Definitive Report - Report No 287, June 1993

Case No 1617 (Ecuador) - Complaint date: 01-OCT-91 - Closed

1. 51. The Committee examined this case at its November 1992 meeting, when it presented an interim report (see 284th Report, paras. 989 to 1010, approved by the Governing Body at its 254th Session (November 1992)). The Government submitted its observations in a communication dated 19 February 1993.
2. 52. Ecuador has ratified the Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87) and the Right to Organize and Collective Bargaining Convention, 1949 (No. 98).

A. Previous examination of the case

1. 53. When the Committee last examined this case a number of allegations remained pending, with the complainant organizations objecting to certain sections of Act No. 133 (amending the Labour Code), promulgated on 21 November 1991, and of Executive Decree No. 2260 of 13 March 1991, which they considered to be in violation of Conventions Nos. 87 and 98. Specifically, this concerned the following provisions:
2. - section 39(1), second paragraph (Act No. 133):
3. In institutions, bodies and enterprises of the public sector or of those in the private sector that perform social or public functions in which there is no works council, the workers subject to the Labour Code shall establish a single central committee, of national, regional, provincial or sectional scope as the case may be, composed of more than 50 per cent of the workers concerned. In any case, the number of their representatives may not exceed 15 principal and alternate representatives, and these shall produce evidence of their capacity to represent the will of the said majority through the submission of the document in which shall appear the full names of the workers, their signatures or fingerprints, the number of their identity card or citizenship document, and particulars of the workplace.
4. - section 68 (Act No. 133), amending section 503 of the Labour Code (which stipulated that ten days must elapse between the declaration and the commencement of a strike) to read as follows:
5. Declaration of a strike in institutions and enterprises performing services of social or public interest. In the enterprises and institutions of the public sector, specified in section 383 of the Organic Act concerning financial administration and supervision of the Central Bank of Ecuador and the National Development Bank, work may not be suspended before the expiry of 20 days after the strike was declared.
6. A like interval must elapse between the strike declaration and the suspension of work in electricity supply undertakings, in drinking water supply undertakings, enterprises distributing gas and other fuels, hotels, private banks, savings institutions, institutions providing credit for housing, financial agencies, transport undertakings, food supply undertakings, hospitals, clinics, nursing homes and, in general, institutions providing health care and public welfare services, livestock farming and other agricultural undertakings carrying on activities which, by their nature, demand constant attention.
7. The 20-day time-limit begins to run as from the date on which the employer was notified of the declaration to strike.
8. - section 1 of Decree No. 2260, which provides the following:
9. Preliminary opinion. It is the duty of the National Secretariat for Administrative Development to issue the report on draft collective agreements which are to be concluded between or amended by the public sector bodies or institutions referred to in section 3.3 of the Organic Law on Financial Administration and Supervision, with the exception of provincial councils and municipalities. This opinion will be given prior to the reports which by law must be issued by the State Procurator-General and the Ministry of Finance.
10. The opinion issued by the National Secretariat for Administrative Development shall refer to aspects relating to the development of the public administration and its human resources and to the analysis of cost factors, in accordance with the norms and parameters established by the present decree.
11. It shall be prohibited to sign a collective agreement in the public sector in the absence of the opinions referred to in the previous paragraph.
12. 54. The Committee formulated the following conclusions concerning these allegations (see 284th Report, para. 1009):
13. As regards section 68 of Act No. 133 (time-limit of the notice of the declaration of a strike in institutions and enterprises that perform services of "social or public" interest that exceed the notion of essential services in the strict sense of the term) and section 39(1), second paragraph (which provides that collective bargaining must be conducted at a specified territorial level, that at least 50 per cent of the workers must be represented and that an ad hoc negotiating committee - designated as the "single central committee" - must be established), the Committee notes that the Government's reply does not contain full comments. The Committee notes furthermore that the Government has not replied on the allegations concerning Executive Decree No. 2260. Accordingly, the Committee requests the Government to send full comments on these allegations.
14. B. The Government's reply
15. 55. In its communication of 19 February 1993 the Government states that section 39(1), second paragraph, of Act No. 133 extends to the public sector the principles relating to collective bargaining in the private sector which were already contained in the Labour Code, whereby in the absence of a trade union organization accounting for 50 per cent of the workers (a "works council", in the legal terminology), an ad hoc committee (known as the "single central committee") shall be set up to attend to the needs of all of the trade union organizations and branches of activity, in order to avoid situations in which there are collective agreements establishing discriminatory or mutually contradictory economic or working conditions in the same public institution or undertaking (where the staff is several times more numerous than in a private undertaking).
16. 56. The Government adds that the increase in the period of notice from ten to 20 days that must be given prior to the commencement of strike action in the case of services that are of social or public interest is intended to give the parties to the conflict more time in which to negotiate and to achieve results, specifically in sectors which are vital to the country's development and where any disruption causes very serious harm to the population. The Government explains that the question is that of a 20-day period of notice, and not of a prohibition of the right to strike.
17. 57. As regards the preliminary opinion of the National Secretariat for Administrative Development on draft collective agreements in the public sector (section 1 of Decree No. 2260), the Government states that, in accordance with the Constitution and the legislation in force, the investment and expenditure of financial resources by public sector institutions are governed by very detailed regulations, since the funds in question belong to the State and to the whole community, rather than to those who administer, manage or represent a given public institution. In this context, all expenditures by a public institution must meet the specific conditions that are laid down in the corresponding legislation. Therefore, to the extent that a collective agreement entails formal commitments to pay out from the institution's budget specific sums on dates or at intervals laid down in the collective agreement itself, it is subject to the supervision and verification on the availability and destination of the resources that are stipulated in the corresponding legislation, including the State Budgetary Law and Decree No. 2260.
18. 58. The Government states that although the private sector is not subject to this legislation, it is obvious that any enterprise which enters into negotiations with its workers will carry out a check on its available resources prior to accepting financial obligations under a collective agreement. It takes no more than common sense to understand that when it comes to expenditures, investments, human resource management and so on, any undertaking, whether public or private, needs to follow standards or procedures which both rationalize and establish general parameters for economic expenditures, the ceiling for which is always specified in the approved annual budget. By analysing the provisions contained in Decree No. 2260, it is possible to determine the scope of specific regulations governing public expenditure. Thus, the final paragraph of section 1 of the Decree stipulates that the opinion issued by the National Secretariat for Administrative Development shall refer to aspects relating to the development of the public administration and its human resources and to the analysis of cost factors, in accordance with the norms and parameters established by the present decree.
19. 59. The Government emphasizes the importance, when reviewing collective agreements, of cost studies, balance sheets and forecasts of the institution in question, and points out that Decree No. 2260 does not violate the provisions of Convention No. 98. On the contrary, the Government affirms that the application of the standards of public law to the internal procedures of public institutions which conclude collective agreements with their workers always serves to guarantee the full observance of every aspect - that is, economic, administrative, managerial and so on - of the commitments assumed by the institution under the terms of these agreements. They therefore encourage collective bargaining as an appropriate mechanism for determining working conditions.

C. The Committee's conclusions

1. 60. As regards section 39(1), second paragraph, of Act No. 133, the Committee takes note of the Government's explanations and, in particular, of the fact that this provision, which relates to collective bargaining in the public sector, merely provides that, when in a public institution or undertaking there are several trade union organizations none of which covers 50 per cent of the workers, an ad hoc committee ("single central committee") shall be established with representatives from the various trade union organizations in order to ensure that at least 50 per cent of the workers are represented. The Committee notes, however, that the legislation does not contain any provision which provides for the possibility of collective bargaining when trade union organizations cover less than 50 per cent of the workers. The Committee requests the Government to take the necessary measures to ensure that the legislation recognizes, in this hypothesis, the collective bargaining rights of trade union organizations, at least on behalf of their own members.
2. 61. As regards section 68 of Act No. 133, which amends section 503 of the Labour Code in such a way as to increase the period of notice to be given prior to the commencement of strike action from ten to 20 days, the Committee notes that, according to the Government, the increase in the period of notice applies solely to services of social or public interest and is intended to give the parties to the conflict more time to negotiate and to achieve results. In this respect, the Committee recalls that, in conformity with its principles, "the obligation to give prior notice to the employer before calling a strike may be considered acceptable", provided that the notice is reasonable (see Digest of decisions and principles of the Freedom of Association Committee, 3rd edition, 1985, paras. 377 and 381). The Committee therefore considers that as regards the provision concerning services of social or public interest that is objected to by the complainant organization, the requirement that a 20-day period of notice be given does not undermine the principles of freedom of association.
3. 62. Finally, as regards the requirement that draft collective agreements in the public sector must be accompanied by a preliminary opinion issued by the National Secretariat for Administrative Development (section 1 of Decree No. 2260), the Committee notes that the Government bases that requirement on the need to verify the available resources (given that economic expenditures have as their ceiling the approved annual budget) and on the need to take account in collective bargaining not only of the costs and balance sheets of the institution in question, but also of its projections. The application of these principles also guarantees, in the view of the Government, that the collective agreements concluded within a sector are fully observed.
4. 63. 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 observes that in the present case the complainant organization objects to the fact that the verification of expenditures that would be necessitated by a draft collective agreement, were the parties to sign it, is not carried out by the public institution or undertaking involved in its negotiation, but by the National Secretariat for Administrative Development, which is responsible for issuing a preliminary opinion. In the view of the Committee, it should not be excluded that this body might also formulate recommendations in line with Government economic policy or seek to ensure that the collective bargaining process does not give rise to any discrimination in the working conditions of the employees in different public institutions or undertakings.
5. 64. In view of the fact that the Committee has not had occasion to examine allegations of this nature in the past, it 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 wages 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.
   • In the opinion of this Committee, notwithstanding any opinion submitted by the National Secretariat for Administrative Development, the parties to collective bargaining should be able to conclude an agreement freely; if this were not the case, the Committee would draw the Government's attention to the principle that "... the exercise of financial powers by the public authorities in a manner that prevents compliance with collective agreements already entered into by public bodies is not consistent with the principles of free collective bargaining" (Digest, op. cit., para. 640).
6. 65. With this in mind, the Committee requests the Government to provide for a mechanism which ensures that, in the collective bargaining process in the public sector, both trade union organizations and the employers and their associations are consulted and may express their points of view to the National Secretariat for Administrative Development (the authority responsible for assessing the financial consequences of draft collective agreements).

The Committee's recommendations

1. 66. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee requests the Government to take the necessary measures to ensure that the legislation recognizes, in public sector enterprises and bodies, the collective bargaining rights of trade union organizations which cover less than 50 per cent of the workers, at least on behalf of their own members.
   • (b) The Committee requests the Government to provide for a mechanism which ensures that, as regards the collective bargaining process in the public sector, both the trade union organizations and the employers and their associations are consulted and may express their points of view to the National Secretariat for Administrative Development (the authority responsible for assessing the financial consequences of draft collective agreements).