REPRESENTATION (article 24) - REPUBLIC OF MOLDOVA - C095 - 2000

General Federation of Trade Unions of the Republica of Moldova

Closed

Report of the Committee set up to examine the representation alleging non-observance by the Republica of Moldova of the Protection of Wages Convention, 1949, (No. 95), made under article 24 of the ILO Constitution by the General Federation of Trade Unions of the Republica of Moldova

Decision

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

Complaint Procedure

1. First Supplementary Report: Report of the Committee set up to examine the representation alleging non-observance bythe Republic of Moldova of the Protection of Wages Convention, 1949 (No. 95), made under article 24 of the ILO Constitution bythe General Federation of Trade Unions ofthe Republic of Moldova
2. 1. By letters dated 13 May 1999 and 15 February 2000, the General Federation of Trade Unions of the Republic of Moldova, referring to article 24 of the ILO Constitution, addressed a representation to the Office alleging non-observance by the Republic of Moldova of the Protection of Wages Convention, 1949 (No. 95).
3. 2. The representation concerns a Convention to which the Republic of Moldova is a party and which is in force for it. (Endnote 1)
4. 3. The provisions of the Constitution of the International Labour Organization concerning the submission of representations are as follows:
5. Article 24
6. (Representations concerning the application of a Convention)
7. In the event of any representation being made to the International Labour Office by an industrial association of employers or of workers that any of the Members has failed to secure in any respect the effective observance within its jurisdiction of any Convention to which it is a party, the Governing Body may communicate this representation to the government against which it is made, and may invite that government to make such statement on the subject as it may think fit.
8. Article 25
9. (Possibility of publishing the representation)
10. If no statement is received within a reasonable time from the government in question, or if the statement when received is not deemed to be satisfactory by the Governing Body, the latter shall have the right to publish the representation and the statement, if any, made in reply to it.
11. 4. The procedure to be followed in the case of representations is governed by the revised Standing Orders adopted by the Governing Body at its 212th Session in March 1980.(Endnote 2)
12. 5. In accordance with articles 1 and 2, paragraph 1, of the Standing Orders, the Director-General communicated the representation to the Government of the Republic of Moldova and brought it before the Officers of the Governing Body.
13. 6. At its 276th Session (November 1999) and on the recommendation of its Officers, the Governing Body decided that the representation was receivable.(Endnote 3) It set up a committee to examine the representation, composed of Mr. Milan Majek (Government member, Slovakia) as Chairperson, Ms. Lucia Sasso-Mazzufferi (Employer member) and Mr. Richard Falbr (Worker member).
14. 7. In accordance with article 4, paragraph 1, of the Standing Orders, the Committee invited the Government to send its observations on the representation before 15 February 2000.
15. 8. In two letters received on 15 February and 28 March 2000, the Government communicated its observations on the representation. The Committee met in Geneva on 8 June 2000 and adopted its report. Examination of the representation
16. A. Allegations by the complainant organization
17. 9. In its communication, the General Federation of Trade Unions of the Republic of Moldova alleged the failure of the Government to take the necessary measures in order to bring national legislation and practice into line with the provisions of Convention No. 95 and the absence of a legal, institutionalized machinery capable of ensuring compliance with applicable rules and regulations concerning wage protection.
18. 10. More concretely, the complainant organization asserts that, in violation of Article 12, paragraph 1, of Convention No. 95 which provides that wages shall be paid regularly and also in contravention of article 102 of the Labour Code and article 19 of the Wages Act that contain similar provisions, the delay in payment of wages, ranging from six months to more than a year, affected as of May 1999 around 100,000 workers in most branches of the national economy. On 1 January 1999, wage arrears in all sectors of the national economy totalled 638.2 million lei while the volume of arrears in pensions and allowances was 360 million lei. Wage arrears have been constantly on the increase soaring from 16 million lei in 1994 to 227 million in 1996 and more than 362 million in 1998. On numerous occasions in 1997 and 1998 proposals were submitted to Parliament and to the Government calling for a revision of existing legislation with a view to determining which wages and other compulsory payments should be settled as a matter of priority.
19. 11. The General Federation of Trade Unions of the Republic of Moldova also denounces the widespread practice among the majority of employers of substituting alcoholic beverages and tobacco products for wages in flagrant violation of Article 4, paragraph 1, of the Convention. It adds that, despite several petitions and appeals to the President of the Republic, the Parliament and the Government to take corrective action, the situation remains unchanged. Trade unions have militated for a government organ to be seized of this problem but they have only obtained promises in reply. The General Federation of Trade Unions has led a number of protest initiatives, with a national demonstration bringing together as many as 40,000 workers.
20. 12. In its letter of 15 February 2000, the complainant organization provided up-to-date figures concerning the wage arrears as at 1 January 2000. According to those figures, the total amount of non-paid wages to workers stood at 552 million lei, that is 86.5 million less than in January 1999, while the arrears in pensions and allowances dropped by 60 million lei and now stood at 300.4 million.
21. B. The Government's observations
22. 13. In its communication, the Government states that the problem of delays and non-payment of wages is a result of the poor state of the national economy and that the situation has sharply deteriorated as from early 1999 due to extreme economic difficulties experienced in the country. It recalls, in this respect, the first report on the application of Convention No. 95 covering the period from August 1997 to August 1998, where it indicated that several economic actors, both public and private, did not comply with their obligation for prompt payment of wages on account of the severe financial crisis and that wage arrears exceeded one to two months.
23. 14. The Government points out that, given the worsening of the situation in 1999, special efforts were made throughout the year to remedy the situation and find a solution to the problem of wage arrears. The Government refers, in this connection, to the Memorandum of Understanding signed on 23 April 1999 between the Government and the General Federation of Trade Unions setting out the terms and conditions for the settlement of claims put forward by the trade unions, including those concerning the pay-off of wage dues. In addition, specific tables for the clearing off of wage arrears have been developed, the observance of which is closely monitored on a monthly basis. As a result, the overall amount of wage arrears has been reduced from 638.6 million lei in January 1999 to 552.1 million in January 2000, that is a 13.5 per cent decrease. The volume of wage arrears fell in most economic sectors with the exception of the manufacturing industry, the transport industry, and the public health sector.
24. 15. With respect to the point raised in the representation concerning the substitution of wages by tobacco and alcohol, the Government refers to the national collective agreement concluded on 20 March 1998 between the Government, the National Confederation of Employers and the General Federation of Trade Unions which provides for the possibility of partial payment (not exceeding 50 per cent) of wages in kind with the exception of alcoholic products and narcotic substances. In 1998 payment in kind did not represent, on the average, more than 13.2 per cent of a worker's wage, this figure falling to 12.9 per cent in 1999. No cases have been reported of partial payment of wages in the form of narcotics, and the few isolated cases of payment in the form of liquors of low alcoholic content should not be deemed contrary to the provision of Article 4 of the Convention. However, the Government recognized the need to adopt additional measures for the regulation of wage payment in kind.
25. 16. With reference to the principle of payment of wages at regular intervals, as reflected in Article 12 of Convention No. 95 but also in article 102 of the Labour Code and article 19, section 1, of the Wages Act, the Government recalls Parliamentary Decree No. 435-XIII of 19 April 1995 concerning the exclusive use of 50 per cent of all financial yield of production for the payment of wages - a measure which the Government was able to apply until 1 January 1999. A new Wages Bill to amend the Wages Act is currently under preparation in consultation with the competent services of the ILO; the revised text contains provisions designed to resolve the problem of wage arrears through the introduction of a mechanism designed to compensate for the losses in wages whenever the payment is delayed for more than one calendar month. 17. As regards the allegation that no action was taken against those employers who infringed the provisions of the Convention, the Government states that, according to article 41 of the Code on Administrative Offences of 29 March 1985, the deliberate misdeeds on the part of persons responsible for the payment of wages, pensions, scholarships, or other allowances of a permanent character are punishable with a fine which could reach a sum equivalent to 75 wages; the application of that sanction falls within the jurisdiction of national courts and tribunals.
26. 18. By way of conclusion, the Government indicates that the reform process of the supervisory machinery for the application of labour laws was initiated in 1999 and that the restructuring effort was expected to lead ultimately to the creation of a Labour Inspectorate within the Ministry of Labour, Social Protection and Family for the purpose of controlling the application of national labour legislation, including the rules and regulations relative to wage protection. In another related development, in April 1999 the concept for the elaboration of a system of social dialogue was approved, while in August 1999 a Council for the implementation of this concept was established with the participation of representatives from the General Federation of Trade Unions. Finally, in the Government's view, the law establishing the Economic and Social Council, once adopted by the Parliament, could help to resolve a number of issues making it possible to surmount the current crisis and bring socio-economic stability in the country.
27. 19. In its letter dated 28 March 2000, the Government adds that in January 2000 wage arrears were further reduced from 552.1 million lei to 506.6 million lei, or a decrease of 8.2 per cent. The Government points out, however, that considering the actual economic situation of the country, it is not in a position to settle immediately all the wage arrears which have been accumulated over the years by several preceding governments, and appeals to the General Federation of Trade Unions to address this issue objectively.
28. C. The Committee's conclusions
29. 20. The Committee notes that the issues raised by the General Federation of Trade Unions in the representation mainly concern the application of Article 12, paragraph 1, and Article 4, paragraph 1, of Convention No. 95 which lay down the principle of regular payment of wages and the prohibition of payment of wages in the form of alcoholic beverages or noxious drugs. Failure to ensure the regular payment of wages
30. 21. Article 12 of Convention No. 95 reads as follows:
31. Article 12
32. 1. Wages shall be paid regularly. Except where other appropriate arrangements exist which ensure the payment of wages at regular intervals, the intervals for the payment of wages shall be prescribed by national laws or regulations or fixed by collective agreement or arbitration award.
33. 2. (...) 22. With respect to the above-cited provision, the Committee recalls that a State that ratifies the Convention is required not only to apply it scrupulously to workers whose wages are financed directly from the State's budget, but also to ensure its application by local authorities and private enterprises.
34. 23. The Committee notes that the Government does not argue about the existence of an acute problem in the country regarding wage arrears, and that it confirms the statistics quoted by the General Federation of Trade Unions. The complainant organization and the Government are also in agreement that there has recently been a decrease, for the first time, in the total amount of wage arrears after several years of constant progression, even though the reversal was not observed in all sectors of the economy. In addition, the requirement of Article 12, paragraph 1, of the Convention on the periodic payment of wages appears to have been adequately incorporated into national legislation, in particular, as reflected in article 102 of the Labour Code and article 19 of the Wages Act. The representation, therefore, seems to focus on the Government's failure to enforce effectively the relevant provisions of national legislation since compliance with the obligations arising out of an international labour Convention presupposes not only the enactment of appropriate laws but also their thorough implementation in practice.
35. 24. The Committee notes that the Government refers to various measures to tackle the problem of wage arrears, including Parliamentary Decree No. 435-XIII of 1995, the new Bill on Wages currently under preparation, and the 1999 Memorandum of Understanding signed with the General Federation of Trade Unions setting up schedules to pay the wage arrears. The Committee notes also with interest the latest statistics, not contested by the General Federation of Trade Unions, which show for the first time in recent years a 13.5 per cent decrease of the total volume of wage arrears. In view, however, of the overall amount of delayed or unpaid wages which continues to stand considerably high, the Committee considers that the gravity of the situation remains basically undiminished, and therefore, is bound to conclude that the Government has not secured the effective observance of the relevant provision of the Convention.
36. 25. As concerns the allegation that there are little or no legal consequences for those failing to honour their obligation for prompt payment of wages, the Committee recalls that, as has been consistently pointed out in the past by the Committee of Experts on the Application of Conventions and Recommendations or by Governing Body Committees established to examine representations of a similar nature, the effective application of the Convention comprises three important aspects: effective supervision, imposition of appropriate penalties to prevent and punish infringements, and steps to make good the prejudice suffered.
37. 26. With respect to supervision, the Committee notes the Government's indication that it currently pursues the reforms initiated in 1999 with a view to setting up more effective mechanisms for the application of labour laws, including the creation of a Labour Inspectorate within the Ministry of Labour, Social Protection and Family. The Committee can only hope that a Labour Inspectorate meeting the highest standards of efficiency and independence will be established in the near future in order to put an end to past practices of laxity and inadequate controls and enhance compliance with labour legislation.
38. 27. As regards sanctions, the Committee notes that the Government merely refers to article 41 of the Code on Administrative Offences which provides for fines to punish non-payment of wages, and limits itself to a summary statement to the effect that the judiciary looks into such cases and awards damages as prescribed by the law. The Government does not consider it pertinent to supply detailed information on the enforcement of the provision referred to above, such as the number of cases investigated, prosecuted and convicted with details on the penalty actually imposed, or on any decision made by courts of law or other tribunals concerning the question of regular payment of wages. Under the circumstances, it would be difficult for the Committee to express a definitive view on the efficiency of enforcement measures; however, the system of penalties in place does not appear so far to have exerted, in any appreciable degree, a deterrent effect with regard to law infringements, and thus has only marginally contributed to the attempt to curb the phenomenon of wage arrears. The Committee recommends that penalties commensurate to the scale of the problem be prescribed and scrupulously enforced by the Government in conformity with Article 15(c) of the Convention.
39. 28. As to measures to make good the prejudice suffered, the Committee has not been provided with detailed information as to the exact number of workers affected, or the average amounts and duration of the delay in wage payment. Notwithstanding the recent decline in the overall volume of wage arrears, the Committee urges the Government to pursue and intensify its efforts to ensure the rapid recovery of their wages by the workers concerned. The Committee recalls, in this connection, that the Government's responsibility to redress as swiftly as possible the situation of wage arrears is not in any way limited to state enterprises but applies equally to establishments of the private sector. Finally, the Committee wishes to stress that the fact that previous governments may have failed to contain or remedy the problem of unpaid wages does not absolve the present Government of the Republic of Moldova from its responsibility to rectify the situation in the swiftest manner possible, and, in so doing, honour its international obligations arising from the acceptance of the Convention. Partial payment of wages in the form of alcoholic drinks and tobacco 29. Article 4 of Convention No. 95 reads as follows: Article 4
40. 1. National laws or regulations, collective agreements or arbitration awards may authorise the partial payment of wages in the form of allowances in kind in industries or occupations in which payment in the form of such allowances is customary or desirable because of the nature of the industry or occupation concerned; the payment of wages in the form of liquor of high alcoholic content or of noxious drugs shall not be permitted in any circumstances. 2. (...)
41. 30. The Committee notes the Government's statement that the national collective agreement expressly authorizes partial payment of wages in the form of allowances in kind. The Committee also notes the figures quoted by the Government showing a slight decrease in the average proportion of a worker's wage being paid in kind. Moreover, the Committee notes with special concern that, while the Government does not contest the existence of a situation whereby wages are paid in the form of alcoholic drinks and tobacco, it refers to "a few isolated cases", arguing that such limited practice involving liquors with a low alcoholic content would not be in contradiction with the provisions of Article 4 of the Convention. In contrast, according to the General Federation of Trade Unions, the practice of offering alcohol and tobacco in lieu of money would be extensively used by the majority of employers. Given the contradictory statements it is difficult for the Committee to evaluate the true extent of the problem. However, the extent to which the trade union movement has mobilized on this issue would tend to indicate that the problem has assumed certain proportions.
42. 31. The Committee considers it essential to point out, in this respect, the exceptional nature of the practice provided for in Article 4 of the Convention, and to recall the strict requirements which such practice should meet: (a) specific authorization by means of national laws or regulations, collective agreement or arbitration award; (b) an authorization can only relate to partial payment of wages in the form of allowances in kind; (c) an authorization may only be envisaged for those industries or occupations in which wage payment in kind is customary or desirable because of the nature of the industry or occupation concerned; (d) once authorized, wage payment in kind has to be closely supervised with a view to ensuring that the allowances offered are appropriate and useful for the worker and his/her family as well as reasonably valued.
43. 32. The Committee does not need to insist that Article 4 of the Convention may only be understood as laying down a comprehensive prohibition against replacing salaries and other contractual remuneration by harmful products such as alcoholic beverages, narcotic substances or tobacco. The Committee recalls, in this respect, that the Committee of Experts on the Application of Conventions and Recommendations has consistently read into the provision of Article 4, paragraph 1, of the Convention a clear proscription of wage payment in the form of alcoholic beverages or noxious drugs of any sort and in any circumstances. Moreover, the Committee is of the opinion that the exclusion of liquors and noxious drugs from permissible allowances in kind should be read in conjunction with the provision of Article 4, paragraph 2, of the Convention which limits payment in kind to those allowances which are appropriate and beneficial to the worker and his family.
44. 33. The Committee also wishes to draw attention to the collective agreement of 20 March 1998 referred to by the Government in its reply which excludes all "alcoholic products and narcotics" without distinction from any arrangement authorizing partial payment of wages in kind, and to article 18, paragraph 4, of the Wages Act of 25 February 1993 which reads in identical terms. The Committee expresses the hope that the Government will strictly apply the provisions of those texts and enforce a comprehensive prohibition against wage payment in the form of alcoholic drinks and tobacco. Furthermore, as regards the collective agreement of 20 March 1998 which provides for the possibility of paying as much as 50 per cent of wages in kind, the Committee recalls the comments of the Committee of Experts on the Application of Conventions and Recommendations with respect to similar situations in other countries and trusts that the Government will ensure that the above proportion is reasonable.
45. 34. The Committee can only speculate about the extent to which the recent decline in wage arrears may also be due to payments in the form of alcohol and tobacco, but wishes to draw the Government's attention, in this respect, to the fact that the measures taken for the reimbursement of overdue wages should not result in the violation of other provisions of the Convention. While noting the Government's positive statement that it recognizes the need to better regulate the partial payment of wages in kind (the same was acknowledged in the first report on the application of the Convention), the Committee urges the Government to take all appropriate steps in order to determine the scale on which alcohol and tobacco are used as substitutes for workers' remuneration in cash before adopting and enforcing those measures necessary to ensure compliance with the obligations arising from the Convention.
46. 35. The Committee considers it essential that the Committee of Experts on the Application of Conventions and Recommendations continue to ensure the follow-up of the issues raised in the present representation. It therefore requests the Government to communicate, in the report that is due under article 22 of the ILO Constitution for the next session of the Committee of Experts, all the relevant information on the measures taken or envisaged with reference to the above conclusions and on the consequent development of the situation, including details as to the number of workers affected, the amount of wages owed, the number and type of establishments and enterprises concerned, the nature and amount of penalties imposed for non-payment of wages, the extent to which the practice of paying wages in the form of alcoholic beverages or tobacco products persists and the steps taken for its suppression.
47. Recommendations of the Committee
48. 36. The Committee recommends that the Governing Body -
49. (a) approve this report and, in particular, in the light of the conclusions in paragraphs 20 to 35 of the report, invite the Government to supply detailed information on all the measures taken or envisaged with a view to:
50. (i) ensuring the regular payment of wages and on the consequent development of the situation, and in particular on:
51. - the number of workers affected, the amount of the wages owed, the average delay in the payment of wages, and the number and nature of the establishments and enterprises concerned;
52. - the number of punishable offences observed regarding the regular payment of wages, and the number and nature of penalties imposed, including any relevant court decisions;
53. - the ongoing legislative reforms to improve the supervision of the application of labour laws, including the establishment of a Labour Inspectorate;
54. - progress in the discussions with the most representative workers' organizations to agree on a yearly schedule for the payment of wage arrears and the extent to which such schedule is observed in practice, including information as to the extent to which wage arrears are paid off in kind;
55. (ii) putting an end to the practice of partial payment of wages in the form of alcoholic drinks and tobacco products or any other allowance in kind which would be in violation of Convention No. 95, and in particular on:
56. - the number of workers affected, the number and nature of the establishments and enterprises reported to practise partial payment in kind involving alcoholic drinks or tobacco products and the scale of such practices;
57. - the nature of institutions or agencies responsible for the enforcement of relevant laws and regulations, the number of complaints investigated or infringements observed and the nature of sanctions imposed;
58. - any initiatives for stricter and more effective regulation of the payment of wages in the form of allowances in kind, and on the consequent evolution of the situation;
59. (b) declare closed the procedure initiated before the Governing Body as a result of the representation made by the General Federation of Trade Unions of the Republic of Moldova concerning the application by the Republic of Moldova of the Protection of Wages Convention, 1949 (No. 95). Endnote 1
60. Convention No. 95, ratified on 12 August 1996.
61. Endnote 2
62. See Official Bulletin, Vol. LXIV, 1981, Series A, No. 1, pp. 93-95.
63. Endnote 3
64. GB.276/17/2, para. 5.