

14 Aznar, Fonseca and Leal, ibid.15 Vega Ruiz, op cit., p. 25.16 ILO: La negociación colectiva en América Latina, op. cit.17 Labour relations in the Southern Cone, op. cit.18 Ibid, p. 83.19 Ibid, p. 83.20 Data taken from Encuesta laboral (1998) of the Dirección

Nacional de Trabajo (National Labour Office) The survey isbased on a sample of 1,241 enterprises which cover a total of151,251 workers.

21 Ibid, p. 84.22 To date, this Convention has been ratified by

Argentina, Brazil, Guatemala and Uruguay.23 Act 13720, promoted by the Comisión de Productivi-

dad, Precios e Ingresos (COPRIN). At present its provisionsremaining in effect are chiefly those relating to the mainte-nance of minimum services during strikes which affect anessential service.

24 ILO: Relaciones de trabajo en el Uruguay, op. cit.25 See Freedom of association. Digest of decisions and princi -

ples of the Freedom of Association Committee of the GoverningBody of the ILO, fourth edition (revised), Geneva, 1996.

26 In Chile a trade union may be formed with a minimumof eight workers if the enterprise has fewer than 50 workers,but it must include 50 per cent of the staff.

27 Vega Ruiz, op. cit., p. 29.28 The minimum number of workers required to form a

trade union is 12 in Costa Rica, 20 in Bolivia, DominicanRepublic, Guatemala, Mexico, Nicaragua, Paraguay, Peru,and Venezuela, 25 in Chile and Colombia, 30 in Ecuador andHonduras, 35 in El Salvador, and 40 in Panama.

29 See ILO: Labour relations and development in the Ameri-cas, op. cit.

30 See Basilio González: “La experiencia reciente del diál-ogo social en México”, in Diálogo y Concertación Social, docu-ments for a tripartite symposium, ILO/Ministry of Labourand Social Security of Colombia, Bogotá, 17 and 18 October1995.

31 See A. Bronstein: “La negociación colectiva”, in E. Cór-dova (ed.), op. cit.

32 Act No. 9601 of 21 January 1998 and its regulatorydecree No. 2460 of 4 February 1998.

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The aim of this article is to provide a sum-mary of collective bargaining in Central A m e r-ica, and to show the direction it has taken aswell as the course we expect it to take in itsdevelopment as a component of freedom ofassociation. To achieve this goal, we shall makea brief re f e rence to the concept of collectiveb a rgaining and some of its implications; andstudy its function in society, as ascribed bylabour law.

1. Concept

According to the principles laid down byinternational law, collective bargaining in gen-eral extends to “all negotiations which takeplace between an employer, a group of employ-ers or one or more employers’ organisations, onthe one hand, and one or more workers’ organ-isations, on the other, for:a) determining working conditions and terms

of employment; and/orb) regulating relations between employers and

workers; and/orc) regulating relations between employers or

their organisations and a workers’ organi-sation or workers’ organisations” (Collec-tive Bargaining Convention, 1981 (No.154)).

The following conceptual points could bemade:• Although collective bargaining is an essen-

tial manifestation of collective autonomy,and consequently an integral part of free-dom of association, it is not an activity (ordomain) exclusive to trade union organiza-tions; non-unionized workers may also

engage in or be entitled to participate in col-lective bargaining.

• Secondly, the above definition refers to pro-cedures (“negotiations”) which may be setout in a record or an agreement between theparties. However, specific legislation willfurther define – where appropriate – the pre-cise mechanisms to be applied, and the hier-archical position of the instruments in eachdomestic legal system.

• Thirdly, collective bargaining may takeplace within the framework of formal proce-dures established by labour law, or throughinformal mechanisms or procedures defined bythe parties themselves. Both cases representauthentic collective bargaining governed bycommon principles.

Since collective bargaining is a fundamentalaspect of freedom of association, it would beworth summarizing the basic principles whichthe ILO Committee on Freedom of Associationhas established with regard to collective bar-gaining:1

• Collective bargaining is an essential elementin freedom of association.

• Trade union organizations authorized toengage in collective bargaining must beselected on the basis of their representativ-ity, free from employer or government inter-ference.

• Collective bargaining must be applicable inboth the public and private sectors.

• Collective bargaining with the representa-tives of non-unionized workers may takeplace in the absence of trade unions.

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Central America

Strong state presence to control conflictpervades labour law

Elizabeth TinocoSenior Specialist on Workers’ Activities

MDT/ ILO San José

and Mario Blanco VadoSpecialist in labour law

Costa Rica

• Collective bargaining must always be vol-untary for both workers and employers andfree from governmental intervention orinterference.

• The dispute-settlement bodies arising fromcollective bargaining must be independentand their intervention on behalf of the par-ties voluntary, except in the case of essentialpublic services where arbitration is theprescribed mechanism for the resolution ofdifferences.

2. Function

A less traditional variable concerns theanalysis of the role or function ascribed to col-lective bargaining under labour law. As a start-ing point we can therefore formulate thehypothesis that in Central America collectivebargaining is carried out with a dual purpose:• To establish a set of procedures (collective

bargaining) aimed at maintaining state con-trol over disputes between the actors in col-lective labour relations. It seeks to regulateconflicts, keeping them within the realm oflegitimacy predetermined by the State andcontaining them within the context of theenterprise or sphere of employment inwhich they occur.

• Secondly, collective bargaining by/or withthe participation of trade unions is deter-mined by the specific function of tradeunions within a given socio-economicmodel of society. In that connection, tradeunion participation in collective bargainingis defined and exercised in ways that arespecifically restricted to the enterprise andto the substance of labour relations, withoutany reference to class issues. This aspect isundoubtedly related to the limited rolewhich Central American laws ascribe totrade unions, and according to which tradeunion activity must be based on the supportof a particular socio-economic model.

In view of the significance of this subject incountries experiencing rapid socio-economicdevelopments which could lead to changes inthe regulation of collective bargaining in theshort and medium term, we shall make a briefstudy of each of the national laws. In so doing,it would be useful to identify the distinctmodalities and instruments at the core of col-lective bargaining, and to include special refer-ence to the main trade union instrument: theCollective Labour Agreement.

Constitutional regulations

The primary framework of reference whichdefines the functional nature of the socio-eco-nomic model of collective bargaining and itsgoal of controlling labour disputes may befound in constitutional norms. Such provisionsgoverning collective bargaining are quite com-mon throughout the region. As will be seen, inmost cases, it is included in references to free-dom of association and, from time to time,incorporates the third basic component of thatfreedom: the right to strike.

We can therefore make two observations atthis point. Firstly, reference to or express men-tion of collective bargaining is often avoided,possibly because it is regarded as being alreadysubsumed under the concept of freedom ofassociation (Panama, Political Constititution,hereinafter referred to as PC, article 64) but notthe right to strike (PC, article 65). In other cases(Nicaragua and Costa Rica), freedom of associ-ation (PC, article 60), collective bargaining (PC,article 62) and the right to strike (PC, article 61)are specifically cited in the Constitution. In ElSalvador, for example, the Political Constitu-tion relegates both the conditions under whichcollective bargaining (collective agreementsand contracts) develops and the impossibilityof establishing exclusionary clauses pertainingto trade unions to the competence of ordinarylaw (PC, article 39).

The framers of Constitutions (for examplein Costa Rica) often confuse “class” with “sub-group”. Reference is made only to the Collec-tive Labour Agreement, which is one instru-ment, but not the only, falling within thepurview of collective bargaining, as defined byinternational standards. This theoretical inac-curacy, which is also reiterated in the PoliticalConstitution of El Salvador, tends to cause con-troversy in practice, especially when consider-ing collective bargaining in relation to the sec-tors which are inclined to restrict thiscomponent of freedom of association, as in thecase of public servants.

The inclusion of formulations on labour lawin Central American Constitutions dates back tothe Mexican Constitution of 1917 and its well-known article 123. It is due to this re c o g n i t i o nthat labour principles, which did not excluderules on collective labour law, appear in theConstitutions of the entire region. Yet, re g a rd-less of origin, what is certain is that the incor-poration of labour law principles also re fle c t sthe functions ascribed to collective barg a i n i n gin the first instance. It is indeed in the Political

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Constitution of each country that the dominantsocial groups define the economic model theyp romote under specific economic conditions.

Provisions of ordinary law

In spite of the provisions established in theinternational legal order, even in the case ofcountries which have ratified many suchinstruments, and despite the existence of con-stitutional regulations, what is certain is that –correspondingly – it will be ordinary labourlegislation which definitively establishes themechanisms and the specific guidelines for thedevelopment and implementation of collectivebargaining.

These concrete provisions governing thefunction of labour law allow us to make the ini-tial distinction between statutory collective bar-gaining (directly established by the Statethrough labour law), and negotiations whichare not generated directly by state interventionbut stem from the will of the parties in the col-lective relation and which we might call non-state bargaining. Although both types belong tothe domain of collective bargaining, for thepurpose of this study we shall refer only to thecontent of ordinary labour law, dispensing forthe moment with non-state bargaining and itsvarious manifestations.

In addition, it should be stressed at the out-set that labour law is extensively regulated inthe region. Likewise, it is clear that many ofthese ordinary law regulations again have acommon historical origin, given the stronginfluence in the whole region of the 1931 Fed-eral Labour Act of Mexico, a body of ruleswhich served as a point of reference for manyof the Labour Codes of Central Americaadopted at the beginning of the 1940s and later.

An examination of statutory collective bar-gaining should be carried out through a com-parison of various national laws in order to: (1)differentiate between the various proceduresbased on whether or not a third party isinvolved; and (2) establish and clearly identifythe various instruments and their correspond -ing nomenclature, in accordance with theauthorized collective entity. In both cases weare attempting to illustrate the features whichsupport the stated hypothesis.

Distinction based on procedures

In Central America statutory collective bar-gaining is subject to extensive and sometimesdetailed statutory regulation; it is precisely this

situation which helps us to draw this distinc-tion based on the various procedures laid downby statute: (a) negotiations which are requiredby statute to take place directly between theparties to the collective labour relation; and (b)collective bargaining which occurs in accor-dance with procedures prescribed for the set-tlement of collective disputes and in which theintervention of legal or administrative bodiesthat facilitate the autonomous composition ofthe dispute is relevant.

(a) Direct negotiations

When the legislator determines that collec-tive bargaining will take place directly betweenthe parties to the collective relation, this is directnegotiation or direct collective bargaining. It ischaracterized by two complementary elements:

• The requirement that no third parties whodirect or guide the proceedings, therebyproviding assistance to the parties to thenegotiation, be present. In exceptional cases,mediators participate at the request of theparties, but their presence is not essential tothe validity of the final result.

• The absence at this stage of real conflictbetween the parties in the collective labourrelation. Consequently, the dispute, if itexists, is merely latent and has not yetevolved beyond the basic collective bar-gaining framework. In short, this is not anovert, but rather, a “latent” dispute.

In most instances, statute imposes an oblig-ation to register or deposit the resulting instru-ments as a means of maintaining adequatecontrol over the collective bargaining agenda. Sim-ilarly, statutory collective bargaining (estab-lished by labour law) often contains regulationson its content, its basic rules, the elaboration ofwhich the parties must attend to, and even, aswill become clear when the various instru-ments are studied, on requirements for its reg-istration with the administrative labour author-ity, where so provided.

We should also add that in most bodies oflegislation pertaining to direct negotiation,workers may be represented by both tradeunion organizations and directly elected work-ers’ representatives. It is in this context that thesettlement procedures or direct negotiation ofthe laws under consideration come into play.For our purposes, it is important to point outthat in Central America there is very little devel-opment of direct mechanisms and especially of

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those pertaining to trade union participation.Apart from the exceptions, this is attributableto minimal trade union presence in the enter-prise and to a widespread tendency for law-makers to focus on conflict and its settlementmechanisms or procedures.

(b) Collective conciliation

• In collective conciliation, negotiation takesplace under the supervision of the legal oradministrative bodies specifically estab-lished to monitor labour disputes; the finalresult, if the outcome of the proceedingsis positive, is still an agreement forgedbetween the interested parties, and in thissense, constitutes an autonomous solutionto collective disputes.

• Collective claims are addressed in a proce-dure prescribed by labour law devised insuch a way that the interested parties, withthe mandatory presence of a third party, act-ing as conciliator and/or mediator, mayresolve the collective labour dispute sub-mitted for settlement outside the enterprise.In this case, unlike in direct negotiation, ahigher level of conflict is presupposed, andthe procedures which are being pursued inan attempt to resolve the dispute precedemeasures of open conflict or outwardexpression of the conflict, such as strikes orlockouts.

• As stated in the distinction made earlier, itwould be worth pointing out that represen-tational rights in the procedures mentionedmay well be assumed by the trade unionorganizations or by a temporary and ad hoccoalition of the workers concerned, definedin each case by labour law. Mindful of thefact that direct collective bargaining doesnot always produce a collective instrument,and that, on the contrary, the claims of work-ers and/or their organizations, if not met bythe employer, may lead to a formal collec-tive labour dispute and are likely to assumeexternal manifestations (strikes), labour lawhas established collective dispute-settle-ment systems of a quasi-compulsory nature.

• Similarly, there are mechanisms or proce-dures for autonomous collective disputesettlement, as well as procedures, such aslabour arbitration, in which a third partysets forth a solution which is binding on theparties (heteronomous). In any event, itmust be borne in mind that these are proce-dures established by the State with the basic

aim of preventing (collective) labour dis-putes from surpassing the levels of “nor-malcy”, or conflicts from being regarded asacceptable by the legislator, and that theimplementation and development of theeconomic model are not jeopardized orendangered in any way. This considerationjustifies the presence of third-party bodiesor public officials in practically all CentralAmerican legislation.

Since we are discussing collective barg a i n-ing, re f e rence will be made only to the pro c e-d u res which the parties a g ree to within the legallyestablished settlement pro c e d u res. For the timebeing, we shall set aside the comparative studyof those pro c e d u res which are imposed by at h i rd party (arbitration) since they are also col-lective instruments and are also envisaged in thevarious Labour Codes of Central A m e r i c a .

It would therefore be useful to refer brieflyto the procedures for the settlement of collec-tive labour disputes prescribed in various lawsin order to identify the instruments whichmight emerge.

In general terms, as far as the amendmentor formulation of new labour standards is con-cerned, the main procedure for the settlementof collective labour disputes is the conciliationprocedure. It should be noted that this proce-dure is ordinarily anticipated when directnegotiation fails, and therefore it is usually onlythose parties who have held direct negotiationswho may resort to conciliation.

In El Salvador, conciliation is re g a rded asa stage following direct negotiation. Conse-q u e n t l y, not only are disputes contained(Labour Code (LC), article 49) but also the partyenjoying re p resentational rights is re s t r i c t e d ,since direct negotiation and conciliation are con-ducted only if trade unions are involved in bar-gaining for a collective labour contract (“con-trato colectivo de trabajo”) or collective laboura g reement (“convención colectiva de trabajo”).Nevertheless, statute provides for conciliationp ro c e d u re for the protection of the socio-eco-nomic interests common to non-unionizedworkers (LC, articles 516 and 528). Whena g reement is reached, the resulting instru m e n t ,called the conciliatory settlement ( a r reglo concil-iatorio, LC, article 521), is approved and re g i s-t e red by the administrative labour authority.

In brief, in El Salvador workers may be rep-resented by trade unions at the conciliationstage when a collective labour agreement isconcluded or reviewed (LC, article 481); butworkers temporarily associated for such pur-

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basically under the auspices of the adminis-trative labour authorities. The statutes ofGuatemala and Costa Rica are the exceptionto this rule.

• The documents which result from these pro-ceedings, when they are not collectivelabour agreements, may be authentic con-ciliatory agreements (“convenios conciliato-rios”) or collective agreements (“convenios,pactos colectivos”).

Classification of the instrumentaccording to representativity

As an extension of the above, if we were toconcentrate on the final result of the variousprocedures of collective bargaining, a distinc-tion could be made based on the entitlementconveyed by the instrument produced, regard-less of what it is called. It would therefore beuseful to distinguish between: (a) instrumentsnegotiated through trade union participation,and (b) others which involve workers’ repre-sentatives which are not trade unions.

(a) The collective labour agreement

On the basis of the previous description andthe definitions of the region’s labour laws, wecan deduce that the “collective labour agree-ment” is an instrument in which one or moretrade unions representing workers come to anagreement with one or more employers, oremployers’ organizations, on the conditionsunder which work is rendered in one or moreworkplaces. These conditions must be incorpo-rated into existing and future contracts ofemployment to be concluded in that work envi-ronment, as well as into the rules applicable tothe relationship between the parties to the col-lective labour relation.

Various terms are used in Central Americanlabour laws to describe the above concept. Weshould therefore specify that the instrument towhich the laws of El Salvador refer is called thecontrato colectivo when it is negotiated with anemployer (LC, article 269 and onwards) andconvención colectiva de trabajo when it is negoti-ated with an employers’ organization (LC, arti-cle 288); in Honduras it is called contrato colec-tivo (LC, article 53) but the term convencióncolectiva de trabajo is also used and includes – aswe shall see later – the option that workers maybe represented by non-trade union coalitions.In Guatemala this document is called pactocolectivo de condiciones de trabajo (LC, article 49),and Nicaragua (LC, article 235), Costa Rica (LC,

article 54) and Panama (LC, articles 398) use theterm convención colectiva de trabajo.2

In spite of the variety of terms, they all refertheoretically to one and the same instrument,with some distinct and legally significant fea-tures. We may therefore describe what we callthe “collective labour agreement” as an instru-ment conveying legal entitlement, the representa-tion of workers, in principle only to trade unions.

A c c o rding to the dictates of ConventionN o . 154 (1981), the concept of collective bar-gaining includes all negotiations involving aworkers’ organization and employers and/o rtheir organizations. Even if the participation ofnon-trade union entities (temporary coalitions)is not provided for in collective bargaining, iti s to be hoped that there would be domestics t a n d a rds, relating to the right to organize, toencourage and promote collective barg a i n i n gbetween permanent organizations (ConventionN o . 98, article 4). In that connection, the laws ofeach country should provide for at least onei n s t rument in which trade unions hold exclu-sive responsibility for re p resenting workers.

This principle is respected by practically allbodies of legislation in Central America, sincethe exclusive powers of entitlement of theaforementioned instrument, promoting theinterests of the workers, must be granted to atrade union. The exception to this general rulecan be found in the Labour Code of Honduras,wherein the representation of workers in thecollective contract (“contrato colectivo”) oragreement (“convención colectiva”) may betaken on by one or more workers’ organizationsor by the representatives of workers of one ormore enterprises or groups of temporarily asso-ciated workers (LC, article 53). In this case, wewould have to admit that there are two distinctinstruments denoted by a single legal term:there is one instrument for the participation ofthe permanent workers’ organization; andanother which provides for the authorization ofa temporary coalition of equal legal standing.

However, the laws guarantee trade unionparticipation in this type of collective instru-ment, establishing that under certain circum-stances, which usually take the extent of tradeunion membership into account, the employeris obliged to engage in bargaining.

In such cases, the legislative formula variesbetween countries: in Guatemala the obligationof the employer arises when one-quarter of theworkers in an enterprise is unionized (LC, arti-cle 51); in Costa Rica, the required proportionof unionized workers is one-third (LC, article56); in El Salvador there must be no less than 51

46

per cent trade union membership (LC, articles270 and 289). On the other hand, in Nicaragua,(LC, article 238), Honduras (LC, article 54) andPanama (LC, article 401), as long as there areunionized workers, the employer is obliged tonegotiate the conclusion of an agreement.

The subject is handled diff e rently whent h e re is more than one trade union re p re s e n t i n gthe workers for the purpose of negotiating thea g reement. In such instances, legislative re f e r-ences to re p resentativity are few, and in generalmajority membership is the criterion. Priority ist h e reby granted to the organization with thel a rgest number of members. In the laws of CostaRica (LC, article 56), Guatemala (LC, article 51),Panama (LC, article 402) and Honduras (LC,article 54), contrary to Salvadorean legislation,which re q u i res a minimum membership of 51per cent of the total number of workers, a statedmajority is re q u i red. With re g a rd to this 51 percent re q u i rement, it would be worth pointingout that the criterion established by the ILOCommittee on Freedom of Association statesthat “the re q u i rement of the majority of not onlythe number of workers, but also of enterprises,in order to be able to conclude a collective agre e-ment on the branch or occupational level couldraise problems with re g a rd to the application ofConvention No. 98” (ILO, 1996) .

Several of the bodies of legislation studiedallow bargaining by a coalition of two or moreo rganizations, mainly in the cases in whichexclusivity of the agreement is established, thatis to say, when the existence of several instru-ments at the same time is prohibited (El Sal-v a d o r, Costa Rica, Honduras), unless the tradeor industrial union is allowed to negotiate con-ventions on behalf of its members, without pre j-udice to the fact that a general or industrialworkers’ union might negotiate the general con-ditions applicable in the establishment (Pa-nama, LC, article 402; Costa Rica, LC, article 56).

• The employer may be a physical person (“patro n o ” )or a legal entity, in which case it can also take the formof one or more employers’ o rganizations or unions.

All the laws of the region have uniform pro-visions to the effect that the employer may bean individual or one or more employers’ orga-nizations. The distinctions may be made on thebasis of requirement that is established in somecountries with regard to the unionized natureof the employer organization.

In general terms, as far as the nature of theemployer entity is concerned, Panamanian lawrefers to an employer, group of employers orone or more employers’ organizations (LC, arti-

cle 398); similar latitude is given in the laws ofHonduras (LC, article 53) and Nicaragua (LC,article 235) which state no specific requirementsregarding the type of employer.

A more narrow concept appears in CostaRican law (LC, article 54) which allows for theparticipation of several employers. Theemployer organization is required to have thestatus or nature of a union (LC, article 54), as isalso the case in El Salvador where, as hasalready been shown, the document concludedbetween a trade union of workers and anemployer is called a collective contract (“con-trato colectivo”), or a collective labour agree-ment (“convención colectiva de trabajo”) in thecase of an instrument signed by the workers’union and the employers’ organization, disre-garding any other employers’ organizationswhich are not syndicated. In these cases, theemployers obtain greater security by beingexcluded from the negotiation, grouping them-selves in civil (rather than union) entities, pro-tected under the general right of association.

• The content of the instrument is geared towardsthe determination of general working conditions,but this does not imply that rules of conduct or oblig-ations cannot be established between the partiesthemselves (workers’and employers’ organizationsor unions).

The subject-matter of the collective instru-ment is the setting of general conditions inwhich work should be re n d e red, and accord i n gto statute, the regulation of the conditions whichgovern individual contracts of employment inthe enterprises or establishments in question,and the rights and obligations of the contract-ing parties (El Salvador, LC, article 2 6 8 ) .

This and similar legislative formulations inthe remaining countries allow us to clearly statethat the determination of working conditionsi s the main objective of bargaining. In addi-t i o n , collective bargaining seeks to establish thet h e oretical bases for the classification of therules of the instrument, under which a distinc-tion between operative and mandatory pro v i-sions must be drawn. Operative clauses are thep rovisions which are incorporated into individ-ual contracts of employment to replace the ru l e sof individual contracts of employment whichmay be less favourable than the terms of the col-lective agreement. Mandatory provisions estab-lish direct obligations between the parties to acollective agreement, that is, between theemployer(s) and the trade union.

Some additional comments could be maderegarding operative clauses. Most Central

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American statutes stipulate that they should beapplicable to all workers, thereby preventingthe instrument from being applied exclusivelyto unionized workers. The exception to thisrule, as seen upon examination of the so-calledexclusionary clauses with respect to tradeunions, appears in Honduran legislation (arti-cle 61) which regulates recruitment of person-nel to the enterprise, limiting it to the status ofits union membership. In Honduras the collec-tive instrument may establish privileges infavour of unionized workers; however, appli-cation of this rule shall not be exercised to thedetriment of non-unionized employees whoalready work in the enterprise when the instru-ment is signed.

The remainder of countries are inclined toavoid discrimination against non-unionizedworkers, expressly forbidding exclusionaryclauses in all their terms of re f e rence. They usu-ally adopt a strict formula, along the lines thatthe provisions of the collective agreement shallbe applicable to all employees in an enterprise,even if they do not belong to unions (Nicaragua,LC, article 237). Otherwise, they give the instru-ment broader scope – Guatemala (LC, article50), Costa Rica (article 55), El Salvador (article277) and Panama (article 405) – and prohibit dis-tinctions in the conditions granted to unionizedand non-unionized workers.

Secondly, labour legislation guarantees thatthe instrument may modify individual con-tracts only to the extent that their terms are notmore favourable than those set under the col-lective agreement. This provision is aimed atprotecting workers by preventing collectivebargaining from lowering working conditions.In whatever form it is stated, the provision isinspired by the traditional notion that theinstrument can only improve working condi-tions, linked to which is the typical labour lawnotion that no instrument – neither individualnor collective – may reduce the minimum con-ditions prescribed under ordinary law. It is aprinciple that clearly applies to the collectivelabour agreement, although in this case – atleast in Panama – recent amendment approvedthe replacement of one benefit to workers withanother envisaged in the collective agreement(Panama, LC, article 406).

This rule relates to the legal features of theprovisions of the instrument and specificallystresses that the collective agreement shall notset conditions which are less favourable toworkers than the contents of existing contracts(Honduras, LC, article 60), and furthermore,that the rules shall also apply to future contracts

(Guatemala, LC, article 50). It is understoodthat the application of the operative clauses isbinding on both current individual contractsand similar contracts to be concluded in thefuture (Costa Rica, LC, article 55).

• The main subject is the general regulation ofworking conditions, but the parties are bound by aset of formal rules laid down by the State.

Out of respect for the principles of non-interference and, in particular, of collectiveautonomy, the State does not impose the inser-tion of any specific element into the collectiveagreement, but it does identify the topics theagreement should cover and insists on somebasic formalities. Statute usually lays down cer-tain formal requirements, such as the identifi-cation of the parties; the number of copies of theinstrument; the scope of its application and thecategory of workers concerned; the date of sig-nature and the duration of the agreement.

In that respect, all the laws of the regioncoincide, with some variations in form: El Sal-vador (LC, article 275), Costa Rica (LC, article58) and Panama (LC, article 403). In the othercountries, labour law tends merely to suggestthe subjects which the parties may wish toinclude, such as working hours, vacations andwages, without setting any other restrictionbeyond the observance of statutory minimumsand the content of individual contracts whichmay not be reduced. The important point is thata specific content is never imposed, and the par-ties are free to conclude an agreement in themanner they see fit.

Although voluntary, the duration of theagreement is subject to more specific legislativeregulation. In that connection, the general rulealmost always establishes minimum and max-imum terms within which the parties may setthe period for which the instrument will remainin force. The laws of Costa Rica (LC, article 58),El Salvador (LC, article 276) and Guatemala(LC, article 53) have set this term at a minimumof one year and a maximum of three years. Onthe other hand, in Panama the minimum termis two years and the maximum is four years(LC, article 410); and Nicaraguan law specifiesonly a maximum period of two years (LC, arti-cle 239). Honduras (LC, article 68) presents anexception to this type of regulation: a pre-sumptive term of a year is stated unless the par-ties to the agreement explicitly state otherwise.This seemingly gives the parties greater lati-tude in which to negotiate.

Finally, and despite a few differences, allcountries allow for the automatic extension of

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the term of the instrument: in some instancesby a year (El Salvador), in others for successiveperiods of a year (Honduras), or for a periodequal to the original duration (Nicaragua andCosta Rica) or even until a new instrument isnegotiated (Panama and El Salvador).

• The instrument is usually required to be regis-tered and approved by the administrative labourauthority.

Although there is no compulsory require-ment on substance, observance of formally pre-scribed rules is monitored by the State throughthe process of registration and approval of theinstrument by the administrative labourauthorities. On exceptional occasions, the lawmay ask that the instrument be deposited forsafe-keeping (Nicaragua, LC, article 235), orsimply that it should be presented to the labourauthority (Panama, LC, article 399). On the con-trary, a procedure for both the registration andofficial ratification of the instrument is laiddown in the laws of Costa Rica (LC, article 57),El Salvador (LC, article 277), Honduras (LC,articles 58, 78 and onwards) and Guatemala(LC, article 52) where the administrative labourauthority may order either the registration ordeposit of the instrument, or, on the other hand,request that the parties amend the agreement ifit is not in line with existing labour legislation.

Furthermore, it is worth mentioning that insome countries, ex officio or at the request of theparties, the State reserves the right to extend orbroaden the scope of the collective instrument.This may embrace an entire region, industry orbranch of economic activity. In El Salvador, theextension applies to enterprises with the sameeconomic activity (LC, 295) while in Costa Rica(LC, article 63) and Guatemala it covers abranch of industry, economic activity or region.Extensions are made in Honduras accordingto territory or occupational categories, byarrangement with the labour authorities (LC,article 73).

Obviously, this rather rare practice in Cen-tral America represents state interventions inthe labour market, which was typical of the pre-vious economic model. The low level of devel-opment of collective bargaining in the privatesector, and with limited trade union presence,has resulted in few extensions of this type.

(b) Direct settlement

D i rect settlement is also a formal collectivei n s t rument for the determination of workingconditions when, instead of a trade union, a re p-

resentative of the workers acts as the authorizedb a rgaining partner. This re p resentative is usu-ally appointed for the purposes of the instru-ment and protection of common intere s t s .

Various expressions may be used in legal lit-erature to denote this type of collective bar-gaining which, as mentioned, is characterizedby the non-participation of trade unions, and isdistinct from what we have described earlier asa collective labour agreement.

As for the content of international conven-tions, it must be stressed that these instru m e n t sa re also envisaged within the broader concept ofcollective bargaining, and that an important –albeit indirect – re f e rence can be found in the textof the Workers’ Representatives Convention,1971 (No. 135) and Recommendation (No. 1 4 3 ) :

For the purpose of this Convention the term“workers’ representatives” means persons whoare recognised as such under national law orpractice, whether they are -

(a) trade union representatives, namely, repre-sentatives designated or elected by tradeunions or by the members of such unions;or

(b) elected representatives, namely, representativeswho are freely elected by the workers of theundertaking in accordance with provisions ofnational laws or regulations or of collectiveagreements and whose functions do notinclude activities which are recognised asthe exclusive prerogative of trade unions inthe country concerned. (Article 3, Conven-tion No. 135)

Under Honduran law, the collective laboura g reement (“contrato colectivo de trabajo”,“convención colectiva”) is the sole instru m e n t ,and it may be negotiated equally with a work-ers’ trade union or with a group of workers whoa re temporarily associated (LC, article 53). Inthis unique case, the instruments concluded bythe temporary coalition and trade union, re s p e c-t i v e l y, are encompassed in a single legislativeentity and would have equal authority. There-f o re the statutory stipulation of Direct Settle-ment (LC, article 790) is intended to cover failedtrade union negotiations, out of which woulde m e rge a collective agreement. In the case ofnon-unionized workers – if an agreement isreached – the instrument would take the formof a collective pact on working conditions(“pacto colectivo de condiciones de trabajo”),which would fall within the scope of direct set-tlement as discussed earlier (LC, article 793).

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On the contrary, in Nicaragua and El Sal-vador there is no such instrument. The onlypossibility arises through trade union inter-vention (collective labour agreement), and inthe absence of a workers’ organization, theworkers cannot resort to direct collective bar-gaining. Although direct settlement is providedunder Nicaraguan law (LC, articles 371 and372), it is intended for direct discussionsbetween the employer and the trade union aswell as for the conclusion of collective labouragreements, but not for the exercise of collec-tive bargaining by workers who have tem-porarily associated themselves.

An explicit admission of direct settlementcan be found in the laws of the Republic ofPanama, which state that in the absence of suchorganizations (trade unions), workers may pre-sent grievances and petitions through works’committees or delegates specially designatedfor that purpose (article 423), and that the resultof such measures shall be stated in a record ofsettlement which must be submitted to theadministrative labour authorities (LC, article424). Since this approach specifies a works’committee or delegates, the resulting instru-ment will be an instrument of collective bar-gaining in the terms stated. The importance ofthis regulation stems from the fact that in orderto avoid the anti-union nature which thisarrangement can sometimes take on, the regu-lation is contingent upon the non-participationof trade unions. Employers can thus avoid con-duct which is incompatible with freedom ofassociation.

Similarly, in Costa Rican (article 504) andGuatemalan (LC, articles 374 and 375) legisla-tion, an ad hoc committee may engage in directnegotiations, and subsequent agreements mustbe set out in a record which is deposited withthe administrative labour authorities. It is theduty of those authorities to ensure that theseagreements do not contravene the labour laws,and to enforce strict compliance. The substan-tive difference is that because they are instru-ments which exclude trade unions, they couldserve to circumvent trade union presence.Recent Costa Rican legal reform (Act No. 7360of 12 November 1993) prevents the employerfrom engaging in collective bargaining withouta trade union or if the union has a membershipof at least one-half of the number of workers,plus one (Costa Rica, LC, article 370). It cantherefore be hoped that direct settlement maybe taken up as an authentic instrument of col-lective bargaining, without any trace of anti-trade union discrimination.

In general terms, in the three countrieswhich accommodate this type of instrument theregulations are quite basic and elementary, pre-cisely because the main feature is that theinstrument itself is secondary to the instru-ments involving trade union participation. Theonly exception to that rule can be found in Hon-duran regulations.

The content of trade unionbargaining

An initial examination of the content of col-lective bargaining, restricted for purely practi-cal reasons to trade union instruments (the col-lective labour agreement), confirms the theorythat collective bargaining in the countriesunder discussion is developed in conformitywith labour law. That is to say, it takes placewithin the enterprise and its content is limitedto (individual and collective) labour relations,and devoid of class discrimination.

In addition, it must be borne in mind thatthe subjects and the regulations incorporatedinto the instruments are often based on the legalrules themselves. In such cases, the rules gov-erning the collective instrument tend to surpassthe minimums established by statute, and/orcomplement the legal provisions without devi-ating from the basic path set by the State foreach of the subjects.

The same feature can be detected in some ofthe main topics, as in the case of individual con-tracts of employment and working hours, andgenerally in all areas defined by legal literature,such as the operative clauses of the collectiveinstrument. With individual contracts ofemployment, for example, the parties tend tomake the distinction in the instrument betweenfixed-term contracts (based on time period orjob) and open-ended contracts, as alreadydefined by labour law, stating and/or specify-ing the contents, but without regulating orimposing new terms or conditions for hiring.The same phenomenon can be observed withthe issue of working hours. Collective instru-ments confine themselves to reiterating the tra-ditional legal distinction between a regularworking day and overtime hours worked on aweekly or daily basis, setting the regular work-ing hours at fewer than or the same as those setby statute. For overtime, these instruments setremuneration at levels equal to or higher thanthose prescribed under ordinary law. A similarconclusion might be drawn from reviewing restdays, wages and employment stability.3 In allthese cases, the parties reiterate the legal regu-

50

lations, with variations in favour of the work-ers, thereby transforming the instrument into aspecial, “miniature” Labour Code of limitedscope. It would therefore seem that collectivebargaining in Central America and Panama isclosely linked to the contents of labour law, isimproved for the benefit of workers, and playsa supporting role to the model of labour rela-tions established by labour law.

Furthermore, and almost as a consequence,we should emphasize that collective bargain-ing is also lagging considerably behind thechanges taking place within the current socio-economic context. It is thus clear that the con-tent of collective bargaining does not reflect theso-called emerging themes in the world oflabour, and the few exceptions to this statementconfirm the rule mentioned.4 This is most evi-dent in countries – most of the ones under dis-cussion – whose labour laws have not under-gone changes in the sphere of individual labourrights as a result of the new socio-economicmodel and its requirements.

It could also be said that in those countriesthe emerging themes are neither regulated bylegislation, nor are they components of collec-tive bargaining. This would explain the absencein the instruments of provisions on new formsof labour contracting and pay, irregular work-ing hours, productivity and so on. This situa-tion of genuine dependence between the lawand the bargaining agenda clearly demon-strates the limits – although not thoroughlyexplored – of the stated functions of tradeunionism in respect of the economic contextand, in particular, the inadequacy and malad-justment in the development of the collectivebargaining agenda which might even touchupon the very model of labour relations estab-lished by labour law.

We can therefore draw some general con-clusions.

As is the case throughout labour law, thereis a strong state presence both in the mecha-nisms for the autonomous resolution of con-flicts and in direct negotiation. This presence ismanifest, among other aspects, in the abun-dance of legal regulation of the procedures, theinstrument, its subjects and the contents of col-lective bargaining, aimed at controlling andensuring a content that will not be incompati-ble with the model of labour relations imple-mented by state regulations.

• Trade union participation in collective bar-gaining is expressly and formally accepted,both in ordinary law and in constitutional

provisions. The absence of collective bar-gaining that is repeatedly described byworkers’ organizations in Central Americais not due to the absence of legal provisions,but rather to other factors. These include theincreasing and recognized difficulty inobtaining real trade union participation inthe enterprise and/or the practical inade-quacy of existing rules.

• In spite of the recognition of trade unionparticipation in collective bargaining, it isalso worth stressing that the various bodiesof law provide for the simultaneous partic-ipation of ad hoc entities or permanentcommittees of workers which also engagein collective bargaining. In such cases, notall laws include the principle of the pro t e c-tion of trade unions as a means of avoidinganti-trade union discrimination re s u l t i n gf rom collective bargaining without tradeu n i o n s .

• Taking into account the purely formal levelof legal rules, and allowing for mandatoryprovisions, where appropriate, the basiccontent of collective bargaining is gearedalmost exclusively towards the amendmentor improvement of the rules of the LabourCodes or employment contracts (operativeclauses) in favour of workers, without spe-cific reference to the current topics relatingto the implementation of a new socio-eco-nomic model. The absence of explicit legalreference to the emerging themes in theworld of labour, such as productivity andflexibility, is conspicuous.

Reference

ILO. 1996. Freedom of association, Digest of Decisions of theCommittee on Freedom of Association, para. 854, fourth(revised) edition, p. 172.

Notes

1 One of the most important international regulations inthis field may be found in ILO Right to Organise and Col-lective Bargaining Convention, 1949 (No. 98). Article 4 of thisConvention provides that “Measures appropriate to nationalconditions shall be taken, where necessary, to encourage andpromote the full development and utilisation of machineryfor voluntary negotiation between employers or employers’organisations and workers’ organisations, with a view to theregulation of terms and conditions of employment by meansof collective agreements.”

2 It should be noted that this instrument, which legalscholars call contrato de equipo, has been erroneously termed“contrato colectivo” in some bodies of legislation (Costa Rica,

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LC, article 49 and Guatemala, LC, article 38), but is really aninstrument between an employer and a union aimed at forg-ing an agreement for a specific job (and not conditions ofwork), and in which the union points out, within the scopeof its responsibility and fulfilling its role as a true intermedi-ary in labour relations, which of its members will render aspecific service in exchange for an overall sum to be paid bythe employer, employers or employers’ organization whichare parties to the contract.

3 The general rule in employment stability is to awardcompensation which is higher than that paid under ordinarylabour law, and only as an exception are regulations estab-lished which impede unjustified dismissal.

4 The Republic of Panama may be the exception, takinginto account the changes brought about by Act No. 44 of12 August 1995 and its effects on the content of collectivebargaining.

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The legal framework

In the Andean countries, where the legalsystems are based on Roman law, the system oflabour regulation is structured around the law.Nevertheless, with the forward march of indus-trialization and development and where thepolitical situation has permitted, collective bar-gaining has been opening up its own spheres ofautonomy, at times even ahead of legal devel-opments. In general, however, the over-regula-tion existing in the region has diminished theimportance of collective bargaining, not onlyhampering (even intentionally sometimes) thedevelopment of freedom of association, butalso bringing about a marked discrepancybetween the written and the applied standard.

Despite their overall similarities, the fivecountries – Bolivia, Colombia, Ecuador, Peruand Venezuela – have developed models of col-lective relations that differ considerably andwhich undoubtedly constitute a frameworkthat varies according to economic, social andhistorical divergences.

Without prejudice to one or other orienta-tion, legislative trends in the five countrieswould seem to be moving slowly towardsgreater participation by labour and manage-ment in working out the regulatory framework.Hence, consultative committees (mesas de con-certación) on labour relations are being created(Ecuador), tripartite agreements are beingsigned to encourage the reform of the labour

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The Andean countries

Many social sectors are today demandingthat trade unions work out a common position

in the framework of the social dialogue

Marleen Rueda-CatryJuan Manuel Sepúlveda Malbrán

María Luz Vega Ruiz*

code (Venezuela) and core projects are beingworked out and developed to improve the cul-ture of labour relations (Colombia). In contrast,countries such as Peru are pioneers in legal flex-ibility in the Andean region.

General features of the legislation

Although the sources of labour legislationin Latin America lie in the national Constitu-tions (the Constitutions of the five countriescontain provisions on collective bargaining1) –in fact Colombia, Ecuador and Peru expresslyguarantee the right of collective bargaining – itis the various labour laws that regulate collec-tive bargaining and its procedures. Hence, inBolivia, collective agreements are given effectby Regulatory Decree (Decreto Reglamentario)No. 224 of 22 August 1943 (in turn given effectby the General Labour Act (Ley General deTrabajo) (LGT) and by Supreme Decree (De-creto Supremo) No. 05051 of 1 October 1958. InColombia, collective agreements (convencionescolectivas), collective covenants (pactos colec-tivos) and trade union contracts (contratos sindi-cales) are regulated by the Substantive LabourCode (Código sustantivo de trabajo) (Article467),while in Ecuador, the collective contract (con-trato) or covenant (pacto) is regulated by theLabour Code (Código de trabajo) (Article 226).Finally, in Peru (the only instance of a non-cod-ified body of rules), these are regulated by theCollective Labour Relations Act (Ley de rela-ciones colectivas de trabajo) No. 25593 of July1992,2 and in Venezuela, collective agreementsare regulated by the Labour Organization Act(Ley orgánica de trabajo).

Although an entire regulatory frameworkfor trade union activity3 was developed early

* M. Rueda-Catry, labour relations specialist and M. L.Vega Ruiz, labour law and labour relations specialist, are bothattached to the Labour Law and Labour Relations Branch ofthe ILO. J. M. Sepúlveda Malbrán is attached to the ILOMultidisciplinary Team in Lima as Senior Specialist on Work-ers’ Activities.

on, the evolution of ordinary law has variedconsiderably in time among the five countries,as borne out by the effective dates of the laws inf o rce: Bolivia has the region’s oldest re g u l a t o r yframework, which has seen no major changes inrecent years, even though this is a country hardhit by structural adjustment programmes. InE c u a d o r, although the most recent reform datesback to 1991, the codifications of 1961, 1971 and1978 had the effect of partial reforms in lieu ofa revision of the original 1938 text as a whole,with the result that in practical terms the textnow contains discrepancies and discontinuities.The laws in Colombia, Peru and Venezuela havebeen substantially revised in recent years fro mvery diff e rent standpoints (to make for gre a t e rflexibility in the first two cases and pro v i d es t ronger guarantees in the last).

As re g a rds the ILO Conventions on fre e d o mof association, in particular No. 87 (Freedom ofAssociation and the Protection of the Right toO rganise) and No. 98 (The Right to Organise andCollective Barg a i n i n g ) ,4 all the laws still have f u n-damental flaws that were pinpointed a long timeago by the Committee of Experts on the A p p l i-cation of Standards and Recommendations.

Types of bargaining and instruments

Although there would seem to be no limits inany of the five countries to the scope of collectiveb a rgaining (enterprise, industry, profession) –only Peru5 and Ve n e z u e l a6 have more or lessdetailed standards on the conclusion and appli-cation of industry-wide and/or pro f e s s i o n a la g reements – in practice, barring Venezuela, bar-gaining is still restricted to the enterprise level.

There are differing types of “collectiveagreements” (acuerdos colectivos) and this notonly by reason of terminology (see above). InBolivia, Peru and Venezuela the law providesfor only one type of collective labour agreement(called a contract (contrato) in Bolivia and a col-lective agreement (convención colectiva) in theother two countries) and which is that con-cluded between one or more employers or anassociation or union of employers and a union,federation or confederation of worker unions(in Peru, should these latter bodies not exist,such an agreement may be concluded by rep-resentatives of the workers concerned) in orderto lay down and regulate working conditions(Bolivia), fix wages, working conditions andproductivity and other aspects of labour rela-tions (Peru) or to lay down terms and condi-tions of work and the rights and obligations ofthe parties (Venezuela).

In Colombia, collective agreements (conven-ciones colectivas) (concluded between one orseveral employers or employers’ associationsand one or several workers’ unions or confed-erations of unions to lay down working condi-tions), collective covenants (pactos colectivos)(agreements reached between employers andnon-unionized workers) and trade union con-tracts (contratos sindicales) (one or severalworker unions with one or several employersor employer unions for the provision of servicesor the execution of a particular project by theirmembers) are regulated. In Ecuador, togetherwith the collective contract (contrato) orcovenant (pacto) (concluded between one ormore employers or employers’ associationsand one or more worker associations in orderto determine working conditions or the basesfor the conclusion of individual work con-tracts), there is the binding collective contract(contrato colectivo obligatorio), that is, one whichby virtue of an executive decree issued pur-suant to the law applies to all employers in oneand the same branch of industry and in a par-ticular province, provided that it is concludedoriginally by two-thirds of the employers andorganized workers concerned.

The authorized parties

In the five countries, worker unions are theparties authorized to negotiate on behalf ofworkers, this recognition being extendedexpressly to the federations in Bolivia, Colom-bia, Peru and Venezuela and to the confedera-tions in Bolivia and Venezuela. As seen above,non-unionized workers may nevertheless con-clude agreements in Colombia and Peru. InVenezuela,7 if there is no union, enterpriseagreements may be bargained collectively byrepresentatives expressly elected by a majorityof workers.

In Ecuador, where there is a works commit-tee, as is normally the case, it is the body thatenjoys the preferential right to bargain, otherworkers’ associations being obliged to abstain.

In Bolivia, should there be more than oneunion in the enterprise, all the organizationsmust form a single representation to negotiatea collective contract (contrato colectivo), while inColombia and Peru8 the rules of the most rep-resentative trade union apply. A similar ruleapplies in Ecuador in the absence of a workscommittee.

On the employer side, the very definition ofthe collective agreement (convenio colectivo ) inall the countries legitimizes one or several

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employers or employers’ associations or unionsor several employers’ organizations,9 whilethere are no specific rules on representation.This is because individual employers mayengage in bargaining, which obviates the needto designate any employer union as the mostrepresentative.

Procedure

The launch of the collective bargaining pro-cedure is similar in all the countries: it requiresthe submission of a list of claims (in Colombiathe list is also necessary to start an industrialdispute). The minimum content of this list isexpressly laid down in the law in Bolivia andPeru, whereas in Colombia, the law states thatthis list must contain claims concerning work-ing conditions.

The list of claims is submitted directly to theemployer in Colombia and Peru, whereasin Bolivia, Ecuador and Venezuela it must besubmitted to the works inspector for onwardtransmission.

Once the bargaining team has been desig-nated, the stage of direct talks (a r reglo dire c t o)begins and could last up to five days in Colom-bia or indefinitely in Peru or Venezuela. Shouldd i rect talks fail, the labour authority is informedas a prelude to the conciliation stage, except inColombia, where there are standards in thatre g a rd as conciliation is not envisaged under thecollective bargaining pro c e d u re. Arbitration isenvisaged in the five countries as a form of dis-pute settlement if conciliation fails. In Boliviaand Ecuador it is obligatory and in certaininstances (essential public services) in Colom-bia, Peru and Venezuela, though in these lattert h ree countries it is otherwise usually optional.

Government involvement in the collectivebargaining process can be observed concretelyin all the countries, even where the trendtowards deregulation and greater indepen-dence of mind in collective relations wouldseem to be the new approach. Hence, inVenezuela for example, the constant presenceof government is obvious specifically in regardto time frames and in the highly regulated bar-gaining procedure for working out industry-wide agreements (meeting for setting labourstandards (reunión normativa laboral)), beingexcessively protracted and complex and lastingup to a year, even though the law provides thatbargaining should not exceed 60 days. In Peru,the role of the government has diminished butnot entirely disappeared10 as the Executive hasretained sufficient instruments to ensure that it

does not lose ultimate control. In fact, the newstandard perpetuates heteronomous govern-ment regulation, the static time frames of theagreements and their decentralization (the lawfurthermore prescribing the need and form ofarticulation of the different levels, assumingthat collective bargaining is coordinated).

T h e re is no doubt that legalism and inter-vention do influence the real development ofb a rgaining in the five countries. The stre n g t hand presence of the dialogue partners in the col-lective arena are unquestionably also a baro m-eter of the actual evolution of the agre e m e n t s .In re g a rd to participants, there is evidence in thefive countries of growing ignorance of the prac-tical re q u i rements for preparing the agre e m e n t ,f a i l u re to consult with the rank and file and adistinct trend towards confro n t a t i o n11 – histori-cally very pronounced in Bolivia – especially onthe part of trade union organizations. Besides,trade union federations do not seem to believethat mutual trust among the bargaining part-ners has improved, although some pro g ress hasbeen observed in the communication and trans-mission of unmanipulated information andt o w a rds an approach favouring the search formutually acceptable solutions (a trend alsobecoming apparent in Venezuela and Ecuador).

Efficacy of the agreements

In Bolivia and Colombia (when member-ship does not exceed one-third of the totalworkforce in the enterprise) the collective con-tract (contrato colectivo) binds not only thosewho conclude it, but also those subsequentlyacceding to it in writing and those joining theunion at a later date,12 while in Ecuador13 itbinds only those represented by the union orprofessional association. Under Peruvian lawthe agreement is binding on the parties adopt-ing it, those on whose behalf it was concludedand to whom it is applicable and on workersjoining the enterprise after its conclusion,except for those in confidential positions. InVenezuela, provisions benefit all workers in theenterprise (erga omnes effect), save where theparties expressly exclude managers, inspectorsor persons in confidential positions.

Legal content and time frames

The provisions of the agreements becomepart of individual contracts in the five countriesand are applicable to collective and individualwork relations among the parties coming undersuch agreements. In Colombia, Ecuador and

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focused more on reaching industry-wide agree-ments than on strengthening bargaining at theenterprise level.

In the case of Bolivia, there are obstacles tothe development of genuine collective bargain-ing. The chief hindrance is its own labour law.By dealing with collective contracts and collec-tive bargaining under the standards for indi-vidual labour relations, the law fails to assignthe unions and employers’ associations a pre-eminent role in concluding employment con-tracts. What it does in effect is to clear the wayfor market forces to determine labour relationsbased on individual labour productivity. Inaddition, both the General Labour Act and therules governing employers curtail the latter’sleeway for representing their members inlabour-management questions.

In Bolivia, on the other hand, having optedduring several decades for confrontation as ameans of settling industrial disputes, the tradeunion movement has not allowed the conceptsof bargaining to thrive. What is more, as tradeunion leaders come to believe that democracyand neo-liberalism are two mutually supportiveelements, they have begun to construct a whole“body of theory” hostile to dialogue. The size ofenterprises and the capacity to create unions inthem also partly explain this negative turn ofevents: the stipulated minimum membershipfor the creation of worker organizations in enter-prises is a considerable constraint on the capac-ity of workers to negotiate, especially in the lightof the small size of industry in some countries.

Moreover, the heterogeneity of employersstemming from the varying financial and tech-nological capacities among producers in spe-cific branches of industry is hampering thesigning of industry-wide agreements in somecountries.

The scope of collective bargaining

Collective bargaining in the Andean coun-tries takes place essentially at the enterpriselevel. Industry-wide agreements are practicallyunheard of in Peru, Bolivia and Ecuador andare the exception to the rule in Colombia.

A variety of factors account for this, thoughlabour laws have been the chief among them,having complicated and in some cases pre-vented industry-wide bargaining. Hence, inColombia the law does not exclude industry-wide bargaining, but recognizes as valid onlycontracts negotiated and ratified at enterpriselevel. In that country there are currently nomore than two agreements concluded at a levelhigher than the enterprise level (banana andelectricity industries). Besides, industry-wideagreements are registered only after they areratified within the enterprise, with the resultthat official statistics often do not reflect them.

The law also creates major obstacles to theprogress of sectoral or industry-wide bargain-ing in Peru, added to which are the pressuresexerted by employer organizations, with theirlong-standing preference for enterprise-levelbargaining. The result has been the virtualdemise of industry-wide agreements17 in onlyfive years. In Ecuador, there is practically noindustry-wide bargaining as most contracts areconcluded between the employer and a work-ers’ association.

In Venezuela in contrast, the pre - e m i n e n trole of the labour authorities has given rise to aseries of industry-wide agreements in key sec-tors of the economy: a number of major sectorala g reements have been concluded in that coun-t r y, including those covering workers in thep e t roleum, construction, woodworking, plasticsand derivatives or hides and skins industries.

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Table 2. Coverage of collective bargaining

Country Labour force Wage earners No. of workers Percentage ofcovered workers covered*

1991 1996 1991 1996 1991 1996 1991 1996

Bolivia nd nd nd nd nd nd 0 0Colombia nd nd 10 357 000 11 994 000 141 403 169 505 1.36 1.41Ecuador 3 359 767 3 790 300 1 427 759 189 528 182 903 5.6** 4.8**Peru*** 1 006 409 1 212 318 1 006 409 1 212 318 279 293 89 428 27.75 7.38Venezuela nd nd nd nd nd 1 067 835 .nd .nd

* As the vast majority of collective contracts last two years, the actual number of workers covered by collective bar-gaining would be approximately twice that shown in the columns. ** The percentage refers to the economicallyactive population covered by collective bargaining. *** The data apply to the Lima metropolitan area.nd = no data

Coverage

A study of the coverage of collective agre e-ments is complicated by both the difficulty ofsecuring reliable data and the varying nature ofthe agreements signed. Despite these pro b l e m s ,coverage is known to be limited and it is inVenezuela that the greatest percentage of work-ers is covered. What is worrying is not only thelimited coverage, but also its steady contractionover recent years. In Peru, for example, workersc o v e red by collective bargaining declined by6 8 per cent between 1991 and 1994, this re d u c-tion being 4 per cent in Ecuador (see Table 2).

The increase of coverage in Colombiareflects a recovery from the spectacular droptriggered in 1991 by the economic crisis. Thisnotwithstanding, the overall long-term trend isa declining one, though it is more pronouncedin some sectors than in others.18

It is worthy of note that despite this down-ward trend, a series of parallel bargainingprocesses are taking place in some Andeancountries giving rise to another type of infor-mal agreement or arrangement, with the resultthat in Colombia, for instance, coverage is17 per cent of the workforce.

The low coverage is related to the waningimportance of collective bargaining in theAndean countries, itself in turn partlyexplained by the falling levels of trade unionmembership within enterprises, economicrestructuring and liberalization, privatizationprocesses, subcontracting and corporate down-sizing, the emergence of economic sectorsdevoid of trade union experience or the growthof the informal sector,19 where remuneration,working conditions and job and income oppor-tunities cannot be negotiated with an employer,but instead depend on quite different players.

In Venezuela, the signing of two labour stan-dards covering civil servants and the 1996industry-wide agreements in the agriculture,hunting, forestry and fisheries industries and inthe commercial, restaurant and hotel sectorscaused a surge in the number of workers cov-ered that year.20 Nevertheless, enterprise-levelbargaining – predominant in Venezuela –would not seem to be following the same trendas industry-wide bargaining.

Content of collective agreements

The content of collective agreements in theAndean countries is rather meagre and in manyinstances shows a trend towards a narrowingof the bargaining agenda. In some countries,

the content is limited to that set as a compul-sory minimum by the labour law.

Period of validity

The most frequent time-frame in most of thecollective agreements reached in the A n d e a ncountries is two years (by operation of the law),except in Peru, where the period of validity is oney e a r.2 1 But even in this latter country someemployers are lobbying for the extension of theperiod of validity of agreements. This is beingf a v o u red by a stable economic environment thatmeans less risk of the sharp drops in real wagesthat were frequent during the period of infla t i o n .2 2

At the same time, there is a tendency on thepart of many trade union organizations to seeka shorter period of validity, given the high his-torical rates of inflation in the Andean region,and this creates much uncertainty over wageincreases for the second contractual period. Inrecent years this problem has been solved bynegotiating the second period on the basis ofthe expected increase in the Consumer PriceIndex (CPI) and adding one or more points tothat indicator.

In Venezuela it is frequent to find agree-ments with a three-year duration, especiallysince article523 of the Labour Organization Act(LOT) establishes a maximum of three and aminimum of two years, though some clausesmay be revised within shorter time-frames.

Subjects of bargaining

Wages

Wage increases are the main, sometimes theonly subject of collective agreements in theAndean countries. No other factor is of compa-rable weight and importance. Between 82 and100 per cent of labour agreements contain wageprovisions. Nevertheless, some studies showthe gradual decline in the importance of wage-related issues vis-à-vis other items on the col-lective bargaining agenda.

Wage increases are granted directly throughacross-the-board increments and safeguardclauses, or indirectly through some additionalallowances. The benchmark most frequentlyused for wage negotiations and other financialaspects of labour agreements has been the CPI.The topic of productivity for its part is all butabsent from the bargaining table.

As re g a rds wage negotiations, it is worthunderlining the case of Bolivia where, as alre a d ymentioned, bargaining focuses only on wages.

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Other subjects of bargaining

As for the remaining issues dealt with,studies show an extreme paucity of contentandinnovation. For a variety of reasons, includ-ing evolving production methods, the fewchanges have not enriched the agreements, buthave even further impoverished them. On occa-sion, this process has taken the form of a newlegal framework that introduces substantivechanges in this regard. In Peru for instance, theemployer has been empowered to participatein setting the bargaining agenda and may intro-duce new or substitute clauses. Furthermore,the enactment of the Labour Relations Act (Leyde Relaciones Colectivas (LRTC)) No. 25593entailed a comprehensive review of the collec-tive agreements, which obliged trade unionorganizations to renegotiate each and everyitem that had already become part of their per-manent benefits.

Alook at the agreements in force reveals thatin practice the prescribed minimum of bar-gaining topics becomes a maximum. Besides, inmost cases, what is agreed concerning unionleave does no more than echo the provisions ofthe labour law in force, sometimes even fallingshort of them, or the matter is left to the dis-cretion of the enterprise. Apart from the lack ofinnovation mentioned above, we shouldunderline the high percentage of agreementswith job security clauses that have made theirappearance among collective contracts from1976 onwards. There has been a steadilyincreasing demand for this and it is now themain worker demand. This illustrates just howcrucial it has become in the present context ofcrisis and labour market deregulation, which isjeopardizing employment.

Content would seem to be more substantialin Colombia and Venezuela than in the otherAndean countries, though as pointed out in thenational studies, since the beginning of the pastdecade there have been no major new gains. Ithas been just about possible at great pains tosafeguard real wages and already existing pro-visions. The principal changes have been theamalgamation rather than elimination of somejoint committees, the spiralling cost of the lay-offs made possible by the new law, educationprogrammes and a measure of agreement onworker training, and the commitment to pro-ductivity and quality and in regard to the rightto information.

It is noteworthy that the content of collec-tive covenants (pactos colectivos) in Colombia,most of which have been imposed, is apprecia-

bly less favourable to workers and unions thanthe collective agreements (convenciones). Theoverall number of regulatory provisions isdeclining, as are the joint committees that meanparticipation in the work process. The wagelevels and increments under the collectivecovenants (pactos) are also clearly lower.

Flexible working hours:Only a handful

In the Andean countries, as in the rest of theregion, flexibility remains a central topic of dis-cussion and is inspiring radical stances basedon a legalistic conception of labour law andindustrial relations underpinned by both stateinterference and the curtailment of collectiveautonomy.

Flexibility has basically been introduced bylaw and, except for the case of Peru, its regula-tory framework may be considered as stillembryonic by comparison with other countriesin the region (e.g. Argentina) and other parts ofthe world. As we have seen, Bolivia is a specialcase, for in 1939 (when the current labour lawwas passed), there was no question of dis-cussing flexibility as currently understood.

Generally speaking, companies at the sub-regional level have in practice construed flexi-bility as the possibility to cut back the perma-nent staff by providing them with incentives toresign or take early retirement (Peru), and thishas in many cases led to the hiring of new work-ers on a temporary basis with less coverage andinsufficient protection.

In another approach designed to avoid thistype of flexibility, some labour contracts inColombia set limits on the hiring of temporarystaff and introduce clauses to protect indefiniteengagement. In this same connection, a (very)few contracts in that country even provide forincreases in statutory compensation payments.

The limitation of wage indexation is oneflexibility proposal commonly contained in col-lective agreements (e.g. in Ecuador). In Colom-bia, reducing wage costs is regarded as one ofthe main subjects along with the modernizationof production. In that regard, enterprises intro-duce bargaining proposals designed to limitprevious trade union gains such as a cafeteriaservice within the enterprise at token prices, thepurchase of products made by the enterprise atsharply reduced prices, and so on. In this sameconnection, there are provisions in some enter-prises making wages contingent upon output(Colombia,23 Venezuela). Nevertheless, it isinvariably the enterprise that introduces finan-

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cial incentives (related to skill and professionalaptitude), though this covers a mere 20 per centof enterprises at the most.

Only a handful of enterprises in the fivecountries negotiate annualized or flexibleworking days, though in practice there are“adaptations” to working hours decided indi-vidually by the employer on the basis ofdemand patterns. 24 In Peru for instance, someagreements are based on the flexitime systemlaid down in the law (e.g. in the agreement withCervecería Backus y Johnston S.A.), and some-times shorter working days (CODIEX), grantpaid leave of absence and introduce round-the-clock production systems based on shifts (Com-pañía Nacional de Cervezas or Sudamericana deFibras).

Subcontracting could meanan erosion of rights

Subcontracting is also a visible element ofbargaining at enterprise level and is in fact rec-ognized in many collective agreements inEcuador and Colombia. In Ecuador, paradoxi-cally, to avoid or compensate for lay-offs, theunion itself demands either higher compensa-tion or the rehiring of staff through subcon-tractors (which in principle could mean an ero-sion of rights, as subcontracting arrangementsin practice entail fewer legal guarantees forworkers than those that the main enterprise isstatutorily required to provide). Conversely, inColombia there are contractual provisions thattotally prohibit subcontracting (25 per cent ofall agreements, according to the sampling donein the national study).

Very few agreements take account of tech-nological and organizational changes and theseare generally concentrated in multinationalcompanies and in a few enterprises in the tra-ditional sector that are radically overhaulingtheir processes and equipment. The serviceindustries (e.g. energy or telecommunications)have launched a process of technological re-newal in Bolivia, Peru and Venezuela that isaffecting the organization of work on the shopfloor though having no real impact on enter-prise or group agreements, at least in Colombiaor Venezuela. The assignment of multiple func-tions or polyvalence has mostly been under-taken unilaterally by employers as can beobserved in some 25 per cent of enterprises(Colombian study).

The trade union strategy and response withrespect to flexibility is difficult to assess, as itis dictated by a range of considerations and a

variety of pressures. Indeed, while in countriessuch as Peru, where there is a high degree offlexibility, some trade union leaders haveattempted to include new bargaining subjectsfrom a novel organizational perspective25 andeven though the enterprises have for all practi-cal purposes ignored them, most trade unionorganizations are extremely diffident aboutintroducing new topics to their lists of claims,whether for fear of seeing their overall rightsdiminished (Colombian study), or owing to thegrowing belief that bargaining has now becomemore difficult and the bargaining partners moreintransigent.

No strategy on flexibility

Generally speaking, trade union leaders arefailing to work out a response to the changesi n t roduced by the enterprise, on account of thespeed at which they come onstream, their nov-elty and the lack of pre p a redness to put for-w a rd the new types of claims involved. Norwould the Colombian practice of obstru c t i o nby means of counter- p roposals used on diff e r-ent occasions seem to yield any new answers.The problems facing trade unions in placingnew topics on the bargaining agenda may bec l a s s i fied at diff e rent levels ranging from theu n receptiveness of employers to the lack ofinformation and knowledge of new technolo-gies. The effect is nevertheless the same: theabsence of new subjects in collective agre e-ments designed to regulate and attenuate theimpacts of fle x i b i l i t y.

No trade union strategy on flexibility mayt h e re f o re be said to exist. The fact is that barringsome very specific sectors such as the petro l e u mindustry in Peru, the current labour fle x i b i l i t yhas been construed as something sectoral ratherthan general or national and demands havefocused on wages. Nevertheless, in most of thecountries, the trade union proposal takes theform of the submission of a list of claims per sec-t o r, although this approach has certain practicald i fficulties engendered by the hetero g e n e i t yand weakness of trade unions.

U n d o u b t e d l y, greater bargaining power ofunions is a sine qua non for a substantive alter-ation of their present posture re g a rding fle x i-b i l i t y. The not unfounded fear that new org a-nizational methods may herald a heavier workload and could even become instruments oftrade union re p ression must be met with aw e l l - d e fined organizational policy and witha n adequate legal framework for monitoringa b u s e s .

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No major demands met since 1980

As mentioned above, trade unions are theparties authorized to bargain on behalf of work-ers in the five Andean countries. Nevertheless,recent developments in the various spheres inwhich the unions are active have brought themface to face with a range of questions, dilemmasand challenges.

Hence the amendments to labour laws,which are closely bound up with greater eco-nomic openness and the globalization process– with the resulting advances in the area of flex-ible working hours and the reduced role of gov-ernment as a regulator and supplier of goodsand services – have undoubtedly had a tellingimpact on the way trade unions operate. Inturn, political, social and economic changeshave also complicated their function and rolein the various spheres of activity. At the sametime, companies have adopted austere savingsand cost-cutting policies (including the ever-present sword of Damocles of lay-offs) thatmake it very difficult for workers to operate onan equal footing.

At the internal level, changes in the compo-sition of the workforce (the large-scale incor-poration of women, the emergence of a bur-geoning urban informal sector) and changes inworkers’ attitudes and behaviour patterns(individualism, new cultural and educationalchallenges) are shifting the traditional operat-ing paradigms of trade union organizations.

In practice, the consequences of thesechanges have made themselves felt and fear ofe n f o rcing labour claims in a world of high job-lessness has become generalized; the fear of los-ing their livelihood has in fact prevented work-ers from protesting against low salaries andpoor working conditions. Indeed, it is fre-quently asserted that no major worker demandshave been met since 1980, essentially owing tothese fears and the lack of dynamism on the partof trade union organizations in the pre v a i l i n gadverse and crisis-ridden enviro n m e n t .

This situation is directly affecting collectivebargaining, which is changing in accordancewith the strength or weakness of the unionwithin the enterprise or industry and this isreflected in reduced coverage and the impov-erishment of content (see above). In enterpriseswhere the union is strong, autonomous, andcapable of rallying support and displaying ini-tiative, collective bargaining is the primaryvehiclefor the submission of new subjects andproposals. In enterprises where the union isweak, the threat of dismissal is used as a form

of pressure to dissuade workers from makingdemands and collective bargaining becomes arudimentary exercise. In enterprises whereworkers have been coopted, collective bargain-ing is non-existent or is at best no more than anautomatic and bureaucratic procedure.

F u r t h e r m o re, trade union federationsa n d/or confederations are out of step with localunions especially in the industrial sector. Stro n gunions do not always turn to trade union con-federations and/or federations for support inthe collective bargaining process; they are self-s u fficient and are sometimes better endowedwith re s o u rces than the confederations them-selves. It is the weaker unions that have majord i fficulties and need the trade union confeder-ations and/or federations. Nevertheless, thesuccess of the umbrella trade union bodies inattracting local unions, re g a rdless of theirs t rength, will depend on their capacity to artic-ulate and interpret demands and to offer unionsl e g i t i m a c y, efficiency and self-re l i a n c e .

Trade union organizations are also grap-pling with changes within their own ranks.

New sectors with no tradeunion traditions

Indeed, the trade union movement hasalways claimed to represent all workers and notjust its members. There are huge swathes ofworkers making up new sectors that eitherhave no trade union tradition or are unorga-nized, such as the informal sector and otherswith precarious or atypical wage relations.How can the interests and values of the work-ers in these sectors be effectively represented?What are the forms of organization best suitedto dealing with these situations?

The more heterogeneous nature of the tradeunion rank and file resulting from the large-scale influx of women into the workforce(upsetting the traditional concept of the mar-ket), the increasingly wide variety of qualifica-tions and new forms of hiring constitute a chal-lenge to the ability of trade unions to dovetailthe different demands of each of these sectorsof the labour force into one common tradeunion project.

Apart from its new make-up, the currentatomization of the labour force is throwing upnew challenges. The problem is even furthercompounded by the extreme fragmentation ofthe trade union movement in the Andean coun-tries, where there are still some 25 trade unionconfederations altogether. The four trade unionconfederations existing in Peru in 1990, for

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4 The five countries have ratified both Conventions.5 In Peru, Article 46 of the law prescribes that a majority

of workers and enterprises is necessary in order to concludea collective agreement by branch of activity or profession(contrary to ILO Convention No. 98).

6 Expressly laid down in Article 528 of the OrganicLabour Law.

7 As a result of the recent amendment of the LabourOrganization Act, in enterprises with no unionized workers,agreement may be reached directly with the workers that upto 20 per cent of wages will be excluded from the computingbasis for social security benefits (Article 133).

8 In Colombia, when there is simultaneously a basicunion together with a professional union and an industry-wide union in one and the same enterprise, representation isawarded to the union with the majority. If none has a major-ity, representation will be shared. If there are several unionsin one and the same sphere they may undertake joint repre-sentation (on a pro rata basis) or they may award it to one oftheir number. At the level of industry or profession, autho-rization is effected by the corresponding organization orjointly if there are more than one.

9 In Bolivia, this is limited to one or several employers,while in Peru the phrase “several employers’ organizations”is used.

10 Since the 1992 enactment of Decree Law 25593, there hasbeen no further need either for administrative approval ofa g reements reached in direct talks or conciliation or for anadministrative resolution to be issued covering the agre e-ments reached by direct talks or conciliation, nor for the pass-ing of an administrative resolution concluding the barg a i n i n g .Yet in opting either for discretionary arbitration (whereby ift h e re is disagreement as to the designation of the chairman ofthe tribunal, the administrative authority would undertakethis) or strike action (in case the strike becomes protracted andt h e re f o re seriously prejudicial to the enterprise or sector, theExecutive Power could decree the end of the strike and imposea settlement of the dispute), intervention is clearly maintained.

11 Though confrontation often results from justified dis-trust and in pejus modification of working conditions both inlaw and in practice.

12 In Colombia, this rule applies when membership doesnot exceed one-third of the total workforce in the enterprise,but if it does the agreement covers all workers in the enter-prise, whether unionized or not.

13 This has nonetheless been construed in legal practiceto mean all workers in the enterprise, as it is not acceptableto establish differences in working conditions among work-ers in one and the same production unit.

14 In Bolivia, unlike other countries in Latin America, col-lective bargaining and collective contracts cannot be placedon the same footing. In practice, as pointed out above, col-lective bargaining and the signing of agreements are not pos-sible as the regulations governing employers prevent themfrom negotiating labour questions.

15 The table includes only data concerning collectiveagreements as the other agreements, the so-called collectivecovenants, cannot be considered as genuine bargainingbetween workers and employers.

16 There is a distortion in this year’s figures as the LabourRegions of the Ministry of Labour and Social Promotion(Regiones de Trabajo del Ministerio de Trabajo y Promoción Social)submitted no information.

17 Federal-level collective bargaining is no longer beingconducted by the Banking Federation of Peru (Federación Ban-caria del Perú), the Civil Construction Federation (Federaciónde Construcción Civil), the Textile Federation (Federación Tex-til), nor by the unions in the electricity industry. Only thebakers’ federation still conducts industry-wide bargaining.

18 Please refer to the national study for detailed informa-tion concerning patterns of coverage in the various sectors.

19 Between 1990 and 1994, 15.7 million jobs were createdin Latin America, 8.5 of every 10 being in the informal sec-tor. In Peru in particular, the informal sector accounts forabout 60 per cent of the economically active population.

20 In Venezuela, as a result of the three-year duration ofcollective agreements, coverage skyrockets in those yearswhen the signing of two or three major industry-wide agree-ments coincide, such as those in the petroleum, chemical ortextile industries.

21 The laws throughout the Andean countries pre s c r i b ed i ff e rent periods of validity for collective agreements. Thus,in Peru and Bolivia the labour code establishes minimum pe-riods that may be extended by the parties; in Venezuela it setsa maximum and a minimum time frame; and in Ecuador andColombia the duration is set by the parties, though in the lat-ter country an agreement is presumed to be applicable for suc-cessive six-month periods if it does not specify a time-frame.Even where the labour code is not adhered to, the periods ofvalidity would seem to follow normal usage in each country.

22 In Peru there are prominent cases of extension of theperiod of validity of agreements by two, three and even fiveyears, such as those of Magma Tintaya and Southern Peru.

23 The report by the Centre for the Processing of Collec-tive Agreement Data (Centro de Información Sistematizada deConvenciones Colectivas) (CISCON), which is analysing 200agreements, states that 6.97 per cent of those agreements con-tain clauses on output and productivity, while only oneincludes profit-sharing.

24 Incidentally, the Colombia study contains a singleinstance of flexitime in an arrangement separate from the col-lective agreement at an automobile assembly plant. Onaccount of the problem of terrorism and in an attempt to cir-cumvent it, apart from other insurance benefits, protectionfor trade union leaders and so on, provision was made forthe possibility of varying working hours pending notifica-tion to the plant supervisor.

25 Two noteworthy examples are the company Backus yJohnston S.A., whose list of demands includes proposals con-cerning the organization of production and technical train-ing, and the National Federation of Health Sector Workers(FENUSTA), which successfully tabled a package of pro-posals for comprehensive health sector restructuring, includ-ing new job categories.

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It is well known that the collective laboura g reement, as an agreement concluded betweenworkers’ and employers’ re p resentatives ino rder to lay down the conditions for pro v i s i o nof services in an enterprise, is undoubtedly afundamental institution of labour law. Vi e w e das a paradigm for action of organized labour, itis one of the most important achievements oftrade unionism and the fundamental instru m e n tof the trade union in the Mexican system for thes a f e g u a rd and promotion of workers’ intere s t s .

It is difficult to lay down rules

It is nevertheless important to remember thatany collective labour agreement – whetherknown as a collective agreement, rates agre e-ment, team agreement, etc., according to thecountry and the legislation in question – is pre-ceded by a process of discussion known as col-lective bargaining during which the specific con-ditions are fixed for the provision of services inone or more companies or enterprises. Collectiveb a rgaining is a dynamic and complex process initself which brings together dissimilar personswith differing interests in a discussion for whichthe rules are difficult to define and in which eco-nomic and legal aspects mingle, with a touch ofp s y c h o l o g y, philosophy, human relations andi d e o l o g y. Conceived initially as a demand ande x p ression of workers’ groups against theirexploitation and social vulnerability, today col-lective bargaining has ceased to be a totally con-flictual process and become a normal form ofw o r k e r-employer communication and re l a t i o n s .

A single union device imposedby the labour movement

Our Political Federal Constitution of 1917does not expressly mention collective labour

agreements and, consequently, does not refer tocollective bargaining, but the dogma prevailingsince then acknowledges the existence of bothmerely by recognizing trade unions and strikeaction. In this regard, it may be added that byenshrining respect for freedom of association inArticle 123, section A, part XVI, of the Consti-tution, there is implicit recognition of the rightto freedom of action for workers, whichincludes the possibility of demanding collec-tive bargaining on labour conditions and its for-malization in a collective labour agreement.Hence, since their origin, these instrumentsappear as a single, all-embracing trade unioninstrument imposed by the labour movementto assume the character of a right for workers’organizations to defend and promote better liv-ing and working levels, beyond and despite thebias which liberal individualism has attemptedrecurrently to establish.

Absence of major obstacles since 1931

At the outset, collective bargaining in Mex-ico developed under the provisions of the Fed-eral Labour Act of 1931 and operated withoutmajor obstacles given its own complexity andthe changing conditions of the Mexican situa-tion in each period. In terms of its characteris-tics with regard to the form and substance ofcollective bargaining, they picked up momen-tum when the new Federal Labour Act of 1970came into force, and furthermore when in 1974two provisions on labour standards wereincluded concerning the compulsory annualrevision of collective agreements and dailywages paid in cash. These provisions – 399 bisand 419 bis – began to exert an effect in May1975 just when the government of Luis Echev-erría Alvarez was in power, a period duringwhich, despite the ups and downs of inflation

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Mexico

Collective bargaining: A fresh spurt of social andsectoral dialogue and some interesting findings

José Ramírez GameroSenator of the Republic

Secretary for Education, Qualification and TrainingConfederation of Mexican Workers (CTM)

and devaluation, collective agreementsimproved notably and many of the rightsenshrined in Article 123 of the Constitutionwere laid down in laws and institutions such asthe Instituto y Ley Infonavit (Infonavit Instituteand Act), Fovissste, Fonacot, etc.

Troubled times in the era of the Pacts

Under José López Portillo’s government,the labour aspects linked to collective bargain-ing followed a satisfactory trend: bargainingwas carried out freely and the parties obtainedsignificant improvements in regard to wagesand benefits with up to 1,000 jobs a day beingcreated during the six-year presidential term.Unfortunately, the world oil price crisis and thecomplications of the Mexican external debt ledto severe disturbances, reversing the progressmade and in response to which the adminis-tration of Miguel de la Madrid Hurtado was toresort to a long-lasting economic and labourpolicy hinged to Pacts directed in the first stageat controlling prices and salaries.

A series of cooperation pledges

The Pact on Economic Solidarity, concludedon 16 December 1987, marked the beginning ofa long series of cooperation agreements madewith official intervention which, willy-nilly,have had a considerable impact on the sociale ffectiveness of collective bargaining and haves i g n i ficantly and disturbingly reduced the pur-chasing power and well-being of Mexican work-ers and their families in the past 11 years. Thevalue of the economic and social pacts cannot bedenied. They can be justified and be of enor-mous use in a particular social and economic sit-uation, but such cooperation mechanisms mustbe temporary and re q u i re that all the sectorsinvolved make proportional and equitable sac-r i fices. The virtues of these democratic consen-sual tools can either turn to naught or becomec o r rupt when their successful application re l i e son sacrifices by only one of the parties, in thiscase the most unprotected and vulnerable in anational and international context of aggre s s i v eeconomics and a process of globalization mak-ing headway by leaps and bounds.

Striking a balance among the variousproduction factors

As aforementioned, trade union rights inMexico are upheld constitutionally by Article123, section A, part XVI, which lays down that

“both workers and employers have the right tojoin together in the defence of their respectiveinterests, forming trade unions, occupationalassociations, etc.”, a provision which must beread in association with part XVIII, which stip-ulates that “strikes shall be lawful when theirpurpose is to achieve a balance between the var-ious production factors, harmonizing labourrights with those of capital” [free translationfrom the Spanish original].

Section Seven of the Mexican FederalLabour Act regulates the content of parts XVIand XVIII of the foregoing provision under theheading of Collective Labour Relations and,specifically in chapters I and II, covers the occu-pational associations in regard to coalitions,trade unions, federations and confederations.Chapters III and IV deal with collective labouragreements and the contrato-ley (legal agree-ment), while chapter VIII of the regulatory actrelates to strikes.

The constitutional aspects referred to aboveare closely connected with trade union law, theessential concerns of which largely find expres-sion in collective bargaining, collective agree-ments constituting concrete achievements.

One of the most comprehensivedefinitions

Currently, our Federal Labour Act, in defin-ing a collective agreement as “an agreementconcluded between one or more workers’unions and one or more employers or one ormore employers’ unions, for the purpose ofestablishing the conditions under which workshould be carried out in one or more companiesor establishments” (Article 386), provides oneof the most comprehensive definitions on thesubject so that, in accordance with its content,the negotiation leads primarily to fixing hoursworked per day, the amount of wages, rest daysfor each category and speciality, workers’ train-ing and skills development, the bases for themembership and operation of the joint com-mittees which must function in each enterpriseaccording to the law, and other provisions asdecided by the parties.

Three types of collective bargaining

Viewed essentially from the legal angle, wemay say that Mexican legislation today givesrise to three types of collective bargaining: o r d i-nary barg a i n i n g, in which no authorities partici-pate, except for the judicial authorities toendorse the agreements reached by the parties

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when so specified by the law; a d m i n i s t r a t i v e o rconciliatory barg a i n i n g, under the re s p o n s i b i l i t yof the Directorate-General of the Corps of Con-ciliators dependent on the Secretariat of Labourand Social We l f a re; and negotiation relating to the“ c o n t r a t o - l e y ” in the charge of the Dire c t o r a t e -General for A g reements of the above-men-tioned body of the Federal Executive. Wo r kcompleted during previous presidential termsby the National Tripartite Commission couldnot be followed up because of the Commission’sessentially political rather than legal nature .

Ordinary bargaining: Joint committees

In the first type of bargaining, as a generalrule joint committees are constituted consistingof an equal number of workers’ and employers’re p resentatives who intervene in the pro c e e d-ings. The law provides for the presence of thesecommittees in some specific cases: safety andhealth; education and training and internal re g-ulations; and allows others to function if soa g reed by the production factors – capital andlabour; so all in all they enjoy a very wide r a n g eof functions: conciliation; tabulators; re c ru i t-ment and promotion; standardization of spe-c i fic posts, etc. For each collective agreement theparties themselves agree on its establishmentand lay down the bases for any negotiation.

Administrative bargaining: Officialsresponsible for conciliation

In regard to the second type, for somedecades now there has been a body of concili-ation officials in the Secretariat of Labour andSocial Welfare of our country to provide a pub-lic bargaining service in respect of working con-ditions, avoiding any worker-employer con-flicts by official intervention, especially whenthe parties themselves cannot reach a satisfac-tory settlement.

Asimple procedure governs this type of bar-gaining without any other direct intervention,providing an authorized record of the collectiveagreement both parties conclude: the concilia-tor only testifies publicly to the contents of theagreement for any subsequent legal actionwhich may arise.

The contrato-ley: Obligatory inan industrial branch

In respect of the third category, article 406 ofthe Mexican Federal Labour Act provides thattrade unions which re p resent at least two-third s

of the unionized workers in a branch of indus-try in one or several federal entities or in one orm o re economic branches can conclude a c o n-t r a t o - l e y (legal agreement). The definition whichMexican legislation provides of this legal insti-tution restricts it to an agreement concludedbetween one or more workers’ unions and oneor more employers’ unions for the purpose oflaying down the conditions under which thework in a specified branch of the industry mustbe carried out, in order to declare it obligatoryin one or more federal entities, in one or moreeconomic zones or throughout the national ter-ritory (article 404 of the Federal Labour A c t ) .

Labour authorities step in

On the basis of the provisions re f e r red to, col-lective agreements are held by the labour author-ities to determine the general working condi-tions in the industry or branch as well as fix therules under which plans and programmes aredrawn up for introducing education and train-ing or any other agreed pro v i s i o n s .

The main feature of this type of bargainingis the involvement of the labour authoritiesboth in preparing and ensuring the applicationof these labour-employer agreements and theirinvolvement in the consensual process and inthe revision of the collective agreements byoffering administrative solutions and regulat-ing the functioning of the joint enterprise com-mittees which are set up.

Similarly, the labour authorities must beaware of the objections raised by employersand workers to the compulsory application ofthe contrato-ley and issue an opinion on the mat-ter (Articles 415 et seq. of the Federal LabourAct). In this way, bargaining guarantees appli-cation of the agreement and forestalls any dis-putes which could arise between the tradeunions involved, with the aim of settling thegreatest number of labour demands.

A defence for the mostvulnerable groups

Viewed in a diff e rent perspective – and re l y-ing on the experience amassed by the tradeunion affiliates of the Confederation of MexicanWorkers (CTM) – we can affirm that collectiveb a rgaining is currently satisfactory and consti-tutes an important defence against the harshe ffects of a complicated economy which placesa heavy burden on workers and their families,especially those who are not trade union mem-bers and are there f o re more vulnerable.

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Tripartite bodies do not always takeeconomic realities into account

T h e re is no doubt that conditions of re m u-neration and security in employment, grantingof social benefits, working hours and othersimilar guarantees are achieved more eff e c-tively and yield better social gains when theya re discussed, agreed on and laid down ina g reements which are the outcome of collectiveb a rgaining – the pre rogative of the tradeunions – than when they are concluded by tri-partite bodies. The latter do not always takeinto account the real economic situation inwhich the workers provide their services, butobey macroeconomic imperatives whose con-siderations are far distant from the materialneeds which the wage should cover under con-stitutional pro v i s i o n s .

The recent approval in Mexico of a 13 percent rise in the minimum general wage – lowerthan the 17 per cent recorded inflation – con-firms the foregoing assertions and underlinesthe need for an in-depth review of the estab-lishment and functioning of the tripartiteNational Minimum Wages Commission, whichis the source of the agreements concluded byvote of the workers’ representatives.

A new labour culture gives prideof place to dialogue

Against this background and the volley ofcriticism that the measure has provoked inalmost all sectors of Mexican society, 1999 hasbeen ushered in as a particularly importantyear for an appraisal of Mexican collective bar-gaining with workers and employers engagedin the contractual wage review, making it pos-sible to gauge whether the new jointly spon-sored climate for resolving the labour questionaffords the possibility to overcome the compli-cations caused by the low minimum wageincreases and head towards a new labour cul-ture inspired by dialogue and consensus in theconclusion of collective agreements.

So what are the prospects for collective bar-gaining in Mexico?

The CTM is both spectator and actor at atime which is historic for the nation, but fromseveral stances, all closely linked with theimperatives of globalization and the role andconsideration that must be given today to theworking classes if they are to be part and par-cel of scenarios involving industrial and com-mercial competence of the highest order.

Challenges imposed by regionalcommitments

In this ongoing climate of globalization, weMexicans must respond to the immediate chal-lenges imposed by regional commitments withthe United States of America and Canada, inaddition to those that would surface should asystem of free trade with the European Unionbe introduced in our country, and still othersthat would be the result of short-term agree-ments with countries and blocs in the Centraland South American regions.

Trade unions with the same flexibilityas companies

In a scenario with these characteristics, it isessential to recognize that in present-day worldeconomies, the only workers and unions thatflourish are those which develop the same skillsand acquire the same flexibility as companies.But, in order to be successful, companies mustbe able to exploit market niches, adapt practi-cally and instantly to changes in demand andendeavour to offer a perfect product.

If Mexican workers have to adapt to chang-ing production conditions, investment must bemade so as to improve their skills commensu-rate with changing market conditions. Theiraccess to the tools and re s o u rces re q u i red forperiodic “modernization” must be facilitatedand they must be given the necessary time.

Unskilled workers

A c c o rding to data from the Secretariat ofLabour and Social We l f a re, at the end of the sec-ond half of 1996, the National EmploymentSurvey showed that 73.8 per cent of the Mexi-can population working at that date lacked fullbasic education while 11 per cent had noschooling, 21.2 per cent had not completedprimary school, only 20.6 per cent had com-pleted primary school and 20.9 per cent hadembarked on but not completed secondarye d u c a t i o n .

We must therefore admit that the Mexicanlabour force consists mostly of people withenormous individual potential but who lackproper education.

Mexican companies, for their part, have toconsider productivity and competitiveness asan overall strategy within which the workers’efforts are clearly and precisely geared to thecompany’s changes and objectives, with theresult that only a re-evaluation of the employ-

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ees’ and workers’ role will make it possible toenter the new national and international mar-kets advantageously.

A programme which breaksnew ground

The managerial challenge means that devel-opment programmes must be ongoing, and beg e a red to the following considerations: systemsfor measuring the individual and collectivep ro g ress made and economic incentives; systemsallowing workers to participate both in re v i e w-ing the work process and in the search for solu-tions to the problems posed by the new objectives(e.g. quality circles, productive process analysisg roups, etc.); proper identification of needs forhuman re s o u rces qualification and training; tech-nology transfer and/or adaptation processes; pri-ority to improved business management andstrategic planning; improving the work enviro n-ment with modern techniques such as biome-chanics and ergonomics; and promoting socialactivities among workers and their families ino rder to raise their individual and collective self-esteem, as well as other matters on a bro a dagenda which breaks new ground for the new eraof the collective bargaining process in Mexico.

Why is it perfectly feasible to include theseand other similar topics in an advanced view ofcollective bargaining?

Two requirements for a new labourculture

First, enterprises worldwide have begun torealize that their main assets are not material –m a c h i n e r y, equipment, factories – but humanre s o u rces; and it is from the workers’ capacityfor innovation and their acquired knowledgethat the managerial potential for competitive-ness and productivity can take form; and sec-o n d l y, unless the worker-employer re l a t i o n s h i pincludes employment stability and pro s p e r i t yfor the workers, it will be difficult to produce anew labour culture striving towards consensusin sectoral agreements thereby enabling the var-ious interests to attain their specific goals.

No abdicating: Another brandof trade unionism

In the search for a fresh course for collectivebargaining, two powerful tools are at work inMexico: a new conception of the trade unionstruggle in keeping with the new conditionsand demands of the labour market, and the

virtues of the new labour culture which wehave been formulating and constructing jointlyas workers, employers and government.

The new form of trade unionism we ares p e a rheading in Mexico has abandoned neitherits historical roots nor its social role. It has notabdicated from its position as intransigentdefender of the fundamental rights of workersnor from the never-ending struggle to obtain afair and fitting re w a rd for the product of theirwork enabling them and their families to lead adecent life. But the new brand of trade union-ism we bring to collective bargaining and socialdialogue is to be of a forward-looking and par-ticipatory character, to be modern and support-ive of the other production factors but not desertthe inalienable right to freedom of associationand the true re p resentation of a key componentof society – the workers. The new trade union-ism in which we place our trust is turning tocooperation, dialogue and consensus to find thea p p ropriate formulas which global complexitybrings to the Mexican worker-employer re l a-tionship; and it is in education and training thatit expects to find the new tools for fashioningworkers’ well-being and happiness.

Closer bonds reveal the nationalclimate

This trade union renewal which we as CTMworkers are bringing has already yielded con-crete evidence of its new social philosophy bycontributing decisively to the thrust of the newlabour culture. In 1995, amid the worst crisis inour history, an event occurred that was unusualbut highly revealing of what could, in the nearfuture, be the national climate for collective bar-gaining, a fresh fount for social and sectoralcooperation: a major breakthrough occurred inthe country in the relations between the CTMand the Mexican Employers’ Confederation(COPARMEX) leading to agreements based ondialogue and consensus. The debate about theFederal Labour Act has been shelved and in itsstead has come to the fore the will to analyselabour problems and seek solutions of mutualbenefit, but above all, of benefit to society andthe future of the country.

An agreement signed bythe top organizations

As it happened, in July 1995 the CTM andCOPARMEX signed an agreement entitled “Fora new labour culture”. Subsequently, in August1995, the Congreso del Trabajo (Labour Congress)

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and the Consejo Coordinador Empresarial(Employers’ Coordination Council) – the lead-ing workers’ and employers’ organizationsrespectively – ratified and initiated the jointaction proposals in nine months of work whichresulted, in August 1996, in the signing of thePrinciples of the New Labour Culture, wit-nessed in person by the President of the Repub-lic, Dr. Ernesto Zedillo Ponce de León.

The purpose of the new labour culture is tolaunch a re-evaluation of human labour; strivet o w a rds just and equitable levels of re m u n e r a-tion; actively promote training of workers andemployers as a systematic and ongoing pro c e s s ;stimulate job creation and save existing jobs;foster care for the environment and the fullapplication of safety and health rules in theworkplace; and consolidate cooperation anddialogue as appropriate means to enhancew o r k e r-employer relationships. A round theseobjectives, basic principles have been formu-lated: on ethics, labour rights, obtaining andi n s t ructing in labour justice; and principles ofeconomics, education and training, and pro-ductivity which, as aforementioned, open upi n finite possibilities for collective barg a i n i n gand sectoral consensus.

The regulatory labour instruments referredto earlier enable us to spot very interesting

leads for exploring collective bargaining inMexico which will take us along the route indi-cated in the Declaration of Viña del Maradopted by the Eleventh Inter-American Con-ference of Ministers of Labour of the Organiza-tion of American States held in Viña del Mar,Chile, on 20 and 21 October 1998.

Promising indicators

Indeed, extending the coverage of collec-tive bargaining to the greatest number of sec-tors in the economy; paying special attentionto negotiating appropriate conditions forforms of work other than permanent contracts:seasonal, contract labour, fixed-term, and part-time; establishing or strengthening the scope ofthe tripartite or bilateral social dialogue;endeavouring to obtain respect for freedom ofassociation and rights of re p resentation andautonomy enshrined in national legislation;and, in general, observing the indicationswhich are laid down in the Constitution andILO Conventions on freedom of associationand collective bargaining, as provided in theDeclaration of Viña del Mar, are all pro m i s i n gindicators of how the New Labour Culture ,which is gradually being consolidated, couldtake shape in Mexico.

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A paradox

Collective bargaining has pride of place inthe Canadian labour relations system. A solidframework exists to promote collective bar-gaining, helping to make it one of the keymeans of determining the terms and conditionsof employment.2 Despite such a framework, 50years after its adoption, Canada remainsamong the minority of countries that have notyet ratified the international labour Conventionon collective bargaining.3 Added to this para-dox is the fact that Canada is called to accountregularly by the ILO Committee on Freedom ofAssociation because of complaints concerningviolations of collective bargaining rights.

A pivotal role

Canada holds a significant place in the his-tory of the International Labour Org a n i z a t i o n ,not only as one of its founding members, butalso for having hosted the International LabourO ffice when Europe found itself at the eye of thestorm during the Second World Wa r.4 C a n a d a ’ srole in the Organization has not diminished: theGovernment as well as workers’ and employ-ers’ re p resentatives sit on its Governing Body,5

and Canadian delegates often have a stro n gvoice in many of the Organization’s discussionsand on many of its Committees. Canada playeda pivotal role in securing the adoption of themost recent affirmation of fundamental rights(including the right to bargain collectively),namely the ILO Declaration on FundamentalPrinciples and Rights at Work and its Follow-up.6

Domestic to international commitment

Given its role on the international stage andthe domestic commitment to collective bar-gaining, why has Canada been unable, or per-

haps unwilling, to ratify the Convention on col-lective bargaining? And what are the prospectsfor the future? These questions will be lookedat from two perspectives. First, an examinationof the general framework of collective bargain-ing that has been established: when held up tothe model for promoting collective bargainingthat the ILO supervisory bodies7 have piecedtogether over the years, Canada’s general col-lective bargaining framework looks exemplary.However, there are also cracks in the system,leaving some workers without the same rightsand protections enjoyed by others. There havealso been intervals when the system has beensuspended for certain employees (mainly thosein the public sector) for economic reasons. Thelapses in the system that have been brought tothe attention of the ILO supervisory bodies isthe second perspective from which Canada’srecord will be examined.

Obligations by virtue of membership

Although it has not ratified the principalConvention concerning collective bargaining,namely the Right to Organise and CollectiveBargaining Convention, 1949 (No. 98), Canadastill has international obligations in this area.By virtue of membership in the InternationalLabour Organization, all member States arebound by the basic principles of freedom ofassociation, including the right of collectivebargaining, since these are included in theOrganization’s Constitution.8 As a result, theFreedom of Association Committee of the Gov-erning Body of the ILO has authority to hearcomplaints of violations of freedom of associa-tion whether or not the country at issue has rat-ified the particular Conventions. Since Canadahas not yet ratified Convention No. 98, it isthrough this special complaints procedure thatCanada’s collective bargaining record has been

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Canada

Collective bargainingand international obligations

Shauna Olney 1

Senior Legal OfficerILO Freedom of Association Branch

scrutinized. Of the 70 complaints that havebeen filed against Canada with the Committeeon Freedom of Association since 1951, 60involve collective bargaining issues.

Divided jurisdiction

Before turning to the promotion of collectivebargaining in Canada, when discussing ratifi-cation prospects, the complex constitutionalstructure of the country cannot be overlooked.Authority over labour matters falls under bothfederal and provincial jurisdiction. WhileCanada is the international entity authorized toratify a Convention, jurisdiction for implemen-tation is divided between the federal jurisdic-tion and the provinces. Consequently, the prac-tice has been to ratify only if all 13 jurisdictionsconcur and undertake to implement therequirements of the Convention.9

Canada’s collective bargainingframework

The Right to Organise and Collective Bar-gaining Convention (No. 98) calls on States totake measures to encourage and promote vol-untary collective bargaining.10 It refers specifi-cally to “the full development and utilization ofmachinery for voluntary negotiation”. Impor-tance is placed on the voluntary nature of col-lective bargaining, thus limiting the State’sdirect role in the process. However, this is bal-anced with the concept of “promotion”: a Stateis not entitled to remain indifferent with respectto collective bargaining.

While the ILO supervisory bodies have notdetermined an “ideal” collective bargainingsystem, they have identified practices and pro-cedures that promote collective bargaining. Therecognition of representative trade unions forthe purpose of collective bargaining, good faithbargaining, the prohibition of unfair labourpractices, and mediation and conciliation pro-cedures have been identified in this context,11

all of which are provided for in all Canadianjurisdictions.12

Union recognition or formalcertification

Once a group of employees decides to org a-nize for the purpose of bargaining collectively,either an employer voluntarily recognizes theunion or a formal certification pro c e d u re is setin motion. Certification has been described as“the linchpin of modern North A m e r i c a n

labour law”.1 3 T h rough this process, exclusiveb a rgaining rights are granted to trade unionsthat have secured a certain level of employeesupport. Normally, a union must show thati t has the support of a majority of the em-ployees in a bargaining unit1 4 in order to obtainc e r t i fic a t i o n .

Safeguards built in

For recognizing unions as exclusive bar-gaining agents, the ILO supervisory bodieshave insisted on certain safeguards: the certifi-cation should be made by an independentbody; the representative organization shouldbe chosen by a majority vote of the employeesin the unit concerned; a trade union that previ-ously failed to secure a sufficient number ofvotes in an election should be able to request anew election after a stipulated period; andany new organization should have the rightto demand a new election after a reasonableperiod.15 These safeguards have been built intothe Canadian system. Independent labourboards across the country determine whether aunion is entitled to certification. The federaland provincial legislation provides for a certi-fication vote, but the level of support needed totrigger a vote and the means of proving suffi-cient support may vary.

Representation vote

In some of the jurisdictions, certification canbe obtained without a vote. For example, inBritish Columbia, if the board is satisfied thatthe trade union has 55 per cent of the employ-ees of the union as members “in good stand-ing”,16 it must grant certification.17 But where aunion shows it has less than 55 per cent of mem-bers in good standing, but not less than 45 percent, a representation vote is held.18 All theemployees of the bargaining unit vote in a rep-resentation vote, and if a majority of those cast-ing ballots (as opposed to those entitled to vote)vote in favour of representation by the union,certification will be granted.19 What is particu-larly interesting about the Canadian situationis that, generally, a union need not show it hasa majority of employees as members, but ratherthat a majority of employees support the unionas their bargaining agent.

In some cases, the labour board can certifya union as the exclusive bargaining agent with-out a vote if the employer has been guilty of anunfair labour practice which has prejudiced theunion in its efforts to gain majority support.20

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Duty of fair representation

The mere filing of an application for certifi-cation creates certain obligations on the part ofthe employer: terms and conditions of employ-ment are not to be changed.2 1 Once certified, atrade union becomes the bargaining agent for allthe employees in the bargaining unit, even thosewho are not members of the union. As a coro l-lary to this right of exclusive re p resentation, theunion has a duty to re p resent all the employeesin the bargaining unit fairly.2 2

Good faith bargaining

Once certification is granted, either partycan give notice to begin collective bargaining.When notice to bargain is given, the employeragain must refrain from unilaterally changingterms and conditions of employment,23 andboth the union and the employer are obligednot only to bargain, but to bargain in good faith.Good faith bargaining is important in the viewof the ILO supervisory bodies “for the mainte-nance of the harmonious development oflabour relations”.24

Although good faith bargaining does notre q u i re the parties to reach an agreement, it doesre q u i re them to make every reasonable effort toenter into a collective agreement. In this context,the Committee on Freedom of Association hasnoted the importance of genuine and constru c-tive negotiations and the avoidance of unjusti-fied delays.2 5 The Committee has also stated thata g reements once reached should be binding onthe parties,2 6 which is the case of collectivea g reements under Canadian law. A c o l l e c t i v ea g reement in Canada may also contain what-ever subjects the parties agree to include.

Conciliation/mediation services

Since competing interests are at stake, theparties to collective bargaining are not alwaysable to reach an agreement without the assis-tance of a neutral third party. The importanceof conciliation and mediation as a means ofhelping the parties to come to an agreementvoluntarily is recognized across Canada. Con-ciliation or mediation services are provided tohelp the parties re-establish dialogue and con-sider different possibilities, but in the end it isstill the parties who decide what terms they willagree upon, if any. The importance of main-taining the autonomy of the parties withrespect to dispute settlement machinery hasbeen stressed by the supervisory bodies.27

Voluntary arbitration

Some Canadian jurisdictions also providefor voluntary arbitration. In Ontario, for exam-ple, once notice to bargain has been given, theparties can agree in writing to submit all mat-ters remaining in dispute to final and bindingarbitration.28 Although arbitration results in acollective agreement being imposed, the auton-omy of the bargaining parties is maintained,since the decision to submit to arbitration is thechoice of each party.

Imposition of first collectiveagreement

A general exception to the voluntary natureof collective bargaining in some Canadian juris-dictions is the imposition of a first collectivea g reement. The ILO Committee of Experts onthe Application of Conventions and Recom-mendations has accepted that, while arbitrationimposed at the request of one party is generallycontrary to the principle of voluntary collectiveb a rgaining, an exception might be made ino rder to conclude a first collective agre e m e n t :“As experience shows that first collective agre e-ments are often one of the most difficult steps inestablishing a sound bargaining re l a t i o n s h i p ,these types of provisions may be said to be inthe spirit of machinery and pro c e d u res whichfacilitate collective barg a i n i n g . ”2 9 The diff i c u l-ties in securing a first collective agreement arerecognized in a number of Canadian jurisdic-tions. In Ontario, for example, when the partiesa re unable to reach a first collective agre e m e n t ,either party may apply to the labour board fora direction that the agreement be settled by arbi-tration. In determining whether to order arbi-tration, the board looks at whether the employerhas refused to recognize the bargaining author-ity of the union, the uncompromising nature ofthe bargaining position, if applicable, and anyf a i l u re to make reasonable or expeditious eff o r t sto conclude a collective agre e m e n t .3 0

Business transfers

Another noteworthy aspect of the Canadiancollective bargaining system is the protection ofbargaining rights and collective agreementswhere there is a sale or transfer of a business.At common law, if the parties to the collectiveagreement change, both the collective agree-ment and the union’s bargaining rights come toan end.31 Legislation across Canada attenuatesthis situation by providing in certain cases that

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successor employers are bound by the terms ofthe pre-existing collective agreement and mustrecognize the bargaining rights of the union.32

Falling through the cracks

The standard Canadian collective bargain-ing framework described above is clearlyaimed at encouraging and promoting collectivebargaining. However, not all workers are enti-tled to take advantage of the system. There aretwo types of workers who fall through thecracks: those who are completely excluded bythe general legislation and those whose rightsare suspended from time to time by special leg-islation. The rights provided under ConventionNo. 98, however, are to apply to all workers,except a narrow category of public servants.33

Certain workers not covered

A Governmental Task Force on the revisionof the Canada Labour Code acknowledged that“while there is substantial compliance inCanada with ILO Convention No. 98 on theRight to Organise and Collective Bargaining, ithas not been ratified because in some jurisdic-tions either farm workers or members of certainprofessions are excluded from collective bar-gaining.”34 This has been a point raised by theCommittee of Experts for a number of years inthe context of Canada’s reporting obligationunder the Freedom of Association and Protec-tion of the Right to Organise Convention, 1948(No.87), which has been ratified. Most recently,the Committee noted that certain agriculturaland horticultural workers in the Provinces ofAlberta, Ontario and New Brunswick areexcluded from the coverage of labour relationslegislation; therefore they do not enjoy the pro-tection provided with respect to the right toorganize and to negotiate collectively.35

Ontario nullifies rights and agree-ments for certain categories

The ILO Committee on Freedom of Associ-ation has recently examined some of the leg-islative changes in Ontario, one of which wasto limit further the categories of workers enti-tled to take advantage of the statutory collec-tive bargaining framework. Excluded fromthese rights and protections are domestic work-ers, agricultural and horticultural workers,architects, land surveyors, lawyers and doc-tors.36 The Ontario Labour Relations Act alsoterminates the bargaining rights of existing bar-

gaining agents and nullifies existing collectiveagreements for these groups. The Committeeon Freedom of Association adopted decisiverecommendations: the Government wasrequested to take the necessary measures toguarantee the excluded groups access tomachinery and procedures that facilitate col-lective bargaining, to recertify the organiza-tions representing those workers, and to reval-idate any collective agreements that they hadentered into.37 While the supervisory bodies areobliged to comment where groups of workersare denied access to collective bargainingmachinery, they are likely to be more critical incases where workers, having once been withinthe system, suddenly find themselves strippedof their pre-existing rights and protections.Interference with existing freely concluded col-lective agreements seems to have been a par-ticularly aggravating factor in the Ontario case.

Legislative imposition of wage levels

The Committee on Freedom of A s s o c i a t i o nhas also had a number of opportunities to con-sider cases of the second category of workersfalling through the cracks – those who normallya re within the system, but who find their rightssuspended from time to time through the adop-tion of special legislation. From 1991 to 1994, 20complaints were lodged against Canada con-cerning wage cuts or freezes or the postpone-ment of wage increases in the public sector.3 8 I nthese cases, collective bargaining had been sus-pended through the statutory extension of theduration of collective agreements or the legisla-tive imposition of wage levels re g a rdless of theterms of existing collective agreements. Thesecases have given rise to what is unoff i c i a l l yc o n s i d e red “the Canadian jurispru d e n c e ” .T h e y concern not only the Federal Govern-m e n t but also British Columbia, Manitoba,N e w B runswick, Nova Scotia, Newfoundland,Ontario, Prince Edward Island, Quebec and theYukon. While there was a flurry of cases of thisn a t u re in the early 1990s, similar cases also cameb e f o re the Committee in the 1980s.3 9

ILO Committee expressed concernover large number of cases

The cases in question involved economicstabilization measures imposed by law whichhad the effect of suspending collective bar-gaining, at least with respect to wages. Whileshowing some deference to the Government inits attempts to overcome difficult economic

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problems, and acknowledging that the specialcharacter of the public service requires someflexibility with respect to the application of col-lective bargaining principles, the Committee onFreedom of Association was obliged to expressits concern about the large number of cases thathad been filed and the manner in which someof the measures had been imposed. In the viewof the Committee, “this reflects serious and pro-found difficulties in reaching agreement on thedetermination of employment conditions in thepublic service in Canada both at the federallevel and in the various provinces.”40 The Com-mittee suggested that the Government makeuse of ILO assistance to find a solution to theseproblems; in particular, an advisory missionwas recommended.41

Exceptional measure or violation

Taking into consideration the serious fin a n-cial and budgetary difficulties facing govern-ments, certain conditions must still be metb e f o re collective bargaining rights can be lim-ited. First, the Government must assert thatt h e re are “urg e n t ”4 2 or “compelling”4 3 re a s o n sof national economic interest. Secondly, anyrestrictions must be imposed as “exceptional”m e a s u res, which by definition are temporary.W h e re the duration of the restriction is partic-ularly long or is extended, the Committee ism o re likely to find that there has been a viola-tion. The Federal Government was severe l ycriticized in a case concerning the secondextension of the Public Sector CompensationAct, resulting in a total of six years of wagerestrictions in the public sector.4 4 H a v i n ga l ready examined the original Act and the fir s textension, and having recommended thatt h e re be a return to normal free collective bar-g a i n i n g ,4 5 the Committee “deplored” that theGovernment had not implemented its earlierrecommendations and expressed pro f o u n dre g ret that again collective bargaining had notbeen given pre f e re n c e .4 6 It went on to expre s sits concern at the danger of institutionalizingrecourse to legislation to address wage con-cerns in the public sector.4 7

Committee sympathy for protectionfor lower-paid workers

The third condition before limiting collec-tive bargaining is that there should be adequatesafeguards to protect workers’ living stan-dards. In cases where an attempt was made toprotect lower-paid workers or to maintain pay

equity measures, the Committee has been moresympathetic to the Government.48 On the otherhand, legislation resulting in cancelling theretroactivity of pay equity agreements was seenas an exacerbating factor.49

Role for collective bargaining

A relevant question is whether or not a role,even limited, still remains for collective bar-gaining. For example, if all working conditionsand benefits other than salary are still subject tonegotiations, this will be a mitigating factor.50

Another mitigating factor is where wageincreases are merely postponed by the legisla-tion rather than denied altogether.51 Interfer-ence with the terms of existing collectiveagreements rather than waiting until the expiryof those agreements, however, is viewed withdisapproval.52

Adequate consultation

Finally, an important factor influencing howpublic sector wage restraint measures are per-ceived is whether adequate consultation withall the parties concerned took place before thechanges were imposed: “where a governmentseeks to alter a bargaining structure in which itacts actually or indirectly as employer, it is par-ticularly important to follow an adequate con-sultation process, whereby all objectives per-ceived as being in the overall national interestcan be discussed by all parties concerned.” Theconsultations should be undertaken in goodfaith, with both parties having sufficient infor-mation to make an informed decision.53 By con-sulting with the parties beforehand, the Gov-ernment not only benefits from solutions thatthose with a different perspective may be ableto propose, but may be able to convince the par-ties of the importance of certain measures: theirimplementation may be facilitated, and a har-monious industrial relations climate main-tained. While consultation cannot be consid-ered collective bargaining, it is a step in thedirection of respecting the autonomy of the par-ties and the interests of those who will be sig-nificantly affected.

The central role of collective bargaining inCanadian labour relations cannot be denied.Nor can the role of the State in helping to nur-ture a system that has now developed strongroots. Will Canada be willing to give an inter-national affirmation of its commitment to theright to bargain collectively by ratifying Con-vention No.98? Given that the economic stabi-

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lization programmes have met their objectives,the painful process of streamlining the publicservice has been completed in most jurisdic-tions, and as the Federal Government hasproudly announced a balanced budget, it canbe hoped that the 20 public sector cases will beof historical interest only. As a result, theremaining obstacles to ratification seem rela-tively minor, though some adjustments wouldstill be needed. If ratification of ConventionNo. 98 were a priority on Canada’s politicalagenda, would it not be possible to take mea-sures to convince the provinces to make the nec-essary adjustments? From a political point ofview, it may be useful to wait to ratify until itcan coincide with a significant event – a 50thanniversary perhaps?

Notes

1 The views set out in this article are those of the authorand do not necessarily reflect those of the Office. The authorwould like to thank Bernard Gernigon for comments on thedraft.

2 For example, approximately 50 per cent of all workersin the federal jurisdiction are covered by collective agree-ments: Canada Labour Code Part 1 Review: Seeking a balance(Canada, 1996), p.17.

3 As of February 1999, the Right to Organise and Collec-tive Bargaining Convention, 1949 (No.98), had been ratifiedby 140 countries (approximately 80 per cent of ILO memberStates). There are two other Conventions supplementingConvention No. 98 in the area of collective bargaining: theLabour Relations (Public Service) Convention, 1978 (No. 1 5 1 ) ,and the Collective Bargaining Convention, 1981 (No. 154).Neither has been ratified by Canada.

4 The International Labour Office was based in Montrealfrom 1940 to 1946.

5 At present, the Government of Canada is a titular mem-ber of the ILO’s Governing Body; the Workers’ representa-tive is also a titular member, and the Employers’ representa-tive is a deputy member.

6 Ambassador Mark Moher, Government member ofCanada, chaired the Conference Committee during the 86thSession of the International Labour Conference in June 1998.At the adoption of the Declaration by the Plenary of theConference, Ambassador Moher’s role was unanimouslyheralded.

7 Namely, the Committee of Experts on the Applicationof Conventions and Recommendations – a Committee ofindependent experts that is concerned primarily with exam-ining the periodic reports on ratified Conventions; and theCommittee on Freedom of Association of the GoverningBody of the ILO – a tripartite Committee examining com-plaints concerning violations of principles of freedom ofassociation. An important distinction between the two Com-mittees is that the Committee of Experts’ jurisdiction gener-ally arises from a country having ratified a Convention; how-ever, ratification is not needed in order to bring a complaintbefore the Committee on Freedom of Association.

8 See the Preamble to the Constitution of the Interna-tional Labour Organization, and the Declaration of Philadel-phia annexed to the Constitution. This obligation has recently

been reaffirmed through the adoption in June 1998 of theDeclaration on Fundamental Principles and Rights at Work.Article 2 declares that “all Members, even if they have notratified the Conventions...have an obligation, arising fromthe very fact of membership in the Organization, to respect,to promote and to realize, in good faith ...freedom of associ-ation and the effective recognition of the right to collectivebargaining…”

9 See Freedom of association and collective bargaining , Gen-eral Survey of the Committee of Experts on the Applicationof Conventions and Recommendations (Geneva, ILO, 1994),para. 315; and Canada Labour Code Part I Review: Seeking a bal-ance, op. cit., p. 29.

10 Article 4.11 See F reedom of association, General Survey, op. cit., Chap-

ter 10; and F reedom of Association: Digest of Decisions of the Fre e-dom of Association Committee of the Governing Body of the ILO,4th (revised) edition (Geneva, ILO, 1996), Chapter 14.

12 The only exception is with respect to good faith bar-gaining which is not specifically referred to in the legislationin Saskatchewan; however, section 11 of the SaskatchewanTrade Union Act declares it an unfair labour practice for anemployer to fail or refuse to bargain collectively with a rep-resentative union.

13 W.B. Rayner: The law of collective bargaining (Ontario,Carswell, 1995), p. 12-1

14 It is for the labour board to determine what is an“appropriate” bargaining unit. The board will look at a num-ber of factors, most importantly whether the employees inthe unit share a community of interest with respect to thenature of the work, working conditions, etc.

15 See Freedom of association,General Survey, op. cit., para.240. See also Case No.1743 (Quebec), 295th Report, para. 80.

16 Proof of membership varies from jurisdiction to juris-diction. For example, in British Columbia, this is determinedon the basis of signed membership cards; in Alberta and atthe federal level, the payment of an initiation fee is alsorequired (see BC Labour Relations Regulations, section 3;Alberta Labour Relations Code, section 31; Canada LabourRelations Board Regulations, section 24).

17 BC Labour Relations Code, section 23.18 Ibid., section 24. At the Federal level and in Quebec,

the union must show that 35 to 50 per cent of the employeesin the unit are members of the union: Canada Labour Code,section 29; Quebec Labour Code, section 28.

19 BC Labour Relations Code, section 25.20 For example, see BC Labour Relations Code, section

14; the Manitoba Labour Relations Act, section 40.21 See for example Canada Labour Code, section 24.22 For example, section 37 of the Canada Labour Code

states that the union “shall not act in a manner that is arbi-trary, discriminatory or in bad faith in the representation ofany of the employees in the unit with respect to their rightsunder the collective agreement…”

23 For example, see Canada Labour Code, section 50.24 See Freedom of association, Digest of decisions, op. cit.,

para. 814. See also Freedom of association, General Survey, op.cit., para. 243.

25 Ibid., paras. 815-818.26 Ibid., para. 818.27 Ibid., para. 859; and Freedom of association, General Sur-

vey, op. cit., paras. 246-247.28 Ontario Labour Relations Act, section 40.29 Freedom of association, General Survey, op. cit., para. 257.

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30 Ontario Labour Relations Act, section 43. See also Que-bec Labour Code, section 93.1, and Manitoba Labour Rela-tions Act, section 87.

31 See Rayner, op. cit., p. 14-1.32 See for example Canada Labour Code, section 44;

Alberta Labour Relations Code, section 44. 33 Article 6 provides that “This Convention does not deal

with the position of public servants engaged in the adminis-tration of the State…”. Pursuant to Article 5, the police andarmed forces can also be excluded.

34 Canada Labour Code Part I Review: Seeking a balance, op.cit., p. 30. See also J. Mainwaring: Canada as an ILO member:performance and potential (Ontario, 1968), p. 19.

35 Observation of the Committee of Experts on the Appli-cation of Conventions and Recommendations, December1998.

36 Ontario Labour Relations Act, sections 1(3)(a) and 3.37 Case No.1900 (Ontario), 308th Report, para.194.38 Cases Nos. 1603 (BC), 1604 (Manitoba), 1605 (New

Brunswick), 1606 (Nova Scotia), 1607 (Newfoundland), 1616(Federal), 1624 (Nova Scotia), 1715 (Manitoba), 1722(Ontario), 1733 (Quebec), 1747 to 1750 (Quebec), 1758 (Fed-eral), 1779 (PEI), 1800 (Federal), 1801 (PEI), 1802 (Nova Sco -tia), 1806 (Yukon).

39 See Cases Nos. 1147 (Federal), 1171 (Quebec), 1172(Ontario), 1329 (BC).

40 See Cases Nos. 1733, 1747, 1748, 1749, 1750 (Quebec),299th Report, para. 237.

41 An ILO mission to Canada had in fact taken place ear-lier (in 1985): see report of the Information mission to Canadaannexed to Cases Nos. 1172, 1234, 1247 and 1260, 241st Report.

42 Case No.1733, etc., op. cit.,43 Case No.1616 (Federal), 284th Report, para. 635.44 Case No.1800 (Federal), 299th Report.45 Case No.1616, 284th Report, para. 641; Case No.1758,

297th Report, para. 230.46 Case No.1800, op. cit., paras. 178 and 183.47 Ibid., para. 182.48 See Case No. 1604 (Manitoba), 284th Report; Case

N o . 1605 (New Brunswick), 284th Report; Case No. 1606 (NovaScotia), 284th Report; Case No. 1722 (Ontario), 292nd Report.

49 Case No.1607 (Newfoundland), 284th Report.50 See Case No.1604 (Manitoba), 284th Report, para. 322.51 See Case No. 1605 (New Brunswick), 284th Report,

para. 501; Case No.1606 (Nova Scotia), para. 543.52 See Cases Nos. 1779 and 1801 (Prince Edward Island),

297th Report, para. 266. 53 See Case No. 1802 (Nova Scotia), 299th Report, para. 281;

Case No. 1806 (Yukon), 300th Report, para. 126. In a slightlyd i ff e rent context, see Case No. 1928 (Manitoba), 310th Report,para. 183; Case No. 1943 (Ontario), 310th Report, para. 230.

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As far as trade unions and workers are con-cerned, the ILO Right to Organise and Collec-tive Bargaining Convention, 1949 (No. 98), rat-i fied in 1961 by the Government of Senegalshortly after independence, is still closelybound up with the ILO Freedom of A s s o c i-ation and Protection of the Right to Org a n i s eConvention, 1948 (No. 87). Indeed, these twointernational labour standards are inextri-cably linked: the existence of workers’ org a n i-zations would be inconceivable without fre e-dom of association from which flows the rightto organize and the protection generallya ff o rded it by the national Constitution. Whenwe compare the interaction of the two c o m p o n-ent principles of each of these conventions,i t may also be asserted that without re c o g n i-tion of the right to organize, free and volun-tary collective bargaining would be out of theq u e s t i o n .

Post-independence lossof momentum

Although thanks to the dynamism andpugnacity of the trade union organizations inSenegal it had been possible some years beforeindependence to draw up and implement agood many collective labour agreements thatstill govern all occupational areas of nationaleconomic life to this day, it must be admittedthat collective bargaining soon lost momentumunder the combined effect of a centripetal trendtowards a worker representation monopoly, upto 1976 at any rate, and other structural adjust-ment programmes that have seriously depletedtrade union ranks and curtailed the govern-ment’s room for manoeuvre.

Review of the Labour Code

The result is that Senegal, like the othercountries in the subregion, is experiencingwhat might be called a “delayed adjustment”,a process compounded by highly draconianconditionalities and policies of unbridled liber-alization, with the consequence that the sociallaws and specifically the Labour Code are beingrevised to grant workers even less protection.As the basis of industrial relations, collectivebargaining in Senegal today is reduced to aminimum, giving rise to such an impoverish-ment of labour conditions that inevitablyresults in industrial disputes and setbacks, asillustrated in 1998 by the acrimonious disputebetween the Government and the Single Unionof Electricity Workers (Syndicat Unique des tra-vailleurs de l’électricité), whose leaders wereeither imprisoned or persecuted and dismissedfrom their jobs for challenging the ill-judgedprivatization of the electricity subsector.

Restoring the primacy of the socialdimension

Now that the economic crisis is universallyrecognized as a structural one with worldwideramifications that are restricting the room formanoeuvre of the partners in the social dia-logue (governments, employers, workers), it isnecessary to recognize the imperative of restor-ing central importance to the social dimensionas the aim of work and the resulting productionof wealth and values. Besides, this is the sensethat must be given to the application of inter-national labour standards and in particular ILOConvention No. 98, which enshrines the free-

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Senegal

The rigours of the economic crisis are notthe sole explanation for the refusal to tackle

the issues raised by trade union organizations

Sette DiengNational secretary for trade union education and training

National Union of Autonomous Trade Unionsof Senegal (UNSAS)

dom of association of workers and the need top romote social dialogue through collectiveb a rgaining.

Experience and practice of collectivebargaining

After bitter struggles by the trade unions inAfrican countries under French colonial domi-nation, the passing of the Overseas Labour Code(Code du travail d’outre - m e r) (on 15 December1952) led to the negotiation of the major collec-tive labour agreements, some of which still gov-ern industrial relations to this day in the specificcase of Senegal (see Table 1). Until then, theF rench decree of 20 March 1937 applicable to theoverseas territories had instituted jointe m p l o y e r-worker committees and authorizedthe conclusion of collective agreements in theindustrial, commercial and transport sectors,though excluding agricultural and miningworkers. But reverting to the period followingthe implementation of the Overseas LabourCode, it can hardly be denied that the Sene-galese Labour Code Act of 15 June 1961 (loi por-tant code sénégalais du travail) merely re p ro d u c e dthe bargaining forums established prior to inde-pendence. Thirty-six collective agreements andtheir supplementing regulations date from thisperiod of pro l i fic drafting of social pro t e c t i o nand collective bargaining instru m e n t s .

An inappropriate legislativeframework

It was the pluralism then prevailing and thestrength of workers’ organizations spurred bythe independence struggles that lay at the rootof this proliferation of regulatory instrumentsthat for a long time constituted the frameworkof the laws and regulations governing indus-trial relations. As we shall see later, the inap-propriateness of this regulatory frameworkseriously undermined the collective bargainingmechanisms, which were also affected by thetendency towards a representational monopolyinherited from the period of one-party rule,hence the astutely maintained obstruction ofthe instruments of social dialogue all too oftenseized upon by the employers and governmentas a prelude to anti-union repression and eco-nomic reverses.

Consultation forums

The fact is that even today, workers’ organi-zations are able to score collective bargaining

successes only at the cost of protracted strug-gles and social tensions.

The main consultation forums are the fol-lowing:

• The Economic and Social Council (C o n s e i léconomique et social) set up in 1963. It must beconsulted on all major economic and socialquestions and issues an opinion not bindingon the Government. Trade union org a n i z a-tions are indeed re p resented on the Councilbut would derive greater benefit from it if thelatter took up the matters being discussed inthe society as a whole and examined thetragic social ramifications of the economicpolicies born of structural adjustment pro-grammes. Should the Economic and SocialCouncil perform a watchdog and earlywarning function in respect of economic andsocial matters, it could become a key playerin policy determination and choices, butdespite the presence of workers’ re p re s e n t a-tives, this has not materialized.

• The National Advisory Council on Labourand Social Security (Conseil consultatifnational du travail et de la sécurité sociale)(CCNTSS) instituted in Article L 205 of theLabour Code and organized by Decre e - L a w(d é c re t - l o i) No. 61.452 of 29 November 1961.Its purpose is to study labour and socialsecurity problems. In theory, its opinionmust be sought on all draft labour and socialsecurity laws. The Advisory Council is a tri-partite body and must also be consulted con-cerning the extension of collective agre e-ments and on occupational health and safety.It also fulfils another important function. Inthe event of legislative or regulatory inade-quacies, the CCNTSS may formulate andsubmit proposals to the minister re s p o n s i b l efor labour questions. It may also conductsurveys as needed and enlist the services ofthe labour administration to obtain anyinformation that it may deem useful for car-rying out its work. The operating methodsand efficacy of the CCNTSS are substandard ,despite its potentially meaningful role insolving labour and social security pro b l e m s .

• The National Technical Health and SafetyCommittee (Comité technique national d’hy-giène et de sécurité), a tripartite body. Thisbody was created by Article 210 of theLabour Code and organized by Decree-Law(décret-loi) No.69.137 of 12 February 1969. Itmust be consulted on all occupationalhealth and safety matters. The enactment ofDecree No. 94.244 on occupational health

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and safety committees might have made theNational Committee more efficient. TheSONACOS accident (explosion of a tankerladen with ammonia inside an oil works) on24 March 1992 that claimed 200 lives and leftcountless persons disabled for life couldhave brought safety issues back to the fore,but nothing came of that. To date, the vic-tims and their claimants have neither seen apublished report of inquiry nor managed tobring any criminal or civil action.

We have given an example of a collectivebargaining structure that is inefficient and in-capable of fulfilling its original purpose.

It would seem that enterprise-level collec-tive bargaining ought to have taken on anincreasingly important role. Indeed, the legiti-macy of the shop steward (male or female) as aworker representative cannot be placed indoubt nor can his familiarity with the problemsof the enterprise. Because Senegalese law hasnot yet recognized the existence of trade unionsections in enterprises, the shop steward almostinvariably appears on the list submitted bytrade unions and acts as the representative ofthe workers who elected him and of the unionof which he is a member. The shop steward mayenlist the help of a representative of his union(this is only tolerated but not expressly pre-scribed by the law) and is legally entitled toengage in collective bargaining (working con-ditions, wages, health and safety, etc.), for hisactions are binding on his colleagues and con-stituents, the workers. Shop stewards areinstrumental in the conclusion of enterprise-level labour agreements mostly in big enter-prises. This fundamental role of shop stewardscould conceivably face the following very seri-ous constraints:• the degree of effectiveness of the collective

agreements;

• the level of training of shop stewards (intrade unionism as well as in economics andmanagement);

• those placed on the bargaining freedom andcapacity of shop stewards by pressures thatemployers can exert in a field of action lim-ited to the enterprise.

A safety valve

The National Committee for Dialogue(Comité national de concertation) (CNC) is notenvisaged under the labour law. It plays a“political” role. Organized pursuant to Decree-

Law (décret-loi) No. 75.114 of 23 January 1975,the CNC brings together government, employ-ers and workers and aims to promote dialogueamong the social partners on wage, price andemployment policies. Created in 1975 at thevery onset of the crisis of the groundnut indus-try – which was to spread to many other sec-tors of the national economy – the CNC was infact a “talking shop” where neither decisionsnor commitments were made. With respect tothe collective bargaining agenda, this Commit-tee is perceived by trade unions as a “safetyvalve”, a means of defusing the social bomband a place where trade unionists can give ventto their feelings.

The labour administration has a range offunctions in industrial relations: hiring, concil-iation, monitoring the observance of the labourlaw and regulations, drafting and determiningthe general labour and social security policyand dispute settlement. It lacks the materialwherewithal for fulfilling its mission.

Worker representationin provident institutions

Social security pensioner

This re p resentation takes place at the Boardof Director level though most workers’ org a-nizations are dissatisfied with the pro p o r t i o nof that re p resentation. Many of these bodiesconsider the re p resentation of workers’ org a-nizations to be partial and arbitrary. Besides,it has made no significant impact in terms ofi m p roving re t i rement pensions or other socialsecurity benefits (e.g. family allowances orcoverage of occupational accidents). Yet thedecision-making bodies of these institu-t i o n s might have played a pivotal role inputting in place a more equitable system ofincome re d i s t r i b u t i o n .

Joint employer-workercommittees

These are convened on a random basis in theprivate sector to sign wage increase agreements(under the auspices of the Ministry of Labour).However, these agreements can only beextended to general application by administra-tive orders issued by the labour administration.These committees are often convened underpressure from the trade unions, as for examplefollowing the devaluation of the CFA franc inJanuary 1994. There is no legally prescribed fre-quency for their meetings.

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The civil service: A special status

The principal collective bargaining mecha-nisms for civil servants are the following:

• Joint administrative committees (Commissionsadministratives paritaires) (CAP)

The committees are elected for three yearsand are responsible for the promotion andreclassification of the workers concerned. Asthings stand in the civil service, the CAPman-dates have now expired and no new electionshave been held. Instead, the Government hasreplaced them de facto with ad hoc committees,over the objections of the trade unions in thehealth and education sectors, which considerthemselves to be prejudiced by the deficienciesof the administration.

• Higher Civil Service Council (Conseil supérieurde la fonction publique) (CSFP)

This Council was organized under Law61.33 of 15 January 1969. Worker representationin it has not kept pace with changes in the tradeunion landscape as only one worker organiza-tion is represented, while the most representa-tive public service confederation, the NationalUnion of Autonomous Trade Unions of Senegal(Union nationale des syndicats autonomes du Séné-gal) (UNSAS), and trade union, the All-SenegalDemocratic Trade Union (Syndicat unique etdémocratique de Sénégal) (SUDES), are absent.The CSFP is also an advisory body.

These bodies continue to meet and functionon a random basis, as their make-up is stilldiscretionary and out of step with the changedsituation of trade union independence andautonomy.

A foothold in the educationand health sectors

It is worth noting that public servants in thegeneral administration, often non-unionized(except for some drivers whose demands aremore corporatist in nature), have been given aspecial status under Decree-Law No. 77.880 of10 October 1977. Subject as they are to consid-erable political pressures, their situation stilldoes not favour unionization. To date, attemptsto organize these workers have been fruitless.The Independent Trade Union of Workers in theJudiciary – Syndicat autonome des travailleurs dela justice (SATJUS) – and the Independent TradeUnion of Administrative Workers of Senegal –Syndicat autonome des travailleurs de l’adminis-tration du Sénégal (SYNATAS) – have not with-

stood the pressures and these workers havebeen left without trade union representation,their plight being compounded by the failureof the Government of Senegal to ratify the ILOLabour Relations (Public Service) Convention,1978 (No. 151), to date. It is mainly in the edu-cation and health sectors that workers’ organi-zations have managed to gain a permanentfoothold, after signal struggles for pluralismand collective bargaining.

Collective bargaining trends

Trends in collective bargaining in Senegal donot differ from those observed in other A f r i c a ncountries undergoing structural adjustment.These include:

• the watering down of formal collective bar-gaining procedures under the constraintsstemming from weak economic growth andfrom the conditionalities of internationalfunding agencies;

• the weakening of the institutional structure,whose component elements (the laws/reg-ulations) become dysfunctional if employ-ers (including the Government) are unwill-ing to negotiate in good faith; and

• the shifting of the bargaining location to theenterprise when it comes to more special-ized subjects in order to neutralize tradeunion action and pit the trade unionsagainst unequal forces.

Dialogue for selective purposes

In Senegal, the phase of adjustment thatstarted in 1978 and is continuing with evenmore stringent structural adjustment and unre-strained deregulation has meant less hiring andstagnating wages and a consequent sharp con-traction in the spending power of workers. Per-sisting in their distrust of workers’ organiza-tions, the Government and employers havemade selective use of the mechanisms of dia-logue to push through amendments to theLabour Code (such as those affecting the timeframes of indefinite contracts, economic redun-dancies, or tidying up the Labour Code) whilegiving their dialogue partners the impressionof bargaining in good faith. The lack of conces-sions, however, often leads to deadlock.

The corpus of laws in doubt

There is undoubtedly a breakdown in thesocial dialogue and in collective bargaining in

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Senegal and it is clear that however harsh theymay be, the rigours of the economic crisis alonecannot explain the refusal of the Governmentand employers to contemplate an in-depthexamination of the problems tabled by thetrade union bodies to avert social conflictand reverses that could seriously jeopardizethe commitments assumed by the country.

There are other trends that raise searchingquestions about the application and interpreta-tion of the corpus of Senegal’s labour laws andregulations: these are related to the process ofadapting and ensuring the consistency of textswith the successive bodies of regulationsadopted from the colonial era to the presentday. Like other spheres of activity of workers’organizations, collective bargaining too isdependent on this.

Outlook

Like 50 years ago when ILO ConventionNo. 98 was adopted, the present-day economicand social climate underscores the relevance ofcollective bargaining and the right to organize.

Aside from the aspect of equity that is partand parcel of industrial relations in an envi-ronment so unfavourable to workers and theirorganizations, collective bargaining in a coun-try such as Senegal should also be addressinganother value, described by Professor AntoineLyon-Caen1 as social citizenship…alive to thedemands of solidarity.

Therefore, Senegal’s workers’ organizationsshould continue their endeavours so that:• collective bargaining can help to ensure the

exercise of the fundamental rights of theperson;

• collective bargaining can contribute to deal-ing with the problem of employment andthe equal right of all to a decent standard ofliving;

• job access and security can be strengthenedand employment safeguarded as an elementof social status and cohesion;

• the legal capacity of collective bargainingagents will be strengthened adequately toreflect their power of representation and thelegitimacy of their labour demands.

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Table 1. Some examples of collective agreements in force in Senegaland their date of signing

Sector Date of signing

Professions Declaratory wage agreement (Accord déclaratif de salaire)of 5 July 1958

Textile 17 May 1958Air transport 27 November 1965Rail transport 19 May 1951Highway transports 7 December 1959Oils and fats 4 July 1959Household helpers Order 89 350 of 29 July 1959Water 1 October 1959Electricity 13 May 1959Private education 22 November 1958Hotel business 29 September 1960 (reviewed in May 1998 but contested

by workers’ organizations)Various industries 12 December 1946Printing trades 28 September 1960Mechanical engineering 8 October 1957Mines 14 April 1960Advisory bodies/consultants 2 January 1964Food 19 July 1958Construction/public works 6 July 1956Bakeries 28 March 1949Businesses 16 November 1956Garment industry 10 January 1963Banks 24 April 1958 (reviewed in 1977)

This is the direction in which independenttrade union bodies are channelling their effortsin Senegal today so that the different levels ofcollective bargaining – industry, inter-profes-sional or enterprise – can become part of anational endeavour to bargain with the Gov-ernment and employers for certain minimumbenefits.

While the crisis of legitimacy and of repre-sentation is of concern both to workers’ orga-

nizations and to other social players, there is nodoubt that the brief of collective bargainingagents will depend on the effectiveness of ILOConvention No. 98.

Note

1 See “La négociation collective: Nouveaux horizons?Nouveaux problèmes?” in Droit social (Paris), Special issue,No. 2,Dec. 1997.

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Legal framework of collectivebargaining

Article 19(c) of the Indian Constitutionguarantees freedom of association as a funda-mental right. It was recognized in the Tr a d eUnion Act, 1926, the Industrial Disputes A c t ,1947, and the Industrial Employment (Stand-ing Orders) Act, 1948. In 1923, India ratified theILO Right of Association (Agriculture) Con-vention, 1921 (No. 11), during British rule. Ithas not, however, ratified ILO ConventionsNos. 87 (Freedom of Association and Pro t e c-tion of the Right to Organise) and 98 (Right toO rganise and Collective Bargaining) due to“technical difficulties” involving trade unionrights for civil servants. Such grounds consti-tuted no valid reason for non-ratification: a rat-ifying country can exempt certain services. Thereal intention might have been (as Sure n d r aNath, former Chief Labour Commissioner ofIndia, observed in 1997) “to restrict freedom ofassociation to only manual workers (by defin-ing them as workmen) and exclude supervi-sory and managerial workers…” (Surendra,1997). The other interest of the Government isnot to allow the right of collective barg a i n i n geven to industrial workers in certain Govern-ment departmental undertakings like the Rail-ways, Post and Telecommunications, CentralPublic Works Department, etc. Pay and condi-tions of work of these categories are decided

by the government on the basis of the PayCommission’s recommendations and nott h rough collective bargaining. Nor do thelabour laws at the national level mandate theemployers to recognize unions or engage incollective bargaining. Some States (forinstance, Andhra Pradesh, Bihar, Gujarat, Kar-nataka, Madhya Pradesh, Maharashtra, Orissaand West Bengal) provide for rules concerningthe recognition of trade unions.

A moot issue?

Several conferences organized and co-spon-sored by the trade unions and the Ministry ofLabour, including the one held at Mussoorie in1998, have addressed the question of the ratifi-cation of ILO Convention Nos. 87 and 98 anddeferred the decision. The employers and theGovernment are one in this regard.

Since 1931 to date, the identification of col-lective bargaining agents remains a hotlydebated issue. The Royal Commission onLabour (Government of India, 1931) did notfavour the prevalent idea that re c o g n i t i o nshould depend on the strength of the union. Itheld that recognition should be based on re a s o nand not force, and the fact that a union consistsof only a minority of employees is no adequatereason for withholding recognition. The Na-tional Commission on Labour (1969) left thematter to be decided according to the local

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India

Collective bargaining: Workers are lesscommitted to any solidarity based on ideologyand will readily shift their allegiance if unions

do not deliver results

C.S. Venkata RatnamProfessor & Dean

International Management InstituteNew Delhi

The following article examines the legal framework and the practical issues relating to collective bargain-ing in India. It is structured in five parts: the legal framework; levels and duration; the distinctive aspectsof collective bargaining in the public sector; emerging trends; and the implications of a shrinking core oforganized workers amid growing numbers in the periphery.

c i rcumstances. The 1947 Amendment Act to theTrade Unions Act of 1926 and the Trade UnionsBill of 1950 provided for the recognition of morethan one union by an employer. The 1947Amendment was never enforced and the 1950Bill was not pursued. In 1956, the Second Five-Year Plan document highlighted the importanceof “one union, one industry”. In 1958, the IndianLabour Conference evolved a Code of Disci-pline in Industry, which did not and still doesnot have statutory force but which containedcriteria for the recognition of unions. A c c o rd i n gto the Code, workers belonging to non-re c o g-nized unions should either operate through there p resentative union for the industry or seek tore d ress grievances dire c t l y.

Union recognition

There is no law at the national level forrecognition of unions (Srivastava, 1989). Insome States – Maharashtra and MadhyaPradesh, for instance – legal provisions onrecognition of trade unions do exist. Thus, inIndia, considerable divergence is found in therequirements for determining the representa-tive union for purposes of collective bargain-ing. They include: (a) a code of discipline,which is common in most public sector under-takings; (b) a secret ballot, which is mademandatory in three states: Andhra Pradesh(since 1975), Orissa (since 1994) and West Ben-gal (since 1998); (c) a check-off system, favouredby some unions; and (d) membership verifica-tion. In 1995, the Supreme Court of India askeda government corporation, the Food Corpora-tion of India, to resolve the trade union recog-nition dispute through a secret ballot. Thejudgement also mandated the procedure for asecret ballot. In 1982, the Bombay High Courtstruck down the order of the Industrial Courtordering a secret ballot in the case of Maha-rashtra General Kamgar Union vs. Bayer IndiaLtd. The matter was taken to the Division Benchof the High Court which upheld the order ofthe single Judge. In the case referred to, what isrequired to be proved by the MaharashtraUnion is that the membership of Hind MazdoorSabha has fallen to less than 30 per cent duringthe requisite six-month period. It was arguedthat, in a hypothetical case, if 25 per cent of theworkers in an establishment were to vote forthe recognized union, it would mean that themembership had fallen below the requisite per-centage but, in the absence of the identity of thevoters, it would not be possible to prove thatthe members of the union had voted against it.

Not binding on other unions unlessa result of conciliation

Under Section 2(p) of the Industrial Dis-putes Act of 1947, collective agreements to set-tle disputes can be reached with or without theinvolvement of the conciliation machinery ofthe Government established under the legisla-tion. If a settlement (a written agreementbetween the employer and the workers) isarrived at in the course of conciliation pro-ceedings, it is binding under Section 18(3) of theAct, not only on the actual parties to the indus-trial dispute but also on the heirs, successors orassignees of the employer on the one hand andall the workers in the establishment, present orfuture, on the other. The conciliation officer isduty-bound to promote a proper settlementand to do everything he or she can to inducethe parties to act in such a way as to arrive at afair and amicable settlement of the dispute. Asettlement/agreement with one trade union isnot binding on members of another union or ofother unions unless arrived at during concilia-tion proceedings; the other union(s) – includ-ing a minority union – can, therefore, start anindustrial action. Section 36 (1) of the IndustrialDisputes Act deals with workers’ representa-tion. Any collective agreement would be bind-ing on the workers who negotiated and indi-vidually signed the settlement. It would notbind any worker who did not sign the settle-ment and who did not authorize any otherworker to sign on his or her behalf.

Acollective agreement presupposes the par-ticipation and consent of all the interested par-ties. When workers are members of differentunions, every union, regardless of whether ornot it represents a majority, cannot but be con-sidered interested. A few workers may choosenot to be members of any union, and one (ormore unions), for reasons of its own, may notlike to conclude negotiations by the proposedsettlement. Sections 2(p)4 and 18(3) of theIndustrial Disputes Act of 1947 deal with suchpractical difficulties by making collectiveagreements binding even on indifferent orunwilling workers as the conciliation officer’spresence is supposed to ensure that the agree-ment is bona fide.

The unorganized sector

Collective bargaining rarely occurs in theunorganized sector. In several cases, bipartitecollective agreements in the unorganized sec-tor have provided for lower wages than the

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applicable minimum wages. Where such agree-ments were entered into through conciliationand/or registered with the appropriate govern-ment authority, the labour commissioners con-cerned are expected to ensure that the wages,benefits and other conditions are not lower thanthe applicable minimum wages and other stan-dards laid down in the labour laws.

Unfair labour practices

The Industrial Disputes Act of 1947 does notcontain any provision to the effect that only arecognized union can raise an industrial dis-pute. The 1956 Code of Discipline is inconsis-tent with the Industrial Disputes Act of 1947. In1982, the Industrial Disputes Act of 1947 wasamended to include the following as unfairlabour practices: (a) refusal by the employer tobargain collectively in good faith with the rec-ognized trade unions; (b) refusal by a recog-nized union to bargain collectively in good faithwith the employer; and (c) for workers andtrade unions of workers to indulge in coerciveactivities against certification of a bargainingrepresentative.

The collective bargaining rights of workersin the insurance sector, which has been a pub-lic sector monopoly, were restricted by Parlia-ment when it was found that collusive arrange-ments between the unions and the employers(public sector) were undermining the interestsof policy holders. Since then, insurance work-ers continue to engage in consultations, buttheir pay revisions are notified unilaterally bythe relevant Government department.

Section 2(p) of the Industrial Disputes Actof 1947 defines “settlement”, and section 29 ofthe Act makes breach of any term of the settle-ment punishable with imprisonment for a termof six months or with a fine or both. Refusal tobargain collectively, in good faith, with recog-nized trade unions is considered an “unfairlabour practice” under Section 2(ra)/ScheduleV of the Act and is punishable under section25(u) with imprisonment for a term which mayextend to six months or with a fine which mayextend to Rs.1,000 or with both.

In fact several practices, which qualify to becalled unfair labour practices, go unques-tioned/unprosecuted. In one of the units of amulti-unit engineering industry in North India,the management unilaterally declared a wagerevision package after negotiations with thetrade union had reached deadlock and brokendown. The workers were “happy” with themanagement’s gesture. They also left it to man-

agement’s discretion to determine the nextround of wage revision. So to the extent thatmanagements are willing to pay a price to keepthe union out, the workers in India who arelargely instrumental in their orientation wouldwillingly aid management to make the tradeunion redundant for purposes of collective bar-gaining. A multinational corporation nearDelhi lured the workers into accepting higherwages in return for not joining the trade union.Even in the public sector there have been occa-sions when supervisors received benefits suchas interim relief pending wage revision onlywhen they agreed in writing that they wouldnot join the trade union. Several private sectorcompanies, particularly pharmaceutical com-panies, have designated workers as officers andoffered them additional benefits. However,since it entailed less job security, the workersprotested and persuaded the courts to accepttheir position as workmen even if manage-ments regarded them as officers.

Levels of bargaining

Sectoral bargaining at national level

Prior to the 1970s, wage boards appointedby government were given awards on wagesand working conditions. The number of wageboards had declined from 19 in the late 1960s toone (for journalists) in the late 1990s. Since theearly 1970s, sectoral bargaining has been occur-ring at national level mainly in industrieswhere the Government is a dominant player.These include banks and coal (approximately800,000 workers each), steel and ports anddocks (250,000 workers each). Fifty-eight pri-vate/public/multinational banks are membersof the Indian Banks’ Association. They negoti-ate long-term settlements with the All-IndiaFederation of Bank Employees. Over 200 cok-ing and non-coking mines were nationalized inthe early 1970s. Spread all over the country,some are owned by state Governments andmany by the central Government. There is onenational agreement for the entire coal industry.In steel, a permanent bipartite committee hasbeen set up for the integrated steel mills in thepublic and the private sectors. Since 1969, thiscommittee, called the National Joint Consulta-tive Committee for Steel Industry (NJCS), hassigned six long-term settlements. The 11 majorports in the country have formed the IndianPorts’ Association. They hold negotiations withthe industrial federations of major nationaltrade union centres in the country.

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A peculiar feature of sectoral bargaining atthe national level is the presence of a singleemployer body and the involvement of the rel-evant administrative ministry from theemployers’ side. In many sectors, two to fivemajor national trade union centres with a majorpresence in their respective industrial federa-tions of workers’ organizations engage in nego-tiations. In banks, coal, and ports and docks,invariably all agreements have been precededby strikes or strike threats. Only the steel indus-try has remained free of such unrest during thepast 29 years. Even though industry-wide bar-gaining is not extended to the oil sector, nation-alized in the late 1970s, the Oil CoordinationCommittees achieve a great deal of standard-ization in pay and service conditions even if col-lective bargaining occurs at firm and/or plantlevels (for instance, Hindustan Petroleum Cor-poration Limited). The agreements in bankingand coal covered 800,000 workers each, and insteel and ports and docks 250,000 workers each.

Industry-cum-regionwide agreements

A g reements of this nature are common inc o t t o n/jute, textiles, engineering and tea, whicha re dominated by the private sector. But sucha g reements are not binding on enterprise man-agements in the respective industries/re g i o n sunless they authorize the respective employerassociations in writing to bargain on theirbehalf. Employment fig u res in the four re g i o n a la g reements in textile, jute and plantations standat around 1,200,000, 300,000 and 250,000 re s p e c-t i v e l y.

Decentralized agreements:Enterprise or plant-level

While in the rest of the private sector employ-ers generally press for decentralized negotia-tions at plant level, unions insist on barg a i n i n gat least at company level where the employeesa re formed into federations (combining severalp l a n t s/locations). In 1998, a 39-day strike wascalled on the issue of decentralized barg a i n i n gin Escorts, a private sector automobile and engi-neering conglomerate with over 14 factories and35,000 workers in an industrial centre close toNew Delhi. It does not mean, however, thatemployers in multi-unit private sector enter-prises do not bargain with trade union federa-tions at company level. One such examplerelated to Brooke-Bond till it was merged withLipton and became a part of Hindustan Lever inone of the recent mega mergers in the country.

Plant-level bargaining is believed to reducethe bargaining power of unions, particularlyduring periods of crisis. Admittedly, there is ageneral tendency on the part of the unions, inparticular, as well as the Government, to thinkof the public sector as a whole, with the resultthat uniformity is sought at the highest leveland the concept of capacity to pay is altogetherignored in public sector wage negotiations. If apublic enterprise’s coffers are empty, the exche-quer raises the money. There is no correspond-ing tendency, however, even among the tradeunions, to consider the private sector as awhole, where capacity to pay continues to bereckoned for the purpose of wage negotiations.

Duration

Till the 1970s, collective agreements were fora period of two to three years. During the 1970sand the1980s, the duration of agreements wasextended to three to four years. During the1990s, over four-fifths of the central public sec-tor agreements have been signed for a durationof five years each. Most collective agreementsin the private sector continue to be valid for aperiod of three, or in some rare cases, four years.Some private sector agreements, which dealexclusively with one aspect (e.g. incentives), arevalid for a period of six years.

There has been a semblance of standardiza-tion in collective bargaining in the public sec-tor since the 1970s. The fifth round of wageagreements in the public sector was signed dur-ing the early 1990s. Almost all of them expiredon 31 December 1996. To date (31 December1998), serious discussions on their renewalhave not taken place. Initially, the unions werewaiting for the report of the Fifth Central Com-mission to be out so that they could pitch theirdemands, as in the past, at 15 per cent higherthan the emoluments of civil servants in com-parable categories. Then they waited for thereport of the Justice Mohan Committee. Andnow they are waiting for the decision of theGovernment on the recommendations of theJustice Mohan Committee.

Distinctive features of public sectorbargaining

Since the 1970s, in the wake of the economicreforms of the 1990s, the collective bargainingscene in the public sector has also undergonesignificant change. In 1994, the Department ofPublic Enterprises, which seeks to exercise con-trol over all the 240-odd central public sector

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undertakings in the country, has issued guide-lines providing for limited autonomy fordecentralized bargaining, moving away fromparity among the different central public sectorundertakings. The Government allowed publicenterprises to sign fresh wage agreements onlyif the latter were able to meet the extra financialcommitment arising out of wage revisions fromtheir own sources and if the unit labour costsand unit sale prices did not rise as a result ofwage revision. About 100 public enterprises,which became financially unviable, even incur-ring losses, have had no wage revision since1992 to date (December 1998).

The fifth round of wage agreements in thecentral public sector, which covered the periodfrom 1992 to 1996, has already expired. It islikely, however, that those public enterpriseswhich continue to be sick may remain unableto pursue wage revision in the sixth round asper the new guidelines, which are similar to theold guidelines issued in January 1989 by theDepartment of Public Enterprises attached tothe Ministry of Industry.

The public sector or the State?

In India, civil servants’ pay provides thebenchmark for the public sector. In this sector,competitive bargaining is pitched against thebest bargain and uses Article 12 of the Consti-tution of India where “public sector” has beeninterpreted by some Supreme Court judges asmeaning the State, which, naturally, should notdiscriminate among its employees. In turn,public sector pay provides the benchmark forunionized workers in the private sector wherecollective bargaining has become coercive, withemployers making the best of the worst eco-nomic conditions.

When the Fifth Pay Commission submittedits report in 1996, the central Governmentappointed another Committee to consider thepay and allowances of Board members belowBoard-level executives and non-unionizedsupervisors. The Committee, headed by JusticeMohan, submitted its report in October 1998,but its findings have confused public sectormanagements and displeased the officers’unions in the same sector. The Committee fixedthe salaries of the chief executives of the publicenterprises and recommended that the wagedisparity between the lowest and the highestlevels in public enterprises could be 1:10 asagainst the present 1:6. In the early 1970s it usedto be 1:19. The unionized employees in the pub-lic sector have been demanding the revision of

wages because the fifth round of agreementsexpired on 31 December 1996. Even without therevision, and should the 1:10 disparity be main-tained, either the ceiling on chief executiveswould have to be increased or the currentwages of the lowest-level employees reduced.Both options seem impossible. In any event,unionized workers resent any widening ofwage disparities.

It seems, therefore, most likely that the cur-rent disparity of 1:6 will be maintained in thesixth round of negotiations, which are yet tocommence on a meaningful note, even thoughthe previous five-year agreements expired 25months ago. The Government wants the periodof sixth-round wage agreements, yet to benegotiated, to have the same duration as it doesfor officers. The Government seems to haveaccepted most of the recommendations of theJustice Mohan Committee, but since it has notannounced its decision, unions and manage-ments are unable to commence wage negotia-tions because of uncertainty about the periodof agreement, which the Government wants todecide unilaterally.

Despite the avowed intentions of the Gov-ernment to give autonomy to the public enter-prise managements over the determination ofthe pay and allowances of their unionized staff,such regulations take away the autonomy. Infact, a new set of guidelines for negotiating col-lective agreements in the central public sectorhave apparently been approved by Cabinet andare expected to be issued by the Department ofPublic Enterprises shortly. The trade unionsusually consider such guidelines with con-tempt since they are just baselines rather thanbenchmarks or upper limits.

Emerging trends

Till the 1970s, collective bargaining hadbeen shaped along two main axes as far as pos-sible, considering the adversarial relationshipin most situations involving the social partners:the attitude on the part of both managementsand trade unions has been to bar thegain to theother party. A second trend during the periodwas for the workers’ unions to serve the char-ter of demands on the managements. Manage-ments in bargaining used to claim that it wasnot possible to meet the unions’ demands. Aftersome negotiations, certain agreements wouldbe reached and workers would gain some addi-tional benefits. So managements would reluc-tantly give in and workers would be successfulwith some of their demands.

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Productivity bargaining

In the 1980s, managements began to servecounter-proposals before or after they receivedthe charter of demands from the trade unions,obeying the principles of “productivity bar-gaining”. Trade unions were required to agreeto abandon restrictive and wasteful practices inreturn for higher wages and benefits. In somecases there have been general promises whichsay something without meaning much or spe-cific, actionable clauses. Then, since the late1990s, the scope has been widened to cover theassertion of managerial rights to concessionbargaining in crises.

In the public sector, however, the overalltrend is, “something (to workers) in return fornothing (to management)”, while in the privatesector the usual pattern has been “something (toworkers) in return for anything (for manage-ments)”. The emerging trend, particularly inthe private sector, is somewhat akin to what IanMcGregor of British Steel averred during theThatcher era in the United Kingdom: somethingfor something, nothing for nothing.

Overall, the difficult conditions in productmarkets and the near recessionary and/or job-less growth situations in several crucial sectorsof the economy are such that collective bar-gaining is barring any gains to the workers.Even in cases where they seem to gain sig-nificantly higher wage increases, and asRamaswamy and Holmstrom observe, man-agement’s way of meeting unions is on com-plex issues linked to rights, career prospectsand industrial relations involving a straightbargain between two corporate groups: themanagements win control over work alloca-tion, and unions get more money for their mem-bers. Managements emphasize that manningstandards are not arbitrarily “scientifically”fixed but by Taylorist industrial engineers, anargument that middle-class union leaders canaccept. The company and the union becomemirror images of each other: “hierarchicallystructured, under hardheaded leaders whobelieve they are competent to take decisions onbehalf of the less qualified people below them”(Holmstrom, 1990; Ramaswamy, 1990).

Managerial rights: a post-mid-1980sphenomenon

Very few empirical studies have looked atthe trends in collective agreements over the pasth a l f - c e n t u r y. Two surveys undertaken by theEmployers’ Federation of India during the peri-

ods 1956-60 and 1961-69 revealed that: in the1956-60 period, one-third to one-half of theindustrial disputes in large firms were settledt h rough collective bargaining. The second, cov-ering 111 agreements over the period 1961-69,revealed that over 50 per cent of such agre e-ments were valid for periods ranging from thre eto five years. Although wages were the domi-nant issue in almost all agreements, nearly 50per cent of the agreements concluded during the1960s also dealt with re t i rement benefits. Therewas no evidence at that time of any manage-ment proposals or managerial rights, whichhave emerged as a post-mid-1980s phenome-non, as shown in the studies of 60 and 200 fir m srespectively by Venkata Ratnam (1990, 1997b).

Assertion of managerial rights

Many collective agreements now unequivo-cally state that “the right to plan, direct and con-t rol operations of the plant, to introduce new ori m p roved production methods…are solely andexclusively the responsibilities of the manage-ment. The management’s authority to performthese and other duties will be respected in everycase.” Such agreements also state, usually ande x p re s s l y, the mutual rights and re s p o n s i b i l i t i e sof managements and trade unions.

Changes in work norms/practices

Trade unions in India no longer resist out-right changes in work practices relating to mod-ernization, computerization, multiskilling,flexible deployment, working time/norms, etc.The major issue of dispute in this regard is overcontract labour.1 Recent court judgements havegiven trade unions leverage to press manage-ments to regularize contract labour in certainareas. In January 1999, over 5,000 workersbelonging to several unions in one public sec-tor oil refinery went on a day’s token strikebecause they held that the introduction of“Enterprise Resource Planning (ERP)” wouldadversely affect their jobs.

Flexible wage systems

In the organized sector, wages double everysix to seven years. Wage sensitivity of firmsvaries because labour costs range from 2 percent in process industries to over 100 per centin sick units. In most cases, firms become sen-sitive when wage costs exceed 12 to 20 per cent.

Collective agreements found many innova-tive solutions to ward off a temporary crisis by

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i n t roducing flexible wage systems: (a) a two-tier wage system whereby newcomers get lesspay for three years in the same/new grade. Thed i ff e rence usually tapers off in three years. Thisa p p roach is justified on the ground that thenewcomers take time to become fully pro d u c-tive; (b) linking, temporarily during times offinancial crisis in the firm/plant, the dearnessallowance to productivity instead of the cost ofliving; (c) a wage fre e z e /reduction when afirm/plant becomes financially unviable/non-competitive – wages are unfrozen and pre v i-ous wage levels re s t o red depending on pro-ductivity and/or pro fitability; (d) a wage-jobt r a d e - o ff, etc.

Concession bargaining in crises

Trade unions typically face a dilemma indecentralized bargaining at plant level wherethe plant/firm is facing a crisis due to marketfailure and/or financial sickness, whether suchproblems are a product of recession or not. Intheir anxiety to protect all or most jobs, theyhave, in several cases, agreed to workforcereductions and cutbacks or freezing of pay, ben-efits, and even the suspension of trade unionrights. The following types of drastic measureswere “mutually agreed” on as essential for sur-vival in most of such situations:• reduction in wages and allowances;• freeze on the dearness allowance;• changes in working patterns;• stoppage of or modification to incentive

schemes;• early retirement;• lay-off/retrenchment;• retraining;• redeployment.

Doubts have often been expressed as towhether such concessions on the part of tradeunions alone would ensure the survival of thefirm and the security of the jobs intended to besaved. The Board of Industrial and FinancialR e c o n s t ruction (BIFR), set up in 1987 withquasi-judicial powers to dispose of cases of sickcompanies by deciding on their closure orrehabilitation, realizes that some sick units arepotentially viable while others are not. Theindustry’s characteristics and the firm’s size,technology and corporate strategy are amongthe major determinants of the potential viabil-ity of a sick unit. The experiences of severalcompanies like Jaipur Metals and Electricals

Limited, Kamani Tubes, New Central JuteMills, Walchandnagar Industries, etc., indicatethat such concession bargaining has helped thecompanies to bounce back from the brink ofliquidation and re c o rd impressive perfor-mances subsequently. As a result, in these andseveral other similar instances, employment,employee earnings and productivity have sig-n i ficantly incre a s e d .

Invariably, concession bargaining of thetype described above occurs in companies aftera crisis. Rarely, if ever, do parties see the writ-ing on the wall and proactively respond andaccommodate each other’s interests for collec-tive survival. Many private sector companiessuch as Ashok Leyland, Texmaco, Indian Alu-minium and Kirloskar Cummins have recentlyprovided for two to four days working with prorata reduction in wages and/or relay lay-offs toward off the existing/impending crisis due torecession, excessive piling up of finished goods,etc. Such agreements are in sharp contrast to theexperiences of quite a few large companieswhich ask their employees to sit at home forextended periods and claim full or near fullwages. In a few sick public sector units, work-ers have been getting wages for years withalmost zero production.

Welfare to “moneyfare”

As Holmstrom (1990, p. 8) observes, mostissues can be and indeed have been reduced tomoney. Working conditions, security, dignityand rights all have their price. An analysis ofsocial security benefits in over 200 collectiveagreements revealed that most welfare benefitshave been converted into “moneyfare” (VenkataRatnam, 1997a).

Gender bias

Several agreements, which provide foremployment to heirs/children of employeeswho die in service, consider dependants asmales, not females. This particularly applies inorganizations where the labour laws (under-ground mines, factories involving night-shiftduties, etc.) carry restrictions on women’semployment.

The banking industry computer agreementof 1987 provides an exception where there is apositive gender bias: pregnant women canrefuse to work before computer terminals.

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Crises of confidence

About 2 per cent of the total workforce orover 30 per cent of the workers in the organizedsector participate in collective bargaining. Thelegal framework has a bias towards adjudica-tion, with the Government specially empow-ered to influence the outcome of negotiations.In the case of political unions too, administer-ing the laws is not bias free: not infrequently, inthe collective bargaining process, do tradeunions tend to get coopted by either govern-ment or management. Such a position thenleads the unions to face a crisis of confidence,particularly when negotiations become diffi-cult and they are unable to meet their members’expectations.

The portents are that workers feel less com-mitted to any solidarity based on ideology andaim to be more instrumental in their orienta-tion. If unions do not deliver results within cer-tain intervals, workers will not hesitate muchto shift their allegiance to some otherleader/union who promises more in less time.All this is happening at a time when, increas-ingly, managements in the private sector wantworkers to do more with less. Labour is able tohave its way when product and labour marketconditions are not critical, but when they are,there can be trade-offs: jobs with wages; relaylay-offs; redundancy payments. If trade unionsare still able to hold some influence, particu-larly in the public sector, it is largely becausecoalition Governments in India have beengasping for their own survival.

Shrinking core amid unorganizedperipheries

In summing up, the accent should be placedon five essential areas of interest (a) workers candecide which union can represent them with-out ever belonging to a union; (b) workers canenjoy the benefits of collective bargaining as“free riders” without joining a union/paying

union dues; (c) unions can enjoy collective bar-gaining rights without the support of the rankand file; (d) even where it is mandatory to bar-gain with management, it is possible to strikedeals with minority unions; and (e) throughcollective bargaining, workers’ interests can befurther divided by offering more to the shrink-ing “core” workers who do less, leaving less tothe growing numbers of workers in the unor-ganized “peripheries” who do more.

References

Employers’ Federation of India. 1960. Survey ofcollective bar-gaining, Bombay.

Employers’ Federation of India. 1969. Survey of collective bar-gaining, Bombay.

Holmstrom, M. 1990. Work for wages in South Asia, Manohar,New Delhi.

India (Government of ). 1931. Royal Commission on Labour:Report, Government Printing Press, New Delhi, p. 323.

—. 1969. Report of the National Commission on Labour, NewDelhi.

Ramaswamy, E. A. 1990. “Indian trade unionism: The crisisof leadership”, in Mark Holmstrom (ed.), Work for wagesin South Asia, Manohar, New Delhi.

Srivastava, A. K. 1989. Identification of collective bargainingagent for industrial disputes: History, practice and policyoptions, National Labour Institute, New Delhi.

Surendra, N. 1997. Labour policy and economic reforms in India,1991-96 – Astudy in the context of industrial restructuring,Dissertation (M.Phil), Indian Institute of Public Admin-istration (mimeo), New Delhi.

Venkata Ratnam, C. S. 1990. Unusual collective agreements,Global Business Press, New Delhi.

—. 1997a. Welfare to moneyfare: A study of social securityarrangements through collective bargaining, UNDP/Centrefor Development Studies (Trivandrum) Project Report,(mimeo), New Delhi.

—. 1997b. Collective bargaining and flexibility, report submit-ted to the Labour Law and Labour Relations Branch ofthe ILO, New Delhi.

Note1 See “Contract labour: Looking at issues”, in Labour Edu-

cation, Nos. 106/107, 1997/1- 2, ILO, Geneva.

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A stable and effective industrial relationssystem is vital for the economic and socialdevelopment of any country. It is on this foun-dation that sustained economic growth withequitable distribution of income, especially tolabour, can be achieved. In turn, collective bar-gaining, which is an integral component ofindustrial relations, is essential if sustained eco-nomic growth is to be achieved with equitabledistribution of income, but also constitutes adynamic process between employers andworkers for settling their disputes relating towages and other terms and conditions ofemployment based on the bargaining strengthavailable to each side.

A written guarantee

In other words, collective bargaining is ameans to improve the terms and conditionsunder which workers are engaged, promotetheir socioeconomic interests and maintainindustrial harmony. Its objective is to concludea collective agreement in writing between anemployer or employers’ union on the one handand a trade union on the other, fixing the termsand conditions of employment or the relationsbetween such parties for a specific duration. Itprovides, therefore, a written guarantee forstable and harmonious industrial relations forthe specified period.

First an informal process

Collective bargaining begins as an informalprocess whereby the workers in an establish-ment delegate a few representatives to submittheir claims to their employer for the purposeof negotiating and concluding an agreement ontheir terms and conditions of employment. Ata more advanced stage, a staff association or

trade union is established and the employeragrees to meet, negotiate and conclude a col-lective agreement with the workers’ represen-tatives. The system becomes a formal processwhen the trade union is recognized by theemployer as a representative body and it isagreed that meetings can be called at therequest of either party on issues concerning theterms, conditions and grievances with regardto employment which, in turn, will be governedby mutually agreed grievance procedures. InMalaysia, collective bargaining may be con-fined to the employees of a single establishmentor may cover all the establishments of a singleemployer. It may also be conducted locally inindividual enterprises, nationally, or regionallyin any one industry or occupation.

The process recognizes the need for a re p re-sentative organization of workers or employees,i.e. a trade union; a formal system for re c o g n i-tion by employers of trade unions as legitimatere p resentatives of workers; machinery for nego-tiating and concluding an agreement; and, in theevent of disputes, conciliation and arbitrationmachinery to resolve such disputes.

The growth of trade unions

The evolution of collective bargaining inMalaysia is closely associated with the gro w t hof trade unions in the country. During theBritish colonial period, especially the late nine-teenth and early twentieth century, large num-bers of immigrant workers from China andIndia came to Malaysia to work on the planta-tions and in the mines. They had been intro-duced on an indenture system whereby theworker bound himself or herself to anemployer for fixed terms and conditions ofemployment. In reality the system was open toabuses. The influx of immigrant workers under

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Malaysia

The true challenge: To bring about equitableand meaningful income distribution in society

A. NavamukundanNational Executive Secretary

National Union of Plantation WorkersMalaysia

these conditions also altered the demographicpattern of the country and, by 1911, the nativeMalay population constituted only 51 per centof the total population. The growth of wage-earning labour on the plantations, in tin minesand in the urban areas did not precipitate theformation of trade unions or associations forthe protection of workers’ interests as the gre a tmajority of workers were transient migrants:divided as they were by caste, clan, linguisticand cultural diff e rences, solidarity amongthem was hardly possible. Though wages werelow and the conditions of work appalling, it isf rom this same pool of workers that a perma-nent labour force was to emerge, fully con-scious that they are part of the cosmopolitansociety that has developed and that they havea stake in the country’s development.

Collective action kept under control

The colonial Government’s policy toward sthe working class was a combination of pater-nalism in politics and laissez-faire in economics.The Government ensured the smooth flow ofworkers into the country and left the owners ofthe industries a free hand to manage labourwithin the existing laws. Not only were tradeunions not encouraged, but employers wereopposed to the formal recognition of tradeunions. However, some workers’ org a n i z a t i o n s ,e.g. the Selangor Engineering Mechanics A s s o-ciation and the Chinese Engineering MechanicsAssociation, existed and functioned as re g i s-t e red organizations under the Malayan Regis-tration of Societies Ordinances of 1889 and 1895.Anyone acting in breach of these was fin e d ,imprisoned, or deported and banished underthe Banishment Ordinance. All forms of collec-tive action by workers and industrial unre s tw e re there f o re kept under control. It was onlyin 1938, after the outbreak of strikes sponsore dby the Malayan Communist Party (MCP), thatthe Government took a keen interest in tradeunions and in 1940 introduced the Trade UnionBill to register and monitor trade unions. Dur-ing the Second World Wa r, migrant workersw e re subject to forced labour by the Japanese inthe construction of the railway track betweenpeninsular Malaysia and Thailand, popularlyre f e r red to as the Siam Death Railway.

Trade unions develop undergovernmental supervision

After the Second World Wa r, there was ageneral awakening among the workers, fuelled

by anti-colonial and nationalistic sentiments.The Government understood the threat facedby their economic interest and took appro p r i-ate steps to allow the development of tradeunions under their supervision. Action wastaken by the Government to implement thep rovisions of the Trade Union Enactment bythe Department of the Registrar of Tr a d eUnions. A Trade Union Adviser was appointedand an independent Trade Union A d v i s e r s ’Department was set up in 1946. The role of theTrade Union Adviser was to assist trade unionsin negotiating pro c e d u res and in the settlementof disputes. The objective of the colonial Gov-ernment had been to ensure that trade unionsw e re not infiltrated by agents of the MCP. TheGeneral Labour Union (GLU), led by leaderssympathetic to the MCP, posed a threat to thecolonial Government: in 1947, half of the mem-bership of 200,000 from 289 unions were undercommunist influence through the Pan MalayanFederation of Trade Unions (PMFTU), whichhad by then superseded the GLU. A g g re s s i v estrike action in 1948 brought about the dere g-istration of the PMFTU and the introduction oftrade union registration confined to unionscatering for workers in similar occupationsand industries consistent with the “divide andrule” policy of the colonial Government. Thedeclaration of the State of Emergency and theoutlawing of the MCP in 1948 brought aboutan end to broad-based general labour unionsin the country and marked the beginning of atrade union movement tailored to the colonialeconomic policies and security needs of theG o v e r n m e n t .

Trade unionists tendedto be labelled

The period between the declaration of theState of Emergency and national independence(1948-57) saw the emergence of “culture d ”democratic free trade unions consistent withcolonial policies. All the same, the growth oftrade union membership was slow: workersw e re suspicious that the Government mightre g a rd trade unionists who made activedemands on employers as communist agents.In spite of such apprehension, trade unionmembership was to improve with the eco-nomic recovery which followed, especiallyduring the rubber boom. Assistance from inter-national trade union organizations also playeda part in strengthening the trade union move-ment through amalgamation, org a n i z a t i o n a lchanges and leadership training.

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Proliferation of small unions

The Government declared its policy of pro-moting the growth of a strong, free and demo-cratic trade union movement after independ-ence in 1957. Trade unions were acknowledgedas equal social partners in the tripartite respon-sibility for the economic and social develo-pment of the nation. The Trade Union A d v i s e r s ’Department was merged with the LabourDepartment to form a new Department ofLabour and Industrial Relations and a newTrade Union Ordinance was introduced in 1959after consultation with the trade unions. Thenew Ordinance retained the substantial role ofthe Government in determining the registra-tion and administration of trade unions. Tradeunion membership came mainly from the rub-ber plantation industry and the tin mine indus-try. The characteristics of trade unions at thetime indicate that, with the exception of a fewlarge unions, there existed a large number ofsmall unions with an average membership ofless than 400, which reflected the fragmentednature of the trade union movement. Further-more, this proliferation of small unions andhaphazard growth of a mixture of local, craftand specialized departmental unions and a fewnational and industrial unions with inherentresource constraints had limitations withregard to their primary functions of industrialrelations and collective bargaining.

Collective bargainingin the public sector

The public sector unions were always lessi n fluenced by the activities of the GLU and itssuccessor the PMFTU. The largest number oftrade unions were in the public services in thepostwar period. These public sector unionsw e re also organized on a departmental andclass basis, e.g. clerical or technical workers,nurses and hospital assistants, or by sectors, e.g.telecommunications, postals services and rail-ways. The British colonial Government wasa w a re of the potential threat of communist infil-tration into public sector unions and took theinitiative to address the issues concerning termsand conditions of employment in the public sec-tor through some form of collective barg a i n i n g .The first Postwar Salaries Commission was setup in 1947, followed by the Cowgill Commis-sion in 1949 and the Benham Commission in1950. Both Commissions reviewed the salariesand conditions of service of public sectoremployees. In 1952, the Whitley System was

adopted in the United Kingdom for collectiveb a rgaining in the public services and two Coun-cils were established under the system, viz.:(a) the Whitley Council for Divisions I-IV;

(b) the Whitley Council for Daily RateEmployees.

There were five major staff organizations inthe Whitley Council for Divisions I – IV, i.e.:(i) the General Services Staff Council which

represented the employees in Divisions II,III and IV;

(ii) the Senior Government Officers’ Asso-ciation which represented the Officers inDivision 1;

(iii) the Expatriate Officers’ Association whichrepresented the European Expatriate Offi-cers;

(iv) the Malayan Civil Service Associationwhich represented the Malayan Civil Ser-vice; and

(v) the Malayan Administrative Service Asso-ciation which represented the Officers ofthe Malayan Administrative Service.

The employees were re p resented by the StaffSide, who were accredited members from thevarious staff organizations. There were 22 StaffSide members appointed by the Staff Org a n i z a-tions and 19 Official Side members appointedby the High Commissioner. The Whitley Coun-cil for Daily Rate Employees was set up on thesame lines except that, in the case of the StaffSide, the members were from the unions thato rganized the Industrial and Manual Gro u p(IMG) workers, namely Telecoms, the RailwayUnion, etc. The Officers’ Side included theHeads of Major Departments, Senior Civil Ser-vants in the Public Services Department andre p resentatives of State Governments. The fir s tP reliminary Meeting of the Staff Side was heldin March 1953 and both the Whitley Councilsw e re formally established in April 1954.

The Whitley Council System was negotiat-ing and conciliation machinery. A main featureof the system was that no circular was issuedor implemented without the agreement of theStaff Side. In the event of disagreement, themachinery provided for arbitration by refer-ence to the Prime Minister. The Tribunal whicharbitrated was known as the Public ServicesTribunal which consisted of an independentChairman and one member, each drawn froma panel of persons representing the Staff Sideand the Official Side.

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The Council consisted of two main Com-mittees:(i) the General Purpose Committee which

dealt with general provisions governingthe public service; and

(ii) the Combined Grades Committee whichdealt with claims of the various grades.

In 1960, the public sector trade unions,which were under the General Services StaffCouncil, formed the Congress of UnionsEmployed in the Public and Civil Services(CUEPACS) which was to become became thenational centre for public sector trade unions.It was registered under the Trade Union Actand acted as coordinator and negotiated payclaims for all classes of employees in the pub-lic sector. From 1960 to 1964, CUEPACS nego-tiated and settled wage claims for more thanhalf of the public services employees.

In 1964 the Official Side was unable tocope with the claims, and the Governmentappointed the Suffian Commission to settle theclaims of the public sector unions. Its recom-mendations were not implemented, and sepa-rate Commissions were set up to review the payand terms and conditions of employment of theother sectors, namely:(i) the Aziz Commission for Teachers;(ii) the Harun Commission for Statutory

Bodies and the Local Authorities Committeeon Pay for the Armed Forces; and

(iii) the Committee on Pay for the ArmedForces.

The Whitley System was replaced by theNational Joint Council in 1973. The Council wasestablished to strengthen the status of the Whit-ley Council so that agreements reached couldbe binding on both parties. The National JointCouncils (NJCs) were for:(i) the general public service and teachers;

(ii) the statutory bodies and local authorities;and

(iii) the police service.

The Government appointed the IbrahimCommission in 1973 to review the recommen-dations of the previous Commissions. Its reportwas not made available to the Staff Organiza-tions and all the public sector unions threatenedindustrial action. The Cabinet established itsown Cabinet Committee under the Chairman-ship of Datuk Seri Dr. Mahathir Mohamed. This

report was completed in 1976 and adopted inParliament. The Cabinet Committee report alsoestablished the Public Services Tribunal to con-sider claims regarding anomalies with powersto rectify such anomalies. The decision of theTribunal was final and binding.

In 1979 the Government reviewed the func-tions of the NJCs and established further onesas follows, for the:(i) general public service;(ii) education service;(iii) subordinate and manual group;(iv) statutory bodies; and(v) local authorities.

Collective bargaining:A process of consultation

The functions of the National Council wereconfined to giving views and discussing prin-ciples affecting remuneration, allowances andfacilities for employees in the public sector andother general terms and conditions of service.Discussions on the Cabinet Committee salarystructures and on anomalies were restricted assuch anomalies were dealt with by the PublicServices Tribunal and the salary review was tobe undertaken on a five-year periodic basis.CUEPACS considered such restrictions andconstraints a violation of trade union rights.However, the system proved useful for resolv-ing grievances about anomalies speedily. Col-lective bargaining, however, became a processof consultation between the Government andCUEPACS rather than bargaining in the realsense of the word. It is also important to notethat the strike weapon of the unions hasremained ineffective because of the provisionsin the Industrial Relations Act to restrict strikeaction in the essential services of both the pri-vate and public sectors, which can be invokedby the Minister of Human Resources.

Collective bargaining in the privatesector: Three prerequisites

The three Acts of Parliament which influ-ence collective bargaining in the private sectortoday are the Trade Union Act (1959), the Indus-trial Relations Act (1967) and the EmploymentAct (1955).

Collective bargaining has moved throughtwo main phases since the end of the SecondWorld War:• the pre-independence period which encour-

aged a self-regulation and voluntary dis-

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pute resolution system based on the Britishmodel of industrial relations; and

• the post-independence period duringwhich voluntary collective bargaining andcompulsory dispute settlement were intro-duced.

The prerequisites to collective bargaining,universally, are threefold:(i) freedom of association and the right to

organize;(ii) to be able to bargain collectively with the

employer on terms of employment andconditions of work; and

(iii) freedom to strike to back up the process ofcollective bargaining.

Registration does not guaranteerecognition

The Trade Union Act makes the registrationof trade unions compulsory. However, the reg-istration of a union does not guarantee recog-nition by the employer. Workers must registera union and then proceed to obtain recognitionfrom the employer before collective bargainingcan begin. They also need a simple majoritybefore filing a claim for recognition. The Indus-trial Relations Act sets out the procedureswhich need to be complied with in the claim forrecognition.

This process is the challenge that workersface in the establishment of trade unions.

Only a registered trade union can claimrecognition from the employer. Once recogni-tion is granted, the union is formally accordeda locus standi for the purpose of collective bar-gaining and other industrial relations mattersinvolving the employer.

Conditions of eligibility

A union is eligible for recognition by anemployer if its scope of membership is not inquestion. For example, the Electrical IndustryWorkers’ Union cannot organize workers in theelectronics industry. The union is also requiredto exclude workers in managerial, executive,confidential and security capacities, and tohave a simple majority in membership fromamong the workers in the establishment. Anemployer must respond to a claim for recogni-tion within 21 days. The employer may grantor reject recognition, giving the grounds in theevent of a negative decision, in which case theunion can seek the intervention of the Director

General of Industrial Relations. He or she inturn may then bring the matter to the attentionof the Director General of Trade Unions in aneffort to resolve the dispute. The Trade UnionAct also empowers the Minister to directemployers to accord recognition if the unionfulfils the conditions of a simple majority. Someemployers who choose to keep a “union-freeenvironment” at the workplace are able todelay recognition of trade unions throughdelaying tactics, although the Act strictly for-bids such actions. The case of Harris Solid State(M) Sdn. Bhd. v. Bruno Gentil & 21 Others (CivilProceedings No. W-04-109-95 CA) is a goodexample of how establishment, recognition andfunctions of unions can be delayed and frus-trated by some employers who choose to usethe legal nuances to suppress the formation andfunctions of trade unions.

The Trade Union Act also guarantees tradeunions immunity from employer-initiatedcriminal proceedings for conspiracy and civilproceedings for damages as a result of indus-trial action. A strike in common law mightamount to criminal conspiracy as a way tocoerce the employer in the conduct of his or hertrade or business. However, immunity underthe Industrial Relations Act does not affect thelaw relating to riot, unlawful assembly, breachof the peace, sedition or any offences against theKing or any state authority.

Measures to protect the rightto organize and join unions

The Employment Act and the Industrial Rela-tions Act both prohibit an employer from includ-ing in the contract of service any conditionsrestricting a worker’s right to organize or join are g i s t e red trade union and participate in its law-ful activities. It is deemed unfair labour practiceon the part of the employer to include in theemployment contract any condition re s t r a i n i n gthis right. It explicitly prohibits an employer oran employer association from interfering withthe establishment, functioning or administrationof any trade union. It also prohibits an employeror his or her association from supporting anytrade union financially or otherwise with a viewto controlling or influencing the latter.

Measures against victimization,discrimination and intimidation

The Industrial Relations Act also lists the fol-lowing labour practices as unfair, such as vic-timization of workers: refusing to employ any

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person on grounds that he or she is a memberor an officer of a trade union; discriminatingagainst any person with regard to employment,promotion or working conditions on groundsthat he or she is a member or an officer of a tradeunion; dismissing or threatening to dismiss aworker, or injuring or threatening to injure aworker in his or her employment; altering orthreatening to alter his or her position ongrounds that the worker proposes to belong toa trade union or seeks to persuade others tobecome a member or an office bearer of a tradeunion or to participate in the promotion, for-mation or activities of a trade union.

Since freedom of association also impliesfreedom not to join an association, the Indus-trial Relations Act deems it unfair labour prac-tice for any worker or his or her union to intim-idate or induce any person to join or cease to bea member or an officer of a trade union.

Access to information

The exchange of information is facilitatedthrough the provisions of the Industrial Rela-tions Act whereby employers may providetheir workers with information on any matterpertaining to any collective bargaining mattersor trade dispute involving them. Such provi-sions ensure healthy communication and pro-vide information directly to workers on devel-opments connected with collective bargainingor trade disputes.

A union can submit claimsfor collective bargaining

Once recognition is accorded, the union cansubmit its memorandum of claims for collectivebargaining. Workers in “managerial, executive,confidential or security” categories of employ-ment are not to be represented by a trade unionwhere the majority of its members are notemployed in similar capacities (see Fig. 1).

From voluntary to compulsoryarbitration

Voluntary arbitration was encouragedbetween disputing parties through an agreedpanel of arbitrators in the industrial relationssystem after the Second World War, pursuantto the Industrial Court Ordinance (1948) whichempowered the Commissioner of IndustrialRelations to refer industrial disputes for arbi-tration with the consent of the parties to thedispute. This system failed to prove effective

and industrial unrest was widespread between1948 and 1964. During this period, a total of 17awards were made, including four major dis-putes with regard to wage claims in the miningand rubber industries and conditions ofemployment in the pineapple industry and therailways. During the Indonesian ConfrontationEmergency in 1964 the step towards compul-sory arbitration was taken when, under theRegulations of the Emergency Act (1964), theMinister of Labour was empowered to refer anindustrial dispute to the Industrial ArbitrationTribunal which was empowered to hand downa binding, final and conclusive award whichcould not be challenged in any court. TheIndustrial Court Ordinance and the ArbitrationTribunal under the regulations of the Emer-gency Act (1964) were replaced by the currentIndustrial Court under the provisions of theIndustrial Relations Act (1967), which providedfor both voluntary and compulsory arbitration.The Minister of Human Resources is empow-ered to refer disputes to the Industrial Court onhis or her own if he or she is satisfied that it isin the best interest to do so at the joint requestof the parties to the dispute. The IndustrialCourt Panel comprises the President, a memberrepresenting workers, and a member repre-senting employers who are selected fromamong a list of panel members appointed bythe Minister of Human Resources. Althoughquick settlement of disputes is recommended,the backlog of cases in the Industrial Courtdelays the hearing of disputes especially withthe limited resources available in the IndustrialCourt system. The decision of the IndustrialCourt can be appealed to the High Court onquestions of law with leave to do so.

Courts ratify collective agreements

The Industrial Court has another importantfunction: to ratify collective agreements by tak-ing cognizance of the collective agreements.This process is mandatory and it gives collec-tive agreements a binding effect on both par-ties, since once taken cognizance of by theIndustrial Court, they are deemed to be awardsof the Industrial Court and bind the partieseven in instances where a party is a trade unionof employers; all members of the trade union towhom the agreement relates and their succes-sors, assignees or transferees; and all workerswho are employed or subsequently employedin the undertaking or part of the undertakingto which the agreement relates. A collectiveagreement which is not ratified by the Indus-

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trial Court is neither binding on the parties norlegally enforceable in the Industrial Court orcommon law courts. The cognizance processalso ensures that collective agreements are incompliance with the Industrial Relations Actand that the terms and conditions of employ-ment are not less favourable than the minimumprovided for in the Employment Act. TheIndustrial Relations Act ensures that any col-lective agreement must comply with the fol-lowing minimum features:(i) it must be in writing and signed by the par-

ties to the agreement by an authorized per-son;

(ii) it must set out the terms of the agreementand, where appropriate, name the partiesand specify the effective period whichmust not be less than three years from thedate of commencement of the agreement,unless both parties agree to review theterms of the collective agreement withinthe period by mutual consent; and

(iii) it must prescribe the procedure for its mod-ification and termination as well as griev-ance procedures for the settlement of dis-putes.

Binding on all workers,members or not

It is important to note that the collectiveagreement is binding on all workers in theundertaking, irrespective of whether they aremembers of the trade union representing them.It is therefore an implied term of the contract ofemployment with regard to wages and condi-tions of employment. In the event of disputeswith regard to the interpretation of the collec-tive agreement, both parties may apply to theIndustrial Court for the decision on the ques-tion. The Minister of Human Resources is alsoempowered to refer such questions to theIndustrial Court.

Strikes subject to compliancewith certain requirements

An important weapon of trade unions tosupport their claims in a collective bargainingprocess is the right to strike. Any form of col-lective action such as “go slow”, “work to rule”and “stoppage of work” is considered a strikein industrial relations. The statutes on employ-ment, trade unions and industrial relations donot expressly give workers the right to strike.However, it may be inferred from several pro-

visions that workers can strike subject to com-pliance with other provisions requiring appro-priate resolutions and hold a secret ballotrequiring a two-thirds majority in support ofthe resolutions before notice of strike can begiven. Extensive powers are given to the Direc-tor General of Trade Unions to scrutinize thesteps taken by a trade union to call for a strike;nor can strikes be called on issues concerningrecognition, management prerogatives or mat-ters which are referred to the Industrial Courtor in the essential services which are defined inthe Industrial Relations Act, e.g. banking, elec-tricity, health, communications, etc. The Minis-ter of Human Resources is also empowered toadd any other sector to the list of essential ser-vices. The notice period of 42 days before com-mencement of a strike is mandatory. Anybreach of the procedure for engaging in a strikecan be fatal as the strike will be deemed illegal,the union risk de-registration and the member-ship involved cease to be members of the union.The existence of such restrictions makes itimpossible for strike action to be invoked in thecollective bargaining process.

Current status and forecast

Malaysia has ratified the Right to Organiseand Collective Bargaining Convention, No. 98,1949. This Convention provides the scope forthe Trade Union Act and the Industrial Rela-tions Act. An appraisal of these Acts indicatesthat, while workers are free to organize as tradeunions and latitude for free collective bargain-ing is provided for, the procedure and controlmeasures inherent in these Acts restrict the realpotential for the growth of strong industry-based trade unions and limit the possibilities ofuse of the option to strike in the process of col-lective bargaining. It is no surprise, therefore,that one of the growing concerns in the eco-nomic development process of the country isthe growing disparities in the distribution ofincomes in society, especially among the work-ing class, which can be attributed to the lowlevel of trade union membership and therestrictions in the collective bargaining process.Public policy intervention to redistributeincomes is limited to poverty eradication pro-grammes which do not reach out to the formallabour force. An analysis of income groupsamong workers who are contributors to theEmployees’ Provident Fund (EPF) and theSocial Security Organization (SOCSO) indicatethe monthly salary distributions of workers in1996 as follows:

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Wage band Social Employees’Security ProvidentOrganization Fund% %

Under RM 100 0.7 1.9RM 100-300 7 9.6 RM 300-500 16.7 19.2 RM 500-1000 38.1 34.2RM 1000-2000 26.1 20.6RM 2000-3000 11.4 7.1RM 3000-4000 3.0RM 4000-5000 1.5Over RM 5000 3.0Total 100.0 100.0

Informal sector not representedin unions

The above indicates that approximately 65per cent of the workforce who contribute to theEPF earned below RM 1,000 per month. Thisinformation is based on workers in the formalsector of the labour force. The large number ofworkers who are in the informal sector and donot contribute to the EPF and SOCSO are per-haps in a worse position as they do not haveactive trade unions to represent their interestsbecause of the casual nature of employment

they are engaged in, i.e. self-employment, con-tract work and home-based work (see table 1).

Still a matter for small unions

The current provisions of the Trade UnionAct and the policies of the Government encour-age the proliferation of in-house unions (seetables 2 and 3). This strategy is designed to pro-vide favourable conditions for investors whochoose to operate in a weak trade union envi-ronment. A federation of trade unions can beformed, but such federations have limitedscope in active collective bargaining, althoughthey are useful for facilitating an exchange ofinformation on industrial relations matters inthe industry, especially with regard to wagerates, terms and conditions of employment inthe various establishments. Collective bargain-ing is still confined to the individual unions andthe inherent weaknesses of small unions arebound to surface.

Legal restrictions prohibit mergers

A liberal approach is necessary to facilitatethe merger of in-house unions for the purposeof forming viable industry-based unions. How-

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Table 2. Trade unions and membership according to size in Malaysia

No. of members No. of trade unions Total membership

1982 1986 1990 1997 1982 1986 1990 1997

Under 100 46 69 99 127 2 660 3 153 4 601 11 355100-200 39 54 72 76 5 988 7 727 10 237 17 489201-500 50 82 85 113 16 150 27 748 27 715 38 957501-1000 42 65 76 82 28 856 46 509 52 325 65 1321 001-2 000 39 47 50 67 53 917 65 131 72 622 95 7272 001-5 000 30 37 35 36 92 260 117 149 109 045 125 1805 001-10 000 20 16 19 11 136 693 112 889 130 437 82 472Above 10 000 6 9 10 14 191 891 225 518 251 517 298 373Employers’ unions 13 19 17 – 631 670 621 –Federations

of trade unions 2 3 4 – – – – –

Total 287 401 467 526 529 046 606 494 659 120 734 685

Source: Ministry of Human Resources, Malaysia.

Table 1. Population, labour force and employment estimates 1970-95

Year 1970 1975 1980 1985 1990 1995 1998

Population (in millions) 10.77 12.24 14.26 15.86 18.01 20.26 22.18Labour force (in millions) 3.60 4.22 5.38 6.03 7.04 8.14 9.00Unemployment rate (%) 7.4 7.0 5.3 6.9 5.1 2.8 4.9

Sources: Third Malaysia Plan; Sixth Malaysia Plan; Seventh Malaysia Plan; Economic Report 1998/99, Ministry of Finance.

ever, this challenge has been formidable for thetrade union movement. Efforts to organize aNational Union of Electronic Workers by theMalaysian Trades Union Congress met withstiff opposition from both employers and theGovernment. Instead, in-house unions in theelectronics industry have been encouraged. Inthe textile industry, which preceded the elec-tronics industry, regional or state-based unionshave been registered. Furthermore, legalrestrictions prohibit the merger of unions inPeninsular Malaysia, Sabah and Sarawak.

Any national solidarity among all Malaysianworkers is impossible within the current frame-work of legislation governing trade unions. Thenumber of employer trade union org a n i z a t i o n sis also small. In the circumstances, collectiveb a rgaining is a heavy responsibility for theworkers since they have to negotiate within thescope of their union membership.

The trend to casualize employment throughutilizing informal labour and distributing workto home-based workers wherever possible fur-ther weakens the scope for trade union mem-bership and participation in the collective bar-gaining process. The expansion of small andmedium-scale industries also poses difficultiesfor workers to organize into viable and effec-tive trade unions.

Employers withhold necessaryfinancial details

The National Labour Advisory Council hasadopted the Productivity Linked Wage systemwhich encourages productivity/gain-sharingmodels of a wage system compared to “fixed”and “payment by results” systems. This model,however, depends for its success on the will-ingness of employers to reveal the actual finan-

cial accounts of the enterprise. Employers donot reveal financial details of their enterpriseother than what is strictly required to berevealed in their statutory accounts. Althoughthis model can assist in improving the incomelevels of workers, the lack of trust betweenemployers and unions in sharing informationhas not contributed to progress in implement-ing this model through the collective bargain-ing process.

Compulsory arbitration in collective bar-gaining disputes through the Industrial Courtalso contributes to delays in concluding collec-tive agreements. The Industrial Court actsaccording to equity, good conscience and thesubstantial merits of the case without regard fortechnicalities and legal form and in the interestof the nation.

In these circumstances, workers’ solidarityand strength have no place.

Minister can refer disputesto Industrial Court

The strike weapon of trade unions is possi-ble in theory but has no effect in practice. Oncea collective bargaining dispute is referred to theIndustrial Court, the union is obliged to call offthe strike. In the circumstances, the option tostrike may not be useful since the Minister ofHuman Resources can defuse the situation byreferring the dispute to the Industrial Court.The number of strikes, workers involved andworking days lost is shown in table 4. The num-ber of man-days lost is low with one exceptionin 1990 when the National Union of PlantationWorkers went on a national strike to back uptheir claims for a basic monthly wage. Thestrike was, however, defused when the matterwas referred to the Industrial Court.

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Table 3. Trade unions and membership according to sectors in Malaysia

Sector 1995 1996 1997

No. of Membership No. of Membership No. of Membershipunions unions unions

Private sector 281 396 663 292 407 303 303 405 674Government 135 226 823 136 241 411 132 252 854Statutory

corporations andlocal government 88 82 767 88 79 532 91 76 157

Employers 13 572 13 528 11 475

Total 517 706 825 529 728 774 537 735 160

Source: Ministry of Human Resources, Malaysia.

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Table 4. Number of strikes, workers involved and working days lost, 1974-97

Year Number of strikes Number of workers involved Number of man-days lost

1974 85 21 830 103 8841975 64 12 124 45 7491976 70 20 040 108 5621977 40 7 783 73 7291978 36 6 792 35 0321979 28 5 629 24 8681980 28 3 402 19 5541981 24 4 382 11 8501982 26 3 330 9 6211983 24 2 458 7 8801984 17 2 437 9 2671985 22 8 710 34 7731986 23 3 957 14 3331987 13 3 178 11 0351988 9 2 192 5 7841989 17 4 761 22 8771990 17 98 510 301 9781991 18 1 920 6 6101992 11 2 401 5 3881993 13 2 399 7 1621994 7 2 289 5 6751995 2 1 748 4 8841996 9 995 2 5531997 5 812 2 396

Table 5. Employment and number of collective agreements signedand workers covered, 1992-97

Year Total Agriculture, Mining Manu- Con- Finance, Transport, Otherforestry and facturing struc- insurance, storage servicesand fishing quarrying tion business, and

services, commu-and real nicationestates

No. (000) No. (000) No. (000) No. (000) No. (000) No. (000) No. (000) No. (000)

1992 334 12 4 217 1 179 34 25(109.8) (6.5) (1.8) (129.2) (74.7) (7.7) (10.5)

1993 332 15 3 191 – 146 40 41(105.7) (27.9) (2.4) (51.0) (3.4) (14.3) (32.8)

1994 348 15 0 199 – 144 31 40(112.8) (1.5) (54.9) (6.7) (3.6) (10.0)

1995 257 18 0 196 – 153 31 52(79.3) (0.1) (53.5) (0) (10.1) (3.1) (44.5)

1996 398 32 6 210 1 142 55 53(113.3) (13) (1.3) (47.7) (0.1) (4.9) (9.9) (36.5)

1997 412 18 7 241 – 106 31 32(121.1) (36) (0.3) (64.4) (18.8) (0.7) (6.5)

Employ-ment in1997 8 805.1 1 494.5 38.8 2 390.5 874.2 405.8 436.2 2 291.9

Source: Economic Report 1998/99, Ministry of Finance, Malaysia.

One hundred years: A summing up

Trade unions and the concept of collectivebargaining in Korea emerged 100 years ago.However, collective bargaining had not beenrecognized as a legal institution for the earlierhalf of that period: collective bargaining waslegally recognized only when the Constitutionof the Republic of Korea of 1948 incorporatedbasic labour rights. It was not until the estab-lishment of the Trade Union Law and LabourDispute Adjustment Law in 1953 that collectivebargaining was accepted as a real institutionwith its own procedures and effectiveness.Until then, collective bargaining had not beenpractised due to the repression by employersand the weakness of trade unions.

Cooperation and solidarity frustrated

The collective bargaining system had beenrestricted in the 1960s by the Government-ledhigh economic growth policy. In 1961, the ParkJung-hee military regime made collective bar-gaining non-workable by prescribing a toostrict dispute-resolution procedure. Then, from1972 to 1980, the rights to collective bargainingand collective action were taken away by theSpecial Law concerning National Security ofthe Yushin (Renewal) dictatorship. This lawprovided a punishment of seven years or lessimprisonment for any workers’ involvement inacts of collective bargaining or collective action.In the 1980s, the Chun Doo-hwan militaryregime violated workers’ rights to collectivebargaining and collective action by totallyreshaping the labour laws. The revised labourlaws allowed trade unions to be organized onlyat enterprise level and extended the cooling-offperiod of industrial disputes. Then, the article

on “Prohibition of Third Party Intervention”which was introduced in labour laws impededcooperation and solidarity between tradeunions and social organizations in organizingtrade unions, collective bargaining and indus-trial disputes. Violation of this article was sub-ject to punishment with a three-year term ofimprisonment or a 500 won fine. These repress-ive labour laws were revised only in 1997 aftera series of struggles and a course of events suchas the Workers’ Great Struggle of 1987, thenation-wide struggle for the ratification of ILOConventions, and finally the admission of theRepublic of Korea to the ILO as a member Statein 1994.

Sectoral and regional levels

Since 1949, the dominant form of collectivebargaining in the Republic of Korea has beenenterprise-level bargaining reflecting the orga-nizational form of its enterprise-based unionsystem. Though the industrial union structurewas built in 1961 on the instruction of the ParkJung-hee military regime, collective bargaininghad still been conducted at enterprise level.There existed, however, several cases of collec-tive bargaining beyond the level of the enter-prise. In the late 1960s, sectoral bargaining inthe cotton spinning and raw silk industries wasimplemented at national level between textileworkers’ unions and employers’ organizations.Regional bargaining was also conductedbetween automobile workers’ unions andemployers’ organizations which coveredbus/taxi drivers and repair workers. This kindof bargaining practice is still in effect. In thosedays, the main contents of collective bargainingwere focused on wage increase and the guar-antee of trade union activities.

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Republic of Korea

Towards industrial unionism:A grand experiment for the twenty-first century

Lee Won-boDirector

Labour & Society InstituteRepublic of Korea

Calls for autonomy and democracy

F rom the 1970s to June 1987, collective bar-gaining had been undermined by the militarygovernments and the re p ressive labour laws.F rom 1972 to the late 1980s, collective barg a i n-ing and collective action were prohibited. Wo r k-ing conditions were decided either by labour-management commissions or by the arbitrationof government authority. By 1981, collectiveb a rgaining had merely become synonymouswith legal restriction. Under such institutional-ized suppressions on the part of the dictatorialregime, employers were enjoying a dominantposition at the bargaining table. As a result, thegap between wages and the minimum cost ofliving had continuously widened and workingconditions had not improved much. Under suchstrict conditions, however, some trade unionsthat were advocating autonomy and democracydemanded collective bargaining and waged col-lective actions, though prohibited by the law. Ahigher incidence of collective actions occurre din the 1970s than in the 1960s.

Democratization of the workplace

Even after the Workers’ Great Struggle fro mJuly to September 1987, collective barg a i n i n gcontinued to be conducted mostly at enterpriselevel. But collective bargaining and strikes cameto be so much the order of the day that the exist-ing labour laws came to lose their binding grip.Union membership almost doubled from July1987 to 1989. A total of 3,749 labour disputestook place in 1987, 1,873 in 1988 and 1,616 in1989. Against the background of the re t reat ofthe military dictatorship, the hegemony in col-lective bargaining was taken by trade unions,especially by the newly emerged democraticunions that rejected alliances with the Federa-tion of Korean Trade Unions (FKTU). A l t h o u g hthe issues negotiated within the framework ofcollective bargaining mainly focused on wagei n c rease and the improvement of company-pro-vided welfare, the democratization of the work-place had also emerged as an important issue.As a result, from 1987 to 1996, the nominal wageof workers in the Republic of Korea hasi n c reased by 3.8 per cent and democratizationof the workplace was achieved to some extent.

Dismissal and imprisonment

During the period re f e r red to, trade unionshad faced many challenges. The Governmentdid not stop efforts to destroy the democratic

labour movement which had initiated theworkers’ struggle. Employers introduced anew management strategy and pro p e l l e ds t rongly the restoration of workplace contro land division among workers. The Kim Yo u n g -sam administration established in 1993s t rengthened the attack against the labourmovement through the so-called Segyehwa(globalization) policy, which was a kind of neo-liberalist policy. As a result, confro n t a t i o nbetween employers and workers engaged incollective bargaining was aggravated. Manyworkers were dismissed, and 2,807 workersw e re imprisoned between 1987 and the end of1 9 9 6 .

Shrinking membership

The internal conditions of the trade unionmovement have also changed significantly. Thechanges in the economic and industrial struc-ture brought in its wake a decrease in blue-col-lar workers, who had been the main force of thecollective bargaining drive. Due to the chal-lenge of the management strategy in enterprise,the number of regular workers, who form thebasis of enterprise-based unions, has alsodecreased while the number of irregular work-ers has rapidly increased. The number of rankand file union members shrank to a consider-able extent as a result of the employers’ controland attack. Since 1989, union density hassteadily dropped and there have been fewerindustrial disputes.

Broader bargaining agenda

As a response to this new situation, the tradeunions, especially those espousing the demo-cratic labour movement, have tried to adopt anew approach to bargaining and struggle. Thedemocratic labour movement implementedtactics which concentrated its resources on bar-gaining and struggle within a specific period.When the Korean Confederation of TradeUnions (KCTU) was established in 1995, thedemocratic labour movement transformed itsagenda from the demand for wage increase toa combination of wage increase and socialreform. The demands of enterprise-levelunions were eventually to cover various issuessuch as the reduction of working hours, jobsecurity, management participation, health andsafety, etc. The new bargaining mode, “jointbargaining”, has emerged to combine indus-trial-level federation and enterprise-levelunions at the bargaining table.

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Lay-off system delayed till 2001

From late 1996 to February 1997, the KCTUstaged a general strike against the Kim Young-sam Government which tried to revise thelabour laws in order to institutionalize labourmarket flexibility. The general strike mobilized2 million workers, and was the first nation-wide general strike in the last 50 years. TheFKTU also joined the strike. This struggle madethe Kim Young-sam Government abandon thelabour laws in force and make amendments. Bythe newly amended laws, the introduction of alay-off system was delayed till 2001 and the col-lective bargaining system was partly modified.

Enough leeway to prejudicethe outcome of negotiations

Collective bargaining in Korea at present isinstitutionalized in the Constitution, the TradeUnion Law and the Labour Relations Adjust-ment Law. Article 33 of the Constitution pro-vides that workers shall have the right to orga-nize independently both collective bargainingand collective action to improve working con-ditions. The labour laws are so designed thatthey have no safeguards against unfair labourpractice as in cases of acts of refusal or negli-gence of collective bargaining on the part ofemployers. The laws also provide for faithfulnegotiation between labour and management.Trade unions can mandate collective bargain-ing to industrial federations or a third party.They can also negotiate with employers’ orga-nizations. But none of these protects the rightsof workers in a thorough manner. There isenough leeway for government and employersto steer the outcome of negotiations in theirfavour. The Constitution restricts the rights ofpublic employees in terms of trade union orga-nization and collective bargaining. Collectiveaction within the defence industry, whichbelongs to the private sector, is also limited. Asfor the public sector, collective action as anextension of collective bargaining is prohibitedby the mediation system. The labour laws allowthe Minister of Labour to meddle in the con-tents of collective bargaining. However, themediation system can be used to make collec-tive bargaining ineffective. Although the noto-rious ban on third party intervention was elim-inated, outside support for collectivebargaining still required recognition by theGovernment. Furthermore, employers areallowed to nullify the collective agreement sixmonths after the termination of collective bar-

gaining. The Government in turn is supportiveof employers by excluding from the scope ofcollective bargaining the issues of lay-off andworkers’ participation in management.

In December 1997, Kim Dae-jung waselected President. His new Government estab-lished a tripartite commission as an advisorybody to the President for the purpose of over-coming the economic crisis after the “Interna-tional Monetary Fund (IMF)-managed eco-nomic system”. The new President firmlydemanded that the tripartite commissionshould initiate the immediate introduction ofthe lay-off system. In the commission, agree-ment was arrived on 20 issues, including theintroduction of the lay-off system and thelabour dispatching (worker lease) system as ofFebruary 1998; but, of all these agreements,only the immediate introduction of the lay-offsystem has been implemented. The commis-sion failed to adopt any significant measuresconcerning issues raised later such as thereform of the Chaebol system, restructuring orpolitical reform, which aroused much resent-ment on the part of the trade unions againstgovernment and employers.

Recent trends in collective bargaining

Enterprise-level bargaining is still the dom-inant form of collective bargaining in Korea.There also exist other forms of bargaining suchas joint bargaining, multi-employer bargainingand cross bargaining. Joint bargaining means abargaining pattern that an enterprise-basedunion negotiates with an employer jointly withits affiliated industrial federation. Multi-employerbargaining is a pattern whereby severalunions negotiate with employer-nominatedrepresentatives as in the case of bargaining inthe cotton-spinning sector and bus/taxi dri-vers. Cross bargaining is a pattern whereby anindustrial federation negotiates with theemployer of an enterprise. However, they areall partial in scope or at the embryonic stage.Regardless of the different forms of collectivebargaining which prevail, trade unions are fac-ing serious challenges arising from the massiverestructuring and job reduction drive on thepart of government and employers in the con-text of the IMF-managed economic policy andthe ensuing currency crisis.

Job security at the centre

Reflecting this change of situation, the mostimportant issue shifted from wage increase as

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1999. In particular, if a full-scale restructuringin the financial and the public sectors is under-taken and the so-called big deal among Chae-bol is implemented, massive unemploymentwill result. The social security system in theRepublic of Korea, however, is too poor and themeasures to redress unemployment are notfundamental therapy: they are too vague. Cur-rently, finding solutions to all these problemsfalls within the ambit of the unions.

Doubt has set in

Considering the situation as described in thef o regoing, the capacity of trade unions in thecountry to meet this challenge is too weak: uniondensity as of 1997 has only stood at 11.6 per centand is expected to decline even further. Theo rganizational form of trade unions, still basedon the enterprise-level system, suffers fro mweak mergers and a low level of concentrationwithin the unions. It would be possible for enter-prise-level unions to achieve wage incre a s e swith adequate organizational capacity in work-places and to struggle for power in the period of“high growth and low unemployment”. How-e v e r, the enterprise-level union system hasi n h e rent limitations in terms of impro v i n gworkers’ living conditions and rights or in pro-tecting workers’ benefits beyond the “enterprisefence”. The enterprise-level unions have so farfailed to organize the masses of irregular work-ers; nor do they have the capacity to protect theunemployed. The current situation of lowg rowth and high unemployment has bro u g h tfully to light the limits of enterprise-levelunions. It became difficult to protect the rightsof their members through bargaining and stru g-gle. It became all the more clear that the isolatedand scattered enterprise-based unions could notp rotect workers’ rights in the face of the Gov-ernment’s neo-liberal policies and the rational-ization strategy of employers. For this re a s o n ,some doubt has been expressed within the ranksof the trade unions as to the survival of thelabour movement in the Republic of Kore a .

Hope in industrial unionism

Trade unions in the Republic of Korea havee x p l o red many alternatives to try to cope withthese new changes and challenges. These alter-natives include the construction of industrialunionism, the creation of a political partywithin the ranks of the working class and org a-nizational reform, including developing work-place activities. The construction of industrialunionism is considered the most importantgoal if the limitations of the existing enterpriseunionism are to be overcome. Unions are pro-moting tactics of concentrating collective bar-gaining as a preliminary stage for constru c t i n gindustrial unionism. This strategy delegatesthe collective bargaining right of enterpriseunions to industrial (labour) federations andthey demand that each employer engage in col-lective bargaining with such federations.

A history of battles won

The strategy of concentrated collective bar-gaining encounters many difficulties due to theemployers’ tendency to stick to the existingenterprise-level bargaining. However, unionsin the country have accumulated considerableexperience throughout their history in winningbattles against severe re p ression by the statepower and employers. This experience consti-tutes the basis for the historical belief that theunity and solidarity of the workers can pro t e c tthe union movement. For example, the Med-ical Workers’ Union Federation and the Col-lege Employees’ Federation successfully trans-formed themselves from enterprise unions intoindustrial unions. On the basis of these experi-ences and beliefs, trade unions in the Republicof Korea will be pursuing the establishment ofindustrial unionism as a grand experiment forthe twenty-first century even more passion-a t e l y. In this process, the collective barg a i n i n gsystem in the country will undergo deepchange in its stru c t u re and methods.

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• Collective agreements and bargaining toreach them should be a high priority fortrade unions, employers’ organizations andthe State in the countries of Central and East-ern Europe (CEE). Currently they are not.

• All CEE countries have reformed theirlabour laws after the political changes of tenyears ago. The laws recognize the rightsguaranteed in ILO Conventions Nos. 87 and98. Reality does not reflect the text of thelaws.

• CEE countries are not a bloc: their develop-ment has been very diverse. The commonstarting point of Soviet industrial relationsmakes it relevant, however, to discuss col-lective bargaining in the region.

• Trade unions were not prepared for privati-zation and largely failed to use any oppor-tunities offered in the process (should therehave been any).

• Collective agreements are local; nationalbranch agreements have been declining innumber and coverage.

• Trade union representatives do not haveaccess to full information for negotiations.

• Workers’ commitment to their employershas collapsed.

• Membership of the European Union willhave a marked positive impact on collectivebargaining if unions are able to make themost of the opportunity.

• If collective bargaining does not gain gen-uine credibility with the support of repre-

sentative, independent and democratictrade unions and employers’ organizations,any development towards well-functioningmarket economies is at risk.

Political functions of collectivebargaining

Collective bargaining is a political institu-tion that regulates and defines several areas ofinteraction between employee and employerrepresentatives. Its political purpose involves aprocess whereby an organized group ofemployees, in the form of trade unions, negoti-ate with employers, their representatives ortheir associations any aspect of employment orworking conditions within the employer’sorganization. Such bargaining is “collective”because there is strength in numbers, whichendows the institution with its political pur-pose: the balancing of power.

However, the balance of power becomes areality only if the trade unions can presentclaims that are enforceable. “Enforceable” inturn means that they can back up their claimsby threatening to withhold labour. If a singleemployee withholds his/her labour, the threatis usually not meaningful; but when the major-ity of a workforce in an organization threatensto strike or to take any other form of industrialaction, such a threat carries heavier impli-cations.

Once the collective agreement has been con-cluded, its provisions must also be enforceable.In the first place, the parties may resort topeaceful settlement mechanisms which are an

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Economies in transition

Trade unions must carry the burden ofthe reform policies without any new resources

to meet the challenges

Pekka O. AroSenior Management and Programming Officer

ILO Employment and Training Department

In the following article, the author draws on his first-hand experience acquired as Senior Specialist on Work-ers’Activities attached to the ILO Budapest Office from 1992 to 1997 and later in the ILO Brussels Office.

inherent part of the political institution of col-lective bargaining – internal dispute settlementprocedures such as mediation, arbitration orconciliation as well as labour court procedures– but ultimately there remains the option of col-lective action.

If collective bargaining was a political insti-tution in the communist era, it is still a politicalinstitution in all transition economies today butin a different sense: under the control of com-munist structures of industrial relations, col-lective “bargaining” and agreements were toolsto express political objectives for productionand the way in which people were expected tocarry out production. Since 1991, labour lawshave been revised in all transition economies.Basically, all rights guaranteed in ILO Conven-tions Nos. 87 and 98 are recognized in the textsof the new labour laws. Similarly, the right tostrike is recognized in all CEE countries, eitherconstitutionally or by law.

However, the political purpose of collectivebargaining in terms of establishing a balance ofpower is not as evident as the political institu-tion itself in the transition economies. This lackof political purpose is caused by a number offactors.

First, trade unions in many transitioneconomies are still in the process of becomingindependent, democratic and representative,and employers are still in the process of orga-nizing themselves. When the trade unions haveno employers’ organization as a counterpart,the collective agreement has to be negotiatedwith individual employers. Consequently,branch-level agreements are few and farbetween, meaning poor “strength in numbers”.Although there are many reasons why employ-ers are not well organized, in the rare caseswhen they happen to be, the main purpose oftheir organization is not collective bargainingat the branch level but to qualify for legal coun-sel in the field of labour and social affairs.

Second, surplus of labour, overcapacity ofproduction and no need for a modern “just-in-time” production system are common phe-nomena in many industries and workplaces inthe transition economies. Consequently, strikesare less effective as a deterrent. The main rea-son for employers to keep a labour force whichis not actually needed is the old traditionwhereby state-owned enterprises take care ofemployees’ social needs. After most of the stateproperty was privatized, the responsibility forproviding social services was relinquished byenterprises but not transferred to governmentsin a systematic way.

The main reason for overcapacity is the tra-dition of a centralized production systemwhere only a few massive enterprises were pro-ducing goods and services for the entire coun-try, for all Soviet Republics or for all CEE coun-tries. One reason why there is no need fora “just-in-time” production system lies partlyalso in the communist tradition where produc-tion was not driven by the needs of the con-sumers. However, a more important reason isthat individual production plants have notbeen integrated into any production chain ornetwork nationally or internationally.

Third, a common problem for all the transi-tion countries remains the inherent weaknessof the rule of law. The judiciary, from the train-ing of judges to procedural reforms, were moreconcerned with overcoming excessive delays incourt cases. Labour courts are largely missingand mediation/a r b i t r a t i o n/conciliation systemsare not well established. Such weaknesses aredetrimental to the implementation of collectiveagreements.

Economic purpose and the contextof collective bargaining

Collective bargaining is primarily used foreconomic purposes. The result of the process isan agreement which provides for benefits andobligations for both parties – production whichis not disturbed or interrupted by workers,compensation for work in the form of pay,leave, holidays, social services, etc., and work-ing conditions. Such benefits or their costs canbe expressed in terms of money. Naturally, col-lective agreements also have social conse-quences – intended or unintended – but theresult is economic benefits for the interestgroups concerned: employees and employerscovered by the agreement.

Bend the circumstances

The economic context of the bargaining unit(i.e. company, sector, etc.) – and the macroeco-nomic circumstances of the country or regionconcerned – in which collective bargainingtakes place varies considerably among the tran-sition economies. Collective bargaining cannotchange this context: the parties can only bendthe circumstances in their own favour. Natu-rally the trade unions in the different transitioneconomies negotiate in different circumstances.Consequently – besides the skills of individualnegotiating teams and the position of the tradeunion they represent – the level of benefits

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established in the collective agreementsdepends largely on the economic situation ofthe bargaining unit and the country concerned.

Take-off points are different

As for the macroeconomic background, thetransition economies can be divided into twogroups: the CEE countries and the formerSoviet Republics (with the exception of thethree Baltic States – Estonia, Latvia and Lithua-nia – that are economically closer to the cir-cumstances of the CEE countries). The formerSoviet Republics formed an integral part of theSoviet economic, political and security system.Before becoming independent they had but lit-tle control over their national economy, nor didthey possess institutions to handle basic eco-nomic functions, with the result that the struc-ture of production and trade served the inter-ests of the former Soviet Union. Hence, theinstitutional and structural reforms in thenational economy were much more entrenchedin the former Soviet Republics than in the CEEcountries, but the readiness and facilities forsuch transformation were different even withinthe former Soviet Republics. Even the Balticgroup of countries are far from homogeneous:their past in international politics (i.e. domi-nance in the region or under the yoke of differ-ent foreign countries, etc.), industrial tradi-tions, foreign exposure, etc. necessarily makethem different. Much wider differences exist –and are widening – between the poorer regionsof northern Russia and, for example, Moscowor the Caucasus. A further compounding fea-ture among the CEE countries in the process isthat the take-off points of the transformationprocess were different: for instance, the CzechRepublic and Slovakia were already in theprocess of state and nation building alongsidethe economic transformation process.

Experience in the transition economies hasnot just shown that there is no single path to amarket economy, nor just a single type ofmature market economy, but also that there isno consensus about the desirable policies foreffecting transition. Taking into account suchreservations, CEE countries have been consid-ered more successful in implementing reformpackages than the former Soviet Republics.However, important differences also prevail:the southern countries (most of formerYugoslavia, Albania, Bulgaria and Romania)have had less success than the Visegrad four(Poland, the Czech Republic, Slovakia andHungary).

Although the indicators (EBRD, 1990-98)show differences among the transitioneconomies, some of the transition problemshave been common to all of them: decline in sta-tistically recorded production and GDP; col-lapse of productivity (production decline wasnot accompanied by open unemployment) andinvestment; difficulties in maintaining budgetbalance (low level of revenues); high inflation,deep cuts in public expenditure (social secu-rity); a large shadow economy; and poverty.Generally speaking, it has been far more com-plicated and time-consuming to carry out struc-tural changes and privatization than to stabi-lize and liberalize the economy.

Trade unions not prepared

In general, trade unions were not pre p a re dfor privatization nor for any other pro f o u n dchanges the transition period brought with it, sothey were not able to bend the circumstances infavour of their members in collective barg a i n-ing. Most of them did not negotiate with thestate employer any provisions on job security,severance pay, training, maintenance of bene-fits, etc. in the case of a business transfer to pri-vate hands. If trade unions largely lost theirmoments of opportunity in the privatizationp rocess, it is partly owing to internal disunitywithin the trade union movement where “alter-native” and “traditional” unions were fig h t i n gover dominance. Of far more consequence,h o w e v e r, is the fact that the traditional role ofbeing involved in state politics channelled theactivity of the traditional trade unions awayf rom collective bargaining. They tried to influ-ence the government’s decision-making insteadof bargaining with the state employer. Sometrade unions set up investment funds whichbought privatization vouchers, and tried in thisway – as new owners – to guarantee the main-tenance of benefits, especially social benefit s .

H o w e v e r, trade unions in the CEE countrieshave in many cases managed to negotiate locala g reements in privatized enterprises thatinclude provisions on vocational training andjob security. It seems, however, that the jobsecurity provisions negotiated are not alwaysp roperly implemented, and that they fre-quently do not include any compensation ortraining possibilities for periods of temporaryl a y - o ffs. As it happens, it is often more conve-nient for the employer to lay off people tem-porarily than make them redundant: whenworkers are made redundant the employer hasto pay them severance pay, but when they are

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temporarily laid off, employers do not have topay anything. Very often, the workers tem-porarily laid off are not eligible for unemploy-ment benefits or any other social benefits either.

Traditional social benefits still won

Trade unions have all the same managed toinclude some of the traditional social benefitsin collective agreements. In an ILO survey cov-ering five CEE countries, we found that in theCzech Republic and Slovakia workplace child-care is still a common provision, and that inHungary housing provisions are still very com-mon in the collective agreement (Aro and Repo,1997). In most enterprises, some health care isprovided, although such services have gener-ally been eroded. Significantly, over two-thirdsreported that some vocational training is pro-vided by the agreement.

National-level bargaining neededfor shared responsibility

Local bargaining is the dominant level ofindustrial relations in the transition economies,as national agreements gradually decline innumber and coverage. It has the obviousadvantage of being close to the realities of theworkplace where the agreement should beimplemented, and where the specific condi-tions can be taken into account. However, fromthe point of view of solidarity and the broaderinterests at the level of the national economy,social protection and legislation, some nationalcoordinated action is vital. Without nationalbargaining in some form, the enterprises are notdrawn into shared responsibility for the coun-try’s problems.

According to an OECD study, economieswith more centralized or coordinated bargain-ing systems have significantly less earningsinequality compared with more decentralizedones. An examination of changes in collectivebargaining characteristics and changes in eco-nomic performance tentatively suggests thatcountries which moved towards decentraliza-tion or less coordination over the past decadehave experienced larger declines in the employ-ment rate than countries which did not (OECD,1997). An ILO study on four small WesternEuropean countries suggests that well-devel-oped social dialogue supports the positivedevelopment of the labour market (ILO, 1999).

One of the key shortcomings in local bar-gaining is that often the negotiators are notfamiliar with the pre requisites for successful

local bargaining. They are also often unawareof the clauses which are necessary in the agre e-ment in order to implement it. For instance, lessthan half of the respondents in our surveyreplied to the question about the annualturnover or budget of the bargaining unit.Between 9 and 20 per cent of the re s p o n d e n t ssaid that no workers were informed about thefinancial situation of the bargaining unit. Thismeans that trade union re p resentatives nego-tiate basic wages and other conditions withoutany prior information about the economic sit-uation or financial performance of the unit,which is all the more surprising since mostcountries have fairly extensive legislation onworkers’ and trade unions’ right to obtaininformation from employers. On the otherhand, most employers seem to accept collec-tive agreements that do not have a peace clause(i.e. that is intended to prevent measures likestrikes against the collective agreement). Thissupports the view that a new, genuine conceptof bargaining and agreement as a set of mutualobligations and benefits based on confid e n c ehas not yet emerged in transition economies.

Social consequences

Collective bargaining has many social,political and economical consequences. In asocial context, as mentioned earlier, theintended consequence of collective barg a i n i n gas a political institution is a system that re g u-lates conflict, and brings stability to society. Ithelps to ensure that any industrial conflict iskept within limits. In most cases, the moremilitant elements are kept under contro lb y virtue of the fact that the majority of theworkers see an alternative manner of dealingwith disputes.

However, in the transition economies, col-lective bargaining does not serve this functionas well as it could. Strikes and other forms ofcollective action receive a lot of publicity but,as discussed earlier, withholding of labour sel-dom has the intended effect on production and,consequently, it does not bring the intendedresult for the workers. Quite often, strikes arenot targeted against the employer but againstgovernment policy. In regions that are sufferingfrom very severe economic conditions, the onlyway workers are able to show their protest is togo on strike. In many transition countries, anincreasing number of strikes have a tendencyto turn into political demonstrations. Miners’actions in Russia, Ukraine and Romania areexamples of mining communities’ conflict with

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new private enterprises and foreign-ownedenterprises earn much more than workers indomestically owned privatized enterprises orpublicly owned enterprises. In many countries,budget-sector workers earn least.

Foreign anchors for collectivebargaining

The clear aim of all CEE countries and someformer Soviet Republics is to “return toEurope” and become an integral part of West-ern European regional institutions. Their firstsignificant steps on this road were free tradeagreements with the European Union (EU), andtheir final goal is full membership of the EU.Five countries are at the start of their affiliationprocess, expected to be completed early in thenext millennium. Full membership means thatthe candidate countries have to adopt, amongother things, the EU’s social legislation and,more generally, the European social model. Sys-tems of industrial relations form an essentialpart of this model.

Policy conditionality of internationalorganizations

Like the EU, other international organiza-tions also have an important effect on the tran-sition economies. The World Bank and the IMFin particular impose policy conditionalitywhen lending to these countries. As Berglöfpoints out in his working paper, such condi-tionality serves as an outside anchor which canrelieve ex ante and ex post political constraintsin these countries. From the ex ante point ofview, reforms that would not be acceptableeither to the domestic population or by vestedinterests enjoying veto power in the politicalprocess can be made acceptable when they areimposed by international organizations. This isbecause they come “attached” with funding or,in the case of the EU, also with benefits associ-ated with their entry into the EU that helpbuffer the social consequences of reforms. Sim-ilarly, from the ex post point of view, reformreversal becomes more costly since breach ofthe conditionality entails a halt in funding or,in the case of the EU, in the integration process(Berglöf, 1997).

The transition economies expect EU mem-bership to bring them a number of economicbenefits: increased integration would createnew opportunities for trade; improve invest-ment conditions; lower risk levels; and makethe transition economies more directly eligible

for transfers through structural funds, the cohe-sion fund and the Common Agricultural Policy.It would also, with some delay, open WesternEuropean labour markets to their citizens.

Adopting the European social model:Implications and risks

Obviously, the Community would partlyfinance the restructuring of the social system.The history and development of social policy inthe candidate countries have been quite differ-ent from those of the EU. According to the Com-mission report The effects on the Union’s policiesof enlargement to the applicant countries of Centraland Eastern Europe, adoption by these countriesof the EU’s social legislation and, more gener-ally, of the European social model will beaffected by the large number of citizens havingliving standards far below the EU average, bytheir acute social problems, by the low effi-ciency of public administrations and by stillunderdeveloped systems of industrial relations(Aintila and Langewiesche, 1998).

On the other hand, many in EU countries areworried about the risks involved in thisprocess. The process might endanger the inte-gration of social policy in the EU. Enlargementcarries a risk that support for a broad social pol-icy would become weaker in the Union as awhole, especially if the adaptation of the acced-ing countries to the acquired rights were toprove inadequate. Further development ofCommunity policies (equal opportunities forwomen, labour law, coordination of social secu-rity schemes) could be hampered, in particularwhen unanimity will be required for decisions.

Facing the workers every day

Adoption of the EU social legislation hasrequired and will require considerable financialand administrative efforts from the candidatecountries. The burden of trade union represen-tatives in workplaces is much heavier than theburden of other “reformists”, if only becausethey have to face the workers every day. Theyhave to explain to the workers why they getfewer and fewer goods and services with theirwages, why their health care and other serviceshave deteriorated, etc. They are also the personswho have to “sell” to the workers the sacrificesthat are needed for the reforms. And finally,from the point of view of an ordinary worker,they are responsible for any “compromises”they agree to in the collective bargainingprocess.

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A look at the past: The erosionof the Soviet model of collectivebargaining

F rom the 1950s onward, the Soviet-typepolitical and economic regime established itsmodel of labour relations in the CEE countriesas well. As this classic command economy wascharacterized by political, economic and ideo-logical monopoly, its labour relations systemwas not only overcentralized and monolithic,but also dependent on this authoritarian party-State. Formally, negotiations did lead toc o l l e ctive agreements, but not as a result ofautonomous collective action taken at the joint

initiative of the independent social partners.Branch unions were centralized in monolithics t ru c t u res of national confederations under thetutelage of the ruling parties. Union leadersw e re appointed and controlled by the centralpolitical organs. Obligatory union membershipw a s one of the means of political control in soci-ety and in the firms. Nor were employersautonomous actors: they re p resented politicalpower in organizing economic activities andcarrying out central economic decisions at theworkplaces. The function of the unions was totransmit and support the targets of centralizedplanning not only in the field of production, butalso in the allocation of re s o u rces and in the

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Central and Eastern Europe

A twofold objective: Model their countries’labour relations systems on those of the mostdeveloped countries of the European Union,taking into account specific national contexts

Csaba MakóSenior Research Fellow

Centre for Social Conflict ResearchHungarian Academy of Sciences

Budapest

Ágnes SimonyiAssociate Professor

Department of Social PolicyEotvos Lorand University of Sciences

Budapest

In the 1990s, the transformation in the countries of Central and Eastern Europe (CEE) lay at the centreof debate both in politics and in re s e a rch. In the field of labour relations, the parallel tendencies of conver-gence and divergence came once more to the fore (Slomp, 1992; Cimbaliková-Mansfeldová, 1998; Delteil,1998; Martin et al, 1998). Despite the similar political and economic history of this group of countriesafter the Second World Wa r, both policy-makers and re s e a rchers were faced with the very different insti-tutions and traditions which prevailed until 1989 in the labour relations systems of these countries. Theseemingly unifying process of democratization and the shift to a market economy were also to lead even-tually to different solutions in the different CEE countries. In the following article we are going to pre-sent the outcome of this transformation in both its aspects: as results obtained through collective barg a i n i n gbased, on the one hand, on the converging process of democratization and, on the other, those dissimilarelements of the labour relations systems in the CEE countries that obtain due to diverging economic, socialor political traditions or the different practices (economic, employment, privatization, etc.) applied in thetransformation pro c e s s .

redistribution of incomes. Negotiations anda g reements at enterprise and branch levels werederivations of the national and branch-leveleconomic planning and political dire c t i v e s .

Labour conflicts becomenationwide crises

From the foregoing, it is evident that the lackof autonomous actors, of institutions of labourrelations, and the prevalence of dependentunions without an express interest in a repre-sentative role have so far been the main featuresof the uniform model of labour relations in theCEE countries. However, it should be notedthat low political representation of employeesand the dependent role of unions did not auto-matically mean that employees were in a totallysubordinate position: stepped-up industrial-ization accompanied by a chronic manpowershortage ensured for certain employee groupsrelatively strong individual and collective posi-tions in exercising pressure on enterprise man-agement and sometimes even on party officials.Continuous absenteeism, disciplinary prob-lems and restriction of output in the labourprocess were considered to be symptoms ofdiverging interests and indicated a certainautonomy among certain groups in the work-force. These scattered negative signs, cuttingback economic production, often remainedinvisible, but already during the 1950s certainconflicts (as in Berlin in 1954, in Potsdam andBudapest in 1956) were transposed – togetherwith other social and political conflicts – intoa nationwide crisis of the whole political andeconomic system.

Direct workers’ participationand broader scope

The first wave of divergence among thelabour relations systems of the CEE region canbe detected in the two types of political reac-tions to the succession of social, economic andpolitical crises since the late 1950s. In somecountries, the centralized character of collectivebargaining has been reinforced (as in the for-mer German Democratic Republic or in theformer Czechoslovakia since 1968), whiledecentralization of political and economic deci-sion-making enabled trade unions and enter-prise managements to have a more indepen-dent role in collective bargaining (as in Poland,Hungary or Bulgaria during the 1970s). Thefirst signs of articulation of different levels ofcollective bargaining can be traced to this

period. Enterprise-level and branch-level nego-tiations began to have more and more impacton resource allocation and the redistributionprocess as the actors started winning importantrights in the sphere of decision-making and astheir degree of autonomy increased. Manage-ment at enterprise level became responsible forinvestments, technological development, orga-nization, providing incentives and utilizationof labour. At the same time Polish, Hungarianand Bulgarian enterprise-level unions wereofficially considered to be partners in enter-prise-level decisions. In case of conflict theycould even exercise the right of veto grantedthem since the 1970s. In this group of countries,scope for direct participation of employees inissues such as wage distribution within smallergroups, working time arrangements and theallocation of work loads, etc., has been intro-duced and extended.

Continuity of basic institutions

Reforms in certain countries like Poland andHungary have further increased the autonomyof the business organizations by extending thesocial partners’ sphere of action in the economicand human resources strategies of the enter-prises. Such increased economic responsibilityhas led to the further enrichment of their labourrelations systems. In Hungary and Poland,employees participated directly in differentnewly created enterprise-level bodies (enter-prise councils and supervisory councils respec-tively) and in strategic decisions (includingthe election of company directors), significantinvestments and major employment cuts. Evenin the production process various forms oforganizational innovations were introducedsuch as the autonomous brigades in Bulgaria inthe 1980s and economic working associationsin the same period in Hungary. These institu-tions of collective bargaining and employeeparticipation – similar to the self-managementsystem of the former Yugoslavia – emergedafter long decades of cumulative changes andthey seemed to be the basis for further socialdevelopments towards a more autonomoussystem of labour relations at the end of the1980s. In spite of these significant changes insome of the CEE countries up to the late 1980s,the core of the political and economic systemremained intact. The one-party system (or theparty-State) was not and could not have beenquestioned for ideological as well as for inter-national or political reasons. Thus the publicownership structure of these economies has

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prevailed together with the limited autonomyof the labour relations systems. Despite the ero-sion of the CEE regimes, the continuity in thesebasic institutions set limits to any radical trans-formation in the system of labour relations,including the autonomy of the social partnersand the institutions and mechanisms of collec-tive bargaining.

Institutional convergence anddivergence of collective bargainingsystems during the transition process

Since 1989, the pluralist and democraticpolitical system and the market economy basedon private ownership have opened the way forsetting up an autonomous system of labourrelations. This general tendency in the CEEregion obeyed the universal standards laiddown in ILO Conventions and Recommenda-tions and these countries, setting in place mech-anisms of collective bargaining, also tried tobring them into conformity with the socialdimension of the European Union. Foreigndirect investors and multinational companiesalso represent external resources for adaptingto new ways of bargaining.

Much variety in functioningand coverage

In all countries of the region, the funda-mental laws ensure the right of employees tof reedom of association in independent unions,the right of trade unions to collective action,including strikes and the right to collectiveb a rgaining. On the other hand, such rightsmean obligations for employers to negotiate atd i ff e rent levels with unions. The new labourrelations systems in the CEE countries haveb rought about the pluralization of both unionsand employer organizations. At the same time,the membership of unions has radically dimin-ished (by between 20 and 50 per cent) thoughit has still remained at high levels compare dwith Western Europe. The diff e rent sectors ofthe economy according to branches, owner-ship and size, however, show great variety asto the functioning of collective bargaining andthe coverage of collective agreements. Cover-age is wider in those branches where only afew employers of mostly big enterprises dom-inate the sectors and where unions maintainedor re - c reated their positions after the transfor-mation and privatization (as in the energ y,chemical, and mining industries or publica d m i n i s t r a t i o n ) .

No clear directives in legislationfor having agreements respected

Although legislation is designed to pro m o t ecollective bargaining, it is more precise in thedescription of its content and re p resentativity ofthe actors rather than in laying down the meansfor stimulating the partners so as to ensure thatall employers sign and respect the collectivea g reements. Sanctions are either very weak ornon-existent as to non-compliance with labourlegislation or collective agreements on the partof the employer, especially in the new privatesector (Casale, 1997; Mouranche, 1998). Job secu-r i t y, minimum wage and health and safety re g-ulations are fields where the standards agre e da re not always and completely re s p e c t e d .

T h e re is significant diversity in both the“substantive” and “procedural” dimensions ofcollective agreements: in the first, the primaryt a rgets of the bargaining process are wages andemployment conditions; in the second they con-centrate on regulating the relations between thesocial partners and the prevention and settle-ment of labour disputes. Using this two-dimen-sional approach, a few important attempts havebeen made to analyse the state and role of col-lective bargaining in the CEE region (Aro andRepo, 1997; Casale, 1997).

Validity may be extendedto entire sector

In respect of legal regulations governing col-lective bargaining and collective agreements, itis possible to identify both differences and sim-ilarities among the CEE countries. For example,in Hungary and Poland, at the joint demand ofthe social partners signatories to the agreement,the Minister of Labour (or functional equiva-lent) can extend the validity of the collectiveagreement to the entire sector or sub-sector “onconditions that the contracting parties are con-sidered to be representative in that sector orsub-sector” (Casale, 1997). In the Czech Repub-lic, the extension of the national-level Economicand Social Agreement to the employers not par-ticipating in the negotiations is considerablyweakened by their resistance.

As to the content of collective agreements,in one group of countries (Bulgaria, the CzechRepublic and Hungary) legal regulation is verygeneral; in another (Poland, Russia andUkraine) the contents of the collective agree-ments carry more detailed regulations. InPoland and Russia, five or nine areas respec-tively are grouped and recommended, either in

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a “negative” way (Poland) or in a “positive” way(Russia) as areas to be respected during theprocess of enterprise-level bargaining betweenthe social partners.

National-level institutions of collective bar-gaining have been also set up in the form of tri-partite councils between the social partners andthe Governments to discuss and coordinate theirstands concerning economic and social issuesand to make joint proposals in the new democ-ratic parliaments on wages, inflation or a widerange of social welfare issues (from pension andhealth funds to vocational training, from familysupport to taxation). At this level, the social part-ners, the unions and the employers are embod-ied by those considered to be re p resentative. Theprinciple of re p resentativity and its assessmentw e re very much discussed by the social actorsand until now there has been no clear solutionto this problem. For instance, in the case of Hun-g a r y, union re p resentativity is measured by theresults of the elections based on enterprise workscouncils. In Poland, union re p resentativity isdetermined according to the level of collectiveb a rgaining: at national level, unions with at least10 per cent of labour or 500,000 members, and atenterprise-level, unions with a membership of50 per cent of the workforce, are considered tobe re p resentative. Bulgaria resembles the Polishmodel in terms of the two-level distinction, butcriteria for determining re p resentativity in termsof the changing number of grass-roots org a n i-zations and their membership is at the centre offie rce debates.

From minimum-wage fixingto gentlemen’s agreements

The influence of the national-level collec-tive bargaining systems, i.e. of the tripartitebodies, shows diff e rences as to the topicsselected for joint decisions and the issues forconsultations. For example, in Hungary, thenational-level tripartite body not only negoti-ates general economic and social issues but isalso a forum for fixing the national minimumwage. In other countries, as in the case of theCzech Republic, the outcome of national-leveltripartite negotiations is more like a “gentle-men`s agreement” and the function of thisbody is purely consultative.

Two consequences of centralizedagreements

Certain views hold that centralized tripar-tite negotiations are not favourable to the devel-

opment of branch-level action and agreements.Such centralized agreements automaticallyintegrate the branches and leave open somemargins for action at enterprise level. Thisapproach carries two consequences within thelabour relations system: (1) the governmentremains a main actor in national-level bargain-ing; and (2) enterprise-level agreements (eitherthrough “classical” bargaining between unionsand employers or through the participatorymodels of works councils) assume a more andmore important role giving a heterogeneousand fragmented character to the labour rela-tions systems.

Mismatch between bargainingstructure and human resource strategy

In this sense the reluctance of the new pri-vate sector and its employers to engage inhigher-level collective bargaining cannot besimply dismissed as a negative approach butmust be interpreted as a sign that the actualstructure of bargaining is often ill matched withthe economic and human resource strategy ofthe enterprises. In many cases, individual oreven collective informal bargaining might alsobe more promising for important employeegroups and not only more flexible but evenmore stable for their enterprises.

Alongside the differences in the characteris-tics of collective bargaining and collectiveagreements, similarities might also be regis-tered. On the important issue of the recognitionof the social partners, rather similar solutionscan be found in these countries that are basedon the dominance of quantitative methods inmeasuring the representativity of the partners.The rapidly changing social and economicenvironment of the CEE countries explainsanother similarity: the relatively short duration(one or two years) of the collective agreements.

Actors and dynamics

The above phenomenon of divergence andconvergence can be better understood by ananalysis of the actors in the field of labour rela-tions, their past, their future prospects and thedynamics of their relationship. The relationshipbetween the partners in collective bargainingshows certain rather similar problems in theCEE countries as follows:

On the trade union side:• the question of representativity in the case

of pluralistic trade union movements (i.e.

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Poland, Hungary, etc.) has either not yetbeen properly answered or, if so, not in anyacceptable way;

• certain unions had serious political legiti-macy problems at the beginning of the1990s;

• weakness at branch level due to the hetero-geneous organizational structure of theeconomies or various ownership relationswithin the same branch that obstruct tradeunions in their efforts to work out branch-level strategies;

• unions were and are also divided accordingto their former experiences. Some of themfollow their former strategies as businesspartners coming from the traditions of theparty-State. Others follow their confronta-tional model of bargaining based on theirprotest movements since the 1980s.(Mouranche, 1998).

On the employer side:• heterogeneous dimensions, ownership

structures and market strategies that do notcreate common interests among employerswith regard to labour and employmentissues;

• during the privatization process their re l a-tionship with political decision-makers andthe government is a cardinal question for cer-tain business groups; thus the interest gro u p swithin business do not show homogeneitywith respect to the diff e rent sectoral levels.(On the contrary, employers within the samebranches belong to very diff e rent intere s tg roups that do not favour the participationof the former in joint org a n i z a t i o n s . ) ;

• certain employer groups show mistrust ofthe labour and social legislation and of themeasures taken by public institutions tocontrol the agreed norms. Other businessgroups at the same time have very close rela-tions with political decision-makers due tothe special role played by the State in the pri-vatization process and in the banking sectorduring the transformation.

The diff e rent issues in the area of labourrelations and thus of collective bargaining dur-ing the radical transformation period find noeasy parallel with those in the already well-functioning market economies since thedynamics of the processes are rather diff e re n t .In the current transformation period, it has notyet become a question of the “routine” func-

tioning of business but of setting up businessitself: the creation of the partners is on theagenda of social and economic legislation. Thepartners of the trade unions cannot yet beunambiguously identified given the very widerange of problems and their complexity that liewell beyond the responsibility of employers.Even during the intensive codification pro c e s sof the early 1990s during the social dialogueconcerning the social and economic conse-quences of setting up the new marketeconomies, when dealing with welfare issues,the main partners of trade unions were andremained the governments. This fact wasre flected in the creation and functioning of thenational-level tripartite bodies that corre s p o n dto the national-level collective bargaining insti-tution in the CEE countries. There had been thee x p ress political intention to integrate unionsin the transformation process and to neutralizethem with re g a rd to the controversial issues ofeconomic austerity, mass lay-offs, etc., for thesake of social peace (Héthy, 1994, 1995). Itshould also be mentioned that agre e m e n t sbetween employers and the government onbusiness contributions, payroll taxes, healthcontributions, taxes, etc. were also negotiatedand agreed upon in these tripartite councils.Meanwhile, the same tripartite forum was pro-posed to unions and employers as a “classical”collective bargaining institution in such busi-n e s s - related issues as wages or working-timearrangements between these two partners.

At the same time there is a distance betweenthe national and the local level where the lackof branch-level bargaining is noticeable. As ageneral tendency in the CEE countries, andsimilar to the international trend, enterprise-level collective bargaining has been growing inimportance. At first glance, this trend seems tobe the result of similar processes rather thanthe transformation of labour relations. In them a t u re capitalist countries of the EU the samet rend is attributed to the effects of globaliza-tion that re q u i res more flexibility and higherperformance from the individual enterprisesor from the network of enterprises. Businessreactions, including the articulation of the dif-f e rent levels of collective bargaining, areshaped by such forces as the characteristics ofthe political system, the labour market positionof the workforce, the organizational compre-hensiveness of the institutional bodies re p re-senting the interests of the State, their internall e g i t i m a c y, etc. The newly shaped labour re l a-tions system and the business world of the CEEcountries are even more sensitive to the same

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factors. The tendency towards the decliningi n fluence of national and branch-level collec-tive bargaining corresponds to those CEE phe-nomena that show the relative lack of branch-level bargaining and agreements as well as thesometimes contested, sometimes weakenedrole of national-level bargaining. The follow-ing interrelated factors can explain this rathergeneral situation prevailing in the CEE coun-tries at the end of the 1990s:

• low organizational capacity of trade unionsdue to rivalry that results from the lack oforganizational comprehensiveness amongtheir confederations;

• overemphasis on external (national-level/political) legitimacy and less attentionpaid to the continuous search for internallegitimacy by members, on the part of bothtrade unions and employer organizations;

• d i fficulties in identifying the partners in col-lective bargaining, especially on the employ-ers` side at national and branch levels;

• mistrust or “jealousy” of the new politicalforces in the emerging democracies in theregion (with the exception of Poland) whichaim at controlling all segments of the polit-ical arena (that can be motivated by a zero-sum game approach among the social actorsthat can be considered as one of thestrongest legacies of the “monism” of thepolitical regime of the socialist type);

• heterogeneous business structures in themaking with diversified market and humanresource strategies: small and micro enter-prises becoming dominant employers in theCEE region where face-to-face relationsfavour informal bargaining instead of insti-tutionalized collective negotiations; multi-national enterprises carrying out direct

investments representing a “union-unfriendly attitude” while combining orga-nizational and labour-market flexibilitybased on individualized contracts;

• the “dual structure” of enterprise-levellabour relations, as in Hungary and Croatia,may also in the short run challenge the roleof trade unions and collective bargaining.(In Hungary, works councils are often used,especially in foreign-owned enterprises, asa substitute for trade unions.)

Social relations: Outcomes andfashioners of collective bargaining

Since the mid-1990s a few studies havealready been conducted on the workplace influ-ence of collective bargaining and agreements.The social relations between the partners showrather different patterns in the CEE countries(see table 1).

In the research cited, Hungary representsone end of the spectrum where “mutual under-standing and cooperation” characterize therelationship between unions and managementat enterprise level. Poland is located at the otherend where “opposing and conflicting” interests– especially in the case of Solidarnosc – domi-nate the relations between the partners at thelevel of the enterprise. The Czech and SlovakRepublics occupy the middle position betweenHungary and Poland on the “cooperation-con-flict scale” between management and unions.

Good relations, little openconfrontation

Rather similar tendencies were experiencedin another recent survey on management-union relations. Relations between trade

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Table 1. Patterns of the relationship between trade unions and management:A survey in the machine industry (%)

Countries (sample Mutual Mainly cooperating, Mainly opposing, Opposing Difficultof enterprises) under- but sometimes but sometimes and to answer

standing opposing cooperating conflicting

Czech Republic (n = 35) 13.0 53.0 28.0 13.0 3.0Slovakia (n = 35) 14.0 73.0 19.0 14.0 0.0Hungary (n = 379) 50.0 44.0 13.0 10.0 3.0Poland (n = 379)Solidarnosc (n = 98) 14.3 38.1 19.0 28.6 0.0OPZZ (n = 21) 16.7 50.0 22.2 11.1 0.0

Source: Ishikawa (1998), p.16; Kasahara (1998), p.59.

unions and the employers were for the mostpart good in all countries. Cooperation andpartnership dominated the Bulgarian sample.In Hungary, units with “partnership and oppo-sition” had almost as big a share as units with“cooperation and partnership”. In the othercountries (Czech Republic, Poland and Slova-kia), according to the dominant opinion ofemployees, the relations of trade unions withemployers were represented by “both partner-ship and opposition”. It is true that only a tinyminority of respondents (from 2.8 to 6.3 percent) used “open confrontation” to characterizethe social relations between employers andtrade unions. It is worth noting that among Pol-ish, Slovak and Czech employees, the share ofopinions of “open confrontation” is twice ashigh in comparison with Hungary and Bulgaria(Aro and Repo, 1997, p.41).

The gradual process of erosion of the formerlabour relations systems of the 1970s and the1980s and the “traditions” created are reflectedin table 2, which compares the communicationchannels between the social partners in four ofthe CEE countries.

Favours individualized employmentrelations

The exceptionally high proportion of thosewho utilize trade unions as a communicationchannel in Poland re flects the experiencesaccumulated during the recent history of thePolish trade union movement. In Hungary, onthe other hand, the significant role of “infor-mality” in the social relations between enter-prises and the pluralistic stru c t u re of commu-nication channels re flect other types ofexperiences. These features, together with“cooperative” patterns of union-management

relations, are considered as facilitators of newhuman re s o u rce practices favouring individu-alized instead of collective employment re l a-tions in the Hungarian enterprises in compar-ison with other post-socialist enterprises in theCEE re g i o n .

Divergence of interests amongemployee groups

Certain CEE social and economic conditionsare not favourable to collective actions by tradeunions of the kind that may support their standin collective bargaining. The circumstance ofmass unemployment is creating a divergence ofinterests among employee groups. Employeegroups in relatively stable jobs have stronginterests in defending and improving the mar-ket positions of their enterprises. Others in lessprivileged situations or in weak labour marketpositions are afraid of losing their jobs. The phe-nomenon of “double loyalty” (Makó andSimonyi, 1997) can be explained not only interms of the strong cultural patterns of formerdependence and “inertia” (Mouranche, 1998,p.160) but also in terms of the considerablecommitment of employees to keep their enter-prises alive and support their transformationand/or privatization. On the other hand, certainemployer groups too, especially in the new pri-vate enterprises, are fashioning obstacles totrade union presence to hinder the organizationof collective actions.

Concentrate on securing internallegitimacy

T h e re are several practical measures to betaken for increasing the social efficiency of col-lective bargaining in the CEE countries. To con-

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Table 2. Bottom-up communication channels on wage-related issues:a survey in the machine industry (%)

Channels of communication Poland Czech Republic Slovakia Hungary

Trade union 77.6 46.7 47.8 28.6Works council* 10.0 10.0 10.0 28.6Foreman or shop-floor chiefs 23.3 30.0 30.4 15.7Unofficial leaders 10.0 10.0 10.0 14.3Directly or individually by workers 10.0 20.0 13.0 11.4Other 10.0 13.3 18.7 11.4

* Among the so-called “Visegrad countries”, only Hungary incorporated the institution of the “works council” foremployee participation into their industrial relations system.

Source: Yamamura et al. 1996: Business organisation in the transformation process in the post-socialist countries, Sap-poro, Hokkaido University, Slavic Research Centre, Preliminary Research Report, p. 18.

t rol and support the visibility of negotiations,the re q u i rements for the registration of collec-tive agreements should be defined. Once theya re re g i s t e red, their applications can be moni-t o red and they can be sanctioned. Repre s e n t a-tive organizations, both unions and employers,could then concentrate more on methods tos e c u re their internal legitimacy among theirmembers: more intensive cooperation amongtrade union federations where union pluralismp revails could enhance organizational com-p rehensiveness; and more transparency innational-level economic decisions (on mattersrelated to privatization, taxes, credits, publicinvestments, etc.) would also combat the mis-t rust of certain private groups with re g a rd tolabour and social legislation and could stimu-late a common approach on the part ofemployer groups. Reinforcing labour stan-d a rds and finding ways to extend the effects ofcollective bargaining among all employersre q u i re more intensive involvement on the partof the government. Unions, for their part,could further promote branch-level agre e-ments through coordinated dialogue withe m p l o y e r s .

Answers must fulfiltwo objectives

As we have seen, certain problems of col-lective bargaining – concerning the status andrelations between the social partners, sanctionsand obligations and coverage of agreements –a re related to the transition from the monolithicand dependent system of labour relations to apluralist and autonomous one. Others – likethe drop in trade union membership, the legit-imacy of re p resentative organizations amongtheir members, the growing importance ofenterprise-level bargaining, the corporatisttendencies under attack, etc. – are connectedwith global tendencies in modern marketeconomies. These problems together are urg-ing governments and legislators as well asemployers and trade unions to find answersthat can fulfil a twofold objective: modellingtheir labour relations systems on those of themost developed countries of the Euro p e a nUnion; and at the same time ensuring that theyc o r respond to the specificities of their national,social, economic and political contexts.

Each context might be diff e rent, either onaccount of the new ownership relations fol-lowing on from the transformation of the pub-lic sector according to the diff e rent patterns ofprivatization, the diff e rent share of small

enterprises within business and the diff e re n tweight of foreign direct investments, or just onaccount of diff e rences in labour market situa-tions. Unified unionism or union pluralismalso diff e rentiates the labour relations systemsand the institutions and pro c e d u res of collec-tive bargaining in the CEE region. The politi-cal approaches and ideologies of the politicalactors concerning their relations with thelabour relations systems in general and withunions in particular also vary.

On the alert: Danger signals

The recent years of radical transformationhave not yet enabled researchers to assess com-pletely either the lasting effects of the earlierlabour relations systems or the results of adapt-ing the procedures and institutions of collectivebargaining of the developed capitalist countriesto these systems. More intensive and system-atic comparative research in the coming yearswill show how imitation and “institutionaltransplants” mixed with “genuine solutions”and local traditions of the labour relations sys-tems are integrated into the political and eco-nomic systems of the CEE countries. Thereremains the danger that mechanical copyingand formal adaptation of collective bargainingmodels would merely serve once again toobscure the real processes and would fail to cre-ate transparency in labour relations. Thus inad-equate or poor social control over labour andemployment issues could again block theorganic economic development of the countriesin question.

References

Aro, P.; Repo, P. 1997. Trade union experiences in collective bar-gaining in Central Europe, Geneva, ILO.

Casale, P. 1997. Collective bargaining and the law in Central andEastern Europe: Some comparative issues, Budapest, ILOCentral European Team, Working Paper, No. 20.

Cimbaliková, M.; Mansfeldová, Z. 1998. “Les relations pro-fessionnelles dans la république tchèque, slovaque etl’ancienne Tchécoslovaquie”, La Revue de l’IRES, Paris,pp. 105-38.

Delteil, V. 1998. “Mutation systématiques de l’entrepriseetdu salariat: le cas de la Hongrie et la Bulgarie”, Revued’Études Comparative Est-Ouest, Vol. 29, No. 2, Paris, June,pp. 109-42.

Héthy, L. 1994. “Tripartism in Eastern Europe”, in Hymanand Ferner (eds.), New Frontiers in European IndustrialRelations, Blackwell, New York.

—. 1995. “Anatomy of a tripartite experience: Attemptedsocial and economic agreement in Hungary”, Interna-tional Labour Review, Vol. 134, No. 3, ILO, Geneva.

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Ishikawa, A. 1998. Organisation and activity of trade unionsin Central and Eastern Europe, Slavic Research Centre,Occasional Papers on Changes in the Slavic-EurasianWorld, March, No. 64, Sapporo, Hokkaido University,Japan.

Kasahara, K. 1998. Introduction of market economy and indus-trial ielations in Poland, Slavic Research Centre, Occa-sional Papers on Changes in the Slavic-Eurasian World,March, No. 64, Sapporo, Hokkaido University.

Makó, C.; Simonyi, Á. 1997. “Inheritance, imitation and gen-uine solutions. Institution Building in Hungarian labourrelations”, Europe-Asia Studies, Vol. 49, No.2, pp. 221-43.

Martin, R.; Ishikawa, A.; Makó, Cs.; Consoli, F. (eds.). 1998.Workers, firms and unions. Industrial relations in transition,Peter Lang, Frankfurt am Main.

Mouranche, S. 1998. “L`émergence problématique des re l a-tions professionnelles”, Une Nouvelle Europe Centrale,Frybes, M. (ed.), Paris, Editions la Découverte, pp. 152-69.

Slomp, H. 1992. Labour relations in Europe. Ahistory of issuesand developments, Westport CT, Greenwood.

Yamamura, M.; Ishikawa, A.; Makó, Cs.; Ellingstad, M. 1996.Business organisation in the transformation process in the post-socialist countries, Preliminary re s e a rch report, No. 18,Hokkaido University – Slavic Research Centre ,S a p p o ro .

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Conventions

Freedom of Association and Protection of theRight to Organise Convention, 1948 (No.87)

Protection of Wages Convention, 1949 (No. 95)Right to Organize and Collective Bargaining

Convention, 1949 (No. 98)Equal Remuneration Convention, 1951

(No. 100)Minimum Wage Fixing Convention, 1970

(No. 131)Workers’ Representatives Convention, 1971

(No. 135)Paid Educational Leave Convention, 1974

(No. 140)Rural Workers’ Organisations Convention,

1975 (No. 141)Labour Relations (Public Service) Convention,

1978 (No. 151)Collective Bargaining Convention, 1981

(No. 154)

Recommendations

Consultation (Industrial and National Levels)Recommendation, 1960 (No. 113)

Communications within the Undertaking Rec-ommendation, 1967 (No. 129)

Examination of Grievances Recommendation,1967 (No. 130)

Minimum Wage Fixing Recommendation, 1970(No. 135)

Workers’ Representatives Recommendation,1971 (No. 143)

Paid Educational Leave Recommendation,1974 (No. 148)

Rural Workers’ Organisations Recommenda-tion, 1975 (No. 149)

Labour Relations (Public Service) Recommen-dation, 1978 (No. 159)

Collective Bargaining Recommendation, 1981(No. 163)

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Annex

List of relevant ILO instruments on the rightto organize and collectively bargain