Observation (CEACR) - adopted 2004, published 93rd ILC session (2005)

Minimum Wage Fixing Convention, 1970 (No. 131) - Uruguay (Ratification: 1977)

The Committee notes the Government’s report and the explanations provided in reply to its previous comments.

The Committee notes the adoption of Decree No. 255 dated 22 July 2004, which increased as from 1 July 2004 the minimum wage at 1,310 pesos per month for all workers except for rural workers, domestic workers and sheep-shearers. It also notes the adoption of the Decree dated 3 August 2004, which readjusted as from 1 July 2004 the monthly and daily minimum wage rates for agricultural workers by occupational category and also set the monthly and daily rates of the board and lodging allowance. Following on its previous observation concerning the real value of such minimum wage rates in terms of purchasing power and their capacity to satisfy the basic needs of workers and their families, the Committee feels obliged to reiterate its request for statistical information on the evolution of the national minimum wage in recent years as compared to the evolution of other economic indicators such as the inflation rate or the consumer price index. The Committee stresses once again that when minimum rates of pay are systematically left to lose most of their value so that they ultimately bear no relationship with the real needs of the workers, minimum wage fixing is in fact reduced to a mere formality devoid of any substance. Moreover, the Committee requests the Government to indicate whether the latest increases in the national minimum wage rates have been the subject of prior consultations with the social partners, and, if so, to specify the employers’ and workers’ organizations consulted and the institutional framework within which such consultations have taken place.

In addition, the Committee notes the Government’s indication that the national minimum wage is not used as a threshold of a decent wage level but rather as a reference for the calculation of numerous benefits payable under the social security regime, such as pensions, family allowances and unemployment benefits. In this connection, the Committee reminds the Government that the primary function of the minimum wage system envisaged in the Convention is to serve as a measure of social protection and to overcome poverty by ensuring a minimum living wage especially for the low-paid, unskilled workers. Therefore, minimum rates of pay that represent only a fraction of the real needs of workers and their families, whatever their subsidiary importance in calculating certain benefits may be, can hardly fit the concept and the rationale of a minimum wage as this arises from the Convention. The Committee accordingly requests the Government to indicate the measures it intends to take to ensure that the national minimum wage fulfils a meaningful role in social policy, which implies that it should not be allowed to fall below a socially acceptable "subsistence level" and that it should maintain its purchasing power in relation to a basic basket of essential consumer goods.

The Committee is encouraged that the Government, with the technical assistance of the Office, currently considers the possibility of dissociating the determination of the minimum wage level from the calculation of the various social security entitlements. It hopes that the Government will take full advantage of the expert advice of the ILO specialists in this regard and that a time-bound programme of action for the establishment of an institutionalized minimum wage-fixing mechanism based on genuine, direct and broad consultations with the social partners will be announced in the very near future.

[The Government is asked to reply in detail to the present comments in 2005.]