Report in which the committee requests to be kept informed of development - Report No 338, November 2005

Case No 2350 (Republic of Moldova) - Complaint date: 28-MAY-04 - Closed

Allegations: The complainant alleges that, by not allowing membership contributions to employers’ organizations to be fiscally deductible costs, the Government violated Conventions Nos. 87 and 98

1074. The complaint is set out in a communication by the National Confederation of Employers of the Republic of Moldova (CNPM) dated 28 May 2004.

1. 1075. The Committee has been obliged to postpone its examination of the case on two occasions [see 335th and 336th Reports, paras. 5 and 6, respectively]. At its meeting in May-June 2005 [see 337th Report, para. 10], the Committee issued an urgent appeal to the Government, indicating that, in accordance with the procedural rules set out in paragraph 17 of its 127th Report, approved by the Governing Body, it could present a report on the substance of the case at its next meeting even if the information or observations requested had not been received in due time. No reply from the Government has been received so far.
2. 1076. The Republic of Moldova has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainant’s allegations

1. 1077. In its communication dated 28 May 2004, the National Confederation of Employers of the Republic of Moldova (CNPM) alleged that, by not allowing membership contributions to employers’ organizations to be considered as fiscally deductible costs, the Government limited employers’ organizations’ activities and development.
2. 1078. In particular, the complainant alleged that contrary to Article 1 of the Declaration of Philadelphia, which stated that the representatives of workers and employers, enjoying equal status with those of governments, join with them on free discussions and democratic decisions with a view to promotion of the common welfare, employers’ organizations had no equal status with workers’ organizations. In fact, contrary to workers’ organizations in the Republic of Moldova, which benefited from a legally imposed contribution of up to 0.15 per cent of the paid enterprise wage fund, the membership fee paid by employers to their own organizations was not considered as a cost item. As a result of this situation, only those employers that made profit could afford the payment of the membership contribution and those who were making losses could not. The CNPM considered that this situation was not favourable for a stable development of employers’ organizations and was contrary to Articles 3 and 8 of Convention No. 87. They also considered that the fact that employers’ organizations could not collect contributions from their members was also contrary to Article 4 of Convention No. 98 as employers did not have enough resources to hire experts needed for collective bargaining and for development of relevant services to members, including training, information sharing, etc. The complainant indicated that, for about two years, the CNPM and the Government had tried, with ILO assistance, to find a satisfactory solution, but the Parliament had refused once again a proposal from the Government to amend the Fiscal Code so as to provide that the membership contributions to employers’ organizations were fiscally deductible costs.
3. 1079. The CNPM referred to the following ILO texts: paragraph 24 of the conclusions of the Sixth ILO European Regional Meeting of December 2000, which stated: “In the light of the resolution adopted at the Warsaw Regional Conference (September 1995), governments that have not yet taken the necessary measures are reminded that they should facilitate by all means (including tax deductions) policies that ease expansion of membership in employers’ and workers’ organizations” and to the resolution aiming at ensuring the independence and facilitating the financing of employers’ and workers’ organizations” adopted by the Fifth ILO European Regional Conference (Warsaw, September 1995), and especially its paragraph (c), by which the Conference invited the governments of European countries to “consider appropriate measures that would enable their laws, regulations and practice, including tax regulations, to allow enterprises and workers to account for their subscriptions to their respective organizations as cost items”.

B. The Committee’s conclusions

1. 1080. The Committee regrets that, despite the time that has elapsed since the complaint was first presented, the Government has not replied to any of the complainant’s allegations, although it has been invited on several occasions, including by means of an urgent appeal, to present its comments and observations on the case. The Committee urgently requests the Government to be more cooperative in the future.
2. 1081. Under these circumstances, and in accordance with the applicable rules of procedure [see 127th Report, para. 17, approved by the Governing Body at its 184th Session], the Committee finds itself obliged to present a report on the substance of the case without the benefit of the information which it had hoped to receive from the Government.
3. 1082. The Committee recalls that the purpose of the whole procedure established by the International Labour Organization for the examination of allegations of violations of freedom of association is to promote respect for this freedom in law and in fact. The Committee remains confident that, if the procedure protects governments from unreasonable accusations, governments on their side will recognize the importance of formulating for objective examination detailed replies concerning allegations made against them [see the First Report, para. 31].
4. 1083. The Committee notes that the complainant in this case alleged that by not allowing membership contributions to employers’ organizations to be fiscally deductible costs, the Government has limited activities and development of employers’ organizations and therefore violated Conventions Nos. 87 and 98. The Committee further notes that the complainant claimed that employers’ and workers’ organizations did not have an equal status in this respect as trade unions benefited from a legally imposed contribution of up to 0.15 per cent of the paid enterprise wage fund.
5. 1084. It appears to the Committee that there might be inequality between the fiscal treatment of trade union dues and membership dues of employers’ organizations. The Committee considers that, particularly in countries with a transition economy, special measures, including tax deductions, should be considered in order to ease the development of employers’ and workers’ organizations. Noting the resolution aiming at ensuring the independence and facilitating the financing of employers’ and workers’ organizations adopted by the Fifth ILO European Regional Conference (Warsaw, September 1995) and paragraph 24 of the conclusions of the Sixth ILO European Regional Meeting (Geneva, December 2000), the Committee invites the Government to take the necessary measures so as to review the Fiscal Code in full consultation with the social partners concerned, with the aim of finding a mutually agreeable solution to the issue of fiscal treatment of membership fees paid by employers to their organizations, including considering the introduction of tax regulation that would enable the deductibility of membership fees paid by employers to their organizations should there indeed be discrimination in fiscal treatment found.

The Committee's recommendations

1. 1085. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee regrets that, despite the time that has elapsed since the complaint was first presented, the Government has not replied to any of the complainant’s allegations. The Committee strongly urges the Government to be more cooperative in the future.
   • (b) It appears to the Committee that there might be inequality between the fiscal treatment of trade union dues and membership dues of employers’ organizations. The Committee invites the Government to take the necessary measures to review the Fiscal Code in full consultation with the social partners concerned, with the aim of finding a mutually agreeable solution to the issue of fiscal treatment of membership fees paid by employers to their organizations, including considering the introduction of tax regulation that would enable the deductibility of membership fees paid by employers to their organizations should there indeed be discrimination in fiscal treatment found.