Interim Report - Report No 292, March 1994

Case No 1731 (Peru) - Complaint date: 26-AUG-93 - Closed

1. 761. The complaint is contained in a communication from the National Federation of Workers of the National Ports Enterprise (FENTENAPU) dated 26 August 1993. FENTENAPU sent additional allegations in a communication dated 4 October 1993. The Government sent its observations on the case in communications dated 15 November 1993 and 24 February 1994.
2. 762. Peru has ratified the Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87), as well as the Right to Organize and Collective Bargaining Convention, 1949 (No. 98).

A. The complainant's allegations

1. 763. In its communication of 26 August 1993, the National Federation of Workers of the National Ports Enterprise (FENTENAPU) alleges that the current round of collective bargaining for fiscal year 1993 has been seriously affected by legal provisions handed down by the Government which limit the negotiating powers of the state-owned Peruvian National Ports Enterprise (ENAPU PERU) which, in accordance with national legislation, is subject to labour regulations governing the private sector. The position assumed by the enterprise and government authorities is hampering the free and independent development of these negotiations, and is contrary to the principle of good faith which should prevail.
2. 764. In specific terms, the complainant points out that section 23 of the Act on the 1993 Public Sector Budget (Legislative Decree No. 25986) establishes that in the context of collective bargaining, state-owned enterprises covered by Act No. 24948 can only propose and agree to clauses which comply with the guidelines issued by the Ministry of Finance, upon recommendation by the National Development Corporation (CONADE), the state body responsible for public enterprise policy. These standards and their regulatory provisions require state-owned enterprises, under the personal responsibility of the corresponding authorities, to adhere in negotiations to the positions stipulated by CONADE, with no possibility of modifying them in any way whatsoever.
3. 765. The complainant alleges that collective bargaining for fiscal year 1993, aimed at signing a collective agreement valid for 1993 beginning on 1 January to replace the previous one which expired on 31 December 1992, began with a submission by FENTENAPU of a proposed collective agreement on 30 November 1992, within the deadline prescribed by law. FENTENAPU adds that direct negotiations with the ENAPU PERU enterprise began on 11 February 1993, and that by 23 August 1993 ENAPU PERU had submitted no proposal, leading to an unjustifiable delay of nine months in the collective bargaining process.
4. 766. The complainant points out that ENAPU PERU subsequently submitted a proposal, approved by the Ministry of Finance, which was limited to granting a small wage increase and a non-pensionable bonus, valid as of 1 July 1993, and that these proposals violate national legislation. As regards the date on which authorized increases were to be granted (1 July 1993), the complainant first alleges that the proposed date violates paragraph (d) of section 43 of the Act on Collective Labour Relations (Legislative Decree No. 25593), which provides that collective agreements will enter into force on the day following the expiry of the previous collective agreement. Consequently, with the previous agreement having expired on 31 December 1992, the current agreement should have entered into force on 1 January 1993. The complainant further alleges that were this proposal to be accepted, workers at the enterprise would be deprived of all their benefits for the period between January and June 1993. FENTENAPU adds that owing to the above-mentioned obstacles and delays, and the impending deadline for submitting the proposed collective agreement for 1994, it will be difficult to negotiate the 1994 agreement if the 1993 collective agreement does not come into force.
5. 767. In its communication of 4 October 1993, FENTENAPU further alleges that by means of a Supreme Decree issued on 3 September 1992, the Government declared ENAPU PERU to be an enterprise providing essential services; the implication is that more than 50 per cent of the staff (as designated by trade unions) would have to continue working were a strike to be called. Otherwise, the strike would be declared illegal or else the designated workers who had not remained on the job would be dismissed; this effectively makes it impossible to call a strike in response to delays in concluding collective agreements. The complainant also points out that, in accordance with Legislative Decree No. 25593 (section 67), should there be no agreement through direct negotiation or conciliation concerning essential public services, as would be the case of ENAPU PERU, the dispute must be submitted to compulsory arbitration under a tripartite board composed of three arbitrators, two of whom are appointed by the Ministry of Labour; this composition would distort the impartiality of such a board.
6. 768. Lastly, FENTENAPU alleges that Legislative Decree No. 25921, published on 3 December 1992, permits employers to suspend or modify work conditions and economic benefits, and to lay off workers temporarily. The complainant adds that section 2(b) of this Decree provides that in case workers refuse to engage in direct negotiation, or fail to arrive at an agreement by this method, the employer may appeal to the Ministry of Labour to rule on the merits of the issue in question within two weeks, after which the request will be considered as approved in the absence of a decision by the labour authority. The complainant further adds that this legal provision conflicts with Legislative Decree No. 25593, inasmuch as it allows employers to avoid negotiation or to delay the signing of collective labour agreements.

C. The Government's reply

1. 769. In its communication of 15 November 1993 the Government points out that within the framework of a global economic stabilization programme, a rigorous plan entailing austerity and the rationalization of public expenditure is being implemented so as to alleviate the economic problems which the country faces. Consequently, section 23 of Act No. 25986, on the 1993 Central Government Budget, establishes that state-owned enterprises referred to in Act No. 24948, on State Entrepreneurial Activity, whose workers are subject to private sector labour legislation can only propose and agree to clauses which comply with the guidelines issued by the National Development Corporation (CONADE), in accordance with directives issued by the Ministry of Finance.
2. 770. The Government points out that the National Ports Enterprise of Peru (ENAPU PERU) is an enterprise whose economic and financial results have not been completely satisfactory, thus contributing along with most state-owned enterprises to the fiscal deficit. The Government has therefore been obliged to implement an austerity plan for all such enterprises within the framework of a policy of equitable and uniform treatment aimed at overall recovery. Accordingly, CONADE's duties include the supervision and evaluation of the financial resources of state-owned enterprises; this is not to be construed as interference in union affairs, but rather an effort by the Government to set general guidelines for the pay policy of these enterprises.
3. 771. The Government explains that the guidelines with which state-owned enterprises must comply in collective bargaining (section 23 of Legislative Decree No. 25986) are not in violation of Convention No. 98, inasmuch as workers' organizations are able to accept or reject an enterprise's proposals, and that national legislation provides for mechanisms so that negotiations will be submitted to arbitration should parties fail to arrive at an agreement. Lastly, the Government points out that by adopting the Act on Collective Labour Relations (Legislative Decree No. 25593), it has confirmed the fundamental rights of workers such as the right to organize, to bargain collectively and to strike, which are essentially intended to promote resolutions to labour disputes without state interference.
4. 772. As regards the alleged restrictions on the right to strike resulting from the fact that the Government included ENAPU PERU in the category of enterprises providing essential services, the Government mentions that, taking into account the primary role of port activities on the national territory, the National Ports Enterprise S.A. (ENAPU) was included in the list of essential services under Supreme Decree No. 075-92-PCM, in order to ensure transportation and the normal operation of national and international trade activities, which affect the economy of the country. The Government adds that limitations on the right to strike, where it affects services which are essential for life in society are just and reasonable, since this right could not possibly be considered as unrestricted, where its exercise would seriously affect or endanger other goods which enjoy legal protection.
5. 773. As to the allegation concerning Decree Act No. 25921, the Government states that this decree establishes a procedure which employers must observe when they wish to suspend or modify economic benefits or employment conditions, or to suspend the work relationship. It adds that this provision is an incentive for employers in view of the economic situation, in order to achieve higher production and improved productivity, which will have positive effects on the economy of the country and the well-being of the workers.

C. The Committee's conclusions

1. 774. The Committee notes that the allegations in this case refer to limitations in the exercise of collective bargaining and the right to strike by FENTENAPU, arising from various legal provisions (Act. No. 25986, Legislative Decree No. 25921, and Supreme Decree No. 075-92), and from certain measures taken by the National Ports Enterprise of Peru (ENAPU PERU).
2. 775. As regards the requirement for prior approval by the National Development Corporation (CONADE) of the clauses of collective bargaining agreements in state-owned enterprises (Act No. 25986), the Committee notes that within the framework of a global economic stabilization programme, the Government is engaged in a rigorous austerity and rationalization plan with respect to public expenditure, in order to alleviate the difficult economic situation the country is faced with and to reduce the fiscal deficit to which most state-owned enterprises contribute, including ENAPU PERU, whose economic and financial results have not been completely satisfactory. Consequently, section 23 of Act No. 25986 limits proposals by state-owned enterprises covered by Act No. 24948 (Act on State Entrepreneurial Activity) to those proposed by CONADE in accordance with directives from the Ministry of Finance.
3. 776. Accordingly, the Committee refers to its conclusions in a similar case (287th Report, Case No. 1617 (Ecuador), paras. 63 and 64):
   • The Committee is aware that collective bargaining in the public sector calls for verification of the available resources in the various public bodies or undertakings, that such resources are dependent upon state budgets and that the period of duration of collective agreements in the public sector does not always coincide with the duration of the State Budgetary Law - a situation which can give rise to difficulties ... . The Committee ... refers to the following principle formulated by the Committee of Experts when it examined a similar situation (see Report III (Part 4A), 1989 and 1991, pp. 469 and 465 respectively in the English version): The Committee considers that in so far as the income of public enterprises and bodies depends on state budgets, it would not be objectionable - after wide discussion and consultation between the concerned employers' and employees' organizations in a system having the confidence of the parties - for wage ceilings to be fixed in state budgetary laws, and that neither would it be a matter for criticism that the Ministry of Finance prepare a report prior to the commencement of collective bargaining with a view to ensuring respect of such ceilings.
4. 777. The Committee notes that section 23 of Legislative Decree No. 25986 allows enterprises covered by Act No. 24948 - including ENAPA PERU - only to propose clauses in collective bargaining agreements which are approved by the National Development Corporation (CONADE) in accordance with standards adopted by the Ministry of Finance. In the view of the Committee, irrespective of any opinion expressed by CONADE, the bargaining parties should be free to reach an agreement of their own choosing; if this is not possible, the Committee considers that any exercise by the public authorities of their prerogatives in financial matters, which hampers the free negotiation of collective agreements, is incompatible with the principle of freedom of collective bargaining.
5. 778. In the light of the above, the Committee urges the Government to provide for a mechanism which ensures that, as regards the collective bargaining process in state-owned enterprises (those covered by Act No. 24948 on State Entrepreneurial Activity), both the trade union organizations and the employers are adequately consulted and may express their points of view to the National Development Corporation (CONADE) (the authority responsible for the wage policy of state-owned enterprises).
6. 779. As regards the allegation concerning the signing of the collective agreement submitted by FENTENAPU for 1993, the Committee regrets that ENAPU PERU waited approximately nine months before submitting a proposal, which, as pointed out by the complainant, entered into force on 1 July 1993, or six months later than should have been the case according to section 43(b) of the Act on Collective Labour Relations (Legislative Decree No. 25593), which establishes that "the collective agreement shall enter into force on the day following the expiry of the previous agreement," thus depriving workers at the enterprise of the corresponding benefits between January and June 1993. The Committee trusts that in the future suitable measures will be promptly taken to avoid such delays, and that the date of entry into force of the enterprise's proposal will be brought into line with section 43(b) of the above Act.
7. 780. As regards the allegation concerning the limitations on the exercise of the right to strike, which followed from the classification of ENAPU PERU as an enterprise providing essential services, the Government mentions that, taking into account the primary role of port activities on the national territory, the National Ports Enterprise S.A. (ENAPU) was included in the list of essential services under Supreme Decree No. 075-92-PCM, in order to ensure transportation and the normal operation of national and international trade activities, which affect the economy of the country. The Committee notes first that, in accordance with sections 1 and 2 of Supreme Decree No. 075-92, services provided by the National Ports Enterprise (ENAPU) are considered to be essential public services coming under the provisions of section 83(h) of Act No. 25593; secondly, that section 83(h) of this Act defines essential public services as those of a strategic nature as well as those entailing national defence or security.
8. 781. In this connection, the Committee has pointed out that the right to strike can be restricted or even prohibited only in essential services in the strict sense of the term (namely, services whose interruption could endanger the life, personal safety or health of the whole or part of the population). (See Digest of decisions and principles of the Freedom of Association Committee of the Governing Body, 3rd edition, 1985, para. 394.) In the opinion of the Committee, while the services provided by the National Ports Enterprise (ENAPU) do not constitute essential services as defined above, they are an important public service in which a minimum service could be requested in case of strike. The Committee therefore considers that legislation should contain more precise provisions as to the conditions in which such minimum service should be maintained.
9. 782. As regards the allegation concerning the submission of ENAPU PERU to compulsory arbitration under a tripartite board comprised of three arbitrators, two of which are appointed by the Ministry of Labour (section 67 of Legislative Decree No. 25593), the Government has not sent its observations. The Committee notes that section 67 of this Decree provides that in the case of public services, if there is no agreement through direct negotiation or conciliation, the dispute will be submitted to compulsory arbitration under a tripartite board composed of one arbitrator appointed by each party and a chairman appointed by the labour authority.
10. 783. In this respect, the Committee has previously pointed out that resorting to compulsory arbitration in the case of a strike should only be applied to essential services in the strict sense of the term (286th Report, Case No. 1620 (Colombia), para. 384).
11. 784. As regards the allegation concerning Legislative Decree No. 25921 (which authorizes employers to suspend or modify work conditions, allowing them to strengthen their hand to avoid negotiation or to delay the signing of collective labour agreements), the Committee notes that section 1 of Legislative Decree No. 25921, published on 3 December 1992, establishes the procedure that employers should follow in order to modify, suspend or substitute economic benefits and work conditions (paragraph (b)), and to lay off workers temporarily (paragraph (c)). Section 2(b), of this Decree also points out that if workers should reject direct negotiation or refuse to take part in such a procedure, or fail to arrive at an agreement by this method, the employer may appeal to the Ministry of Labour to rule on the merits of the issue in question within two weeks, after which the request will be granted in the absence of a decision by the labour authority.
12. 785. In this respect, the Committee considers that a legal provision which allows the employer to modify unilaterally the content of signed collective agreements, or to require that they be renegotiated, is contrary to the principles of collective bargaining.

The Committee's recommendations

1. 786. In the light of its foregoing interim conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee urges the Government to provide for a mechanism which ensures that, as regards the collective bargaining process in state-owned enterprises (covered by Act No. 24948 on State Entrepreneurial Activity), both the trade union organizations and the employers are adequately consulted and may express their points of view to the National Development Corporation (CONADE) (the authority responsible for the wage policy of state-owned enterprises).
   • (b) As regards ENAPU PERU's nine-month delay in submitting a proposal, the Committee trusts that suitable measures will be taken as soon as possible to avoid such delays, and that the date of entry into force of the enterprise's proposal will be brought into line with the provisions of section 43(b) of Legislative Decree No. 25593.
   • (c) The Committee requests the Government to take steps to modify legislation concerning essential and minimum services, in particular by defining more clearly how the latter should be maintained and as regards the employers' unilateral decision to change conditions of employment, in order to bring the legislation into line with the principles of freedom of association and collective bargaining.
   • (d) The Committee refers the legislative aspects of the case to the Committee of Experts on the Application of Conventions and Recommendations.