Report in which the committee requests to be kept informed of development - Report No 349, March 2008

Case No 2575 (Mauritius) - Complaint date: 21-JUN-07 - Closed

Allegations: The complainant alleges that the process leading to the setting up of a new bargaining structure, called the National Pay Council/Committee (NPC) by the Government, as well as this body’s composition, mode of designation of representatives and objectives, violate Conventions Nos 87 and 98

1. 900. The complaint is contained in a communication from the General Workers’ Federation (GWF) dated 21 June 2007.
2. 901. The Government sent its observations in a communication dated 3 August 2007.
3. 902. Mauritius 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. 903. In its communication dated 21 June 2007, the General Workers’ Federation (GWF) alleges that the Government of Mauritius decided to set up a National Pay Council/Committee (NPC) on 9 April 2007, thus abolishing the National Tripartite Committee on Salary Compensation (the National Tripartite Committee), a tripartite bargaining structure which had existed for more than 30 years, and was entrusted with determining the salary compensation granted to workers on the basis of the annual rise in the rate of inflation as indicated in the consumer price index. In sum, according to the complainant, the setting up of the NPC is contrary to Conventions Nos 87 and 98 in that: (i) it has not been subject to any proper consultation and on the contrary, it has been the outcome of authoritative, manipulative and abusive processes; (ii) the new bargaining structure will cease to grant an annual salary compensation to compensate workers for the loss of purchasing power based on the inflation rate and will subsume the annual salary compensation to a so-called “yearly minimum increase” where the inflation rate is only one out of four other criteria – namely, “national ability to pay”, “national productivity and competitiveness” and “employment and unemployment rate”; the direct impact of such a fundamental change is a reduction in the annual salary compensation granted to workers and an overall salary reduction, thus undermining the capacity of workers to earn a decent wage and decent living standard; (iii) the composition and the mode of designation of union representatives in the new bargaining structure has been carried out so as to favour the employers’ side (ten representatives – five from the employers’ side and five from the Government as public employer); this gives undue power for the Government to interfere in the nomination of trade union representatives and designate a non-independent chairperson, with the aim of reducing drastically the salary compensation; (iv) when the totality of the union movement pointed out the above issues to the authority, the latter chose to nominate five of its political agents as trade union representatives in the new bargaining structure and imposed a drastic reduction in the rate of salary compensation granted to workers for 2007.
2. 904. The complainant then provides a brief explanation of the wage determination mechanism of Mauritius and the function of the National Tripartite Committee which was entrusted with wage determination prior to the introduction of the NPC. The National Tripartite Committee, instituted in 1977, was the outcome of intense negotiations and struggles between unions, Government and employers at that time. The National Tripartite Committee, composed of representatives of Government, employers and trade unions, had acted as a quasi-bargaining structure and recommended the quantum of salary compensation based solely on increases in the consumer price index for 30 years until 2006. In that framework, the Government limited its role to that of an arbitrator between employers and employees and subsequently enacted legislation known as the Additional Remuneration Act, to give statutory power to the recommendations of the National Tripartite Committee. Thus, it enforced the payment of a salary compensation which is also referred to as a “cost of living allowance” to all workers, without any sectoral distinction.
3. 905. In Mauritius, there is no national statutory minimum wage. Collective bargaining structures and processes are quasi non-existent due to the legislative framework imposed by the Industrial Relations Act (IRA). On the other hand, there are different state-controlled bodies to determine minimum wages and working conditions in different sectors. There is the Pay Research Bureau which conducts periodic revision for public and parastatal workers. The National Remuneration Board establishes the different minimum wages and working conditions for different areas of the private sector, after taking into consideration factors such as productivity, capacity of employers to pay and other relevant economic factors. These different minima for private sector workers are given statutory power by the regulations made by the Minister under the IRA. There are actually 30 different remuneration orders proclaimed by the minister establishing 30 different wage minima for 30 industrial undertakings, covering more than 80 per cent of private sector employees. The difference between the statutory minimum of one sector and the other is relatively large. For example, the statutory minimum of a factory worker of the free zone sector, the largest economic sector of the country is Rs2,525.55 and that of another factory worker is Rs4,205.761. The difference between the public and private sectors is also considerable.
4. 906. The aim of the annual salary compensation for the last 30 years was to re-establish part of the loss in purchasing power due to the rise of the inflation rate, of ALL workers, of ALL work sectors. Thus the 30 remuneration orders governing minimum wages in the private and public sectors were adjusted annually after the enactment of the Additional Remuneration Act, which itself was a product of negotiations carried out through the National Tripartite Committee. The newly established NPC, with its new criteria, is undermining the annual adjustment of different minima for different work sectors to the detriment of workers.
5. 907. The complainants hold the view that the new system will reduce the quantum of compensation by around 50 per cent. For example, a worker with a basic salary of Rs6,000 was granted less than 50 per cent compensation in 2007. The percentage of compensation for public sector workers has been further reduced. An average public sector worker of the education sector was paid 2.6 per cent compensation in 2006, when the inflation rate was 5.1 per cent and 2.8 per cent compensation in 2007, when the rate of inflation was 10.7 per cent for the financial year 2006–07.
6. 908. During the last 30 years, the ceiling upon which the inflation rate was applied has always been on an upward trend. It was only last year that the Government unilaterally operated a drastic reversal of this tendency. The institution of the NPC aims at institutionalizing this unilateral reversal.
7. 909. The complainant stresses the fact that the salary compensation exercise has helped enormously to maintain social peace and cohesion by protecting workers against rising inflation and allowing them to recover some of the windfall gains derived by major economic sectors due to the systematic national currency depreciation.
8. 910. The complainant then focuses on what it describes as unilateral, manipulative and abusive processes by the Government. According to the complainant, during recent years, employers had on several occasions pressured to dismantle the National Tripartite Committee and promoted its replacement by another body that would take into account notions like productivity, capacity to pay of employers, etc. Nonetheless, no government and political parties had acceded to this demand so far. The complainant adds that the issue never figured in the political manifesto of the governing party in the last general elections, which took place in July 2005, so that there is no democratic mandate for such an intervention.
9. 911. Despite this, in May 2006, during the 2006 meeting of the National Tripartite Committee, the Minister of Finance took the unilateral decision to abolish it and impose a new mode of calculation of salary compensation which halved the average compensation granted to workers for year 2006–07, the rate of inflation being 5 per cent and compensation granted being 2.5 per cent. The Minister announced that the difference would have to be negotiated at sectoral level. The reality is that more than 95 per cent of workers did not get any compensation above the 2.5 per cent granted by the Government. One month later, the Minister of Finance unilaterally announced the abolition of the National Tripartite Committee. In the budget speech 2006–07, he stated the following: “... we are abolishing the present Tripartite mechanism for wage compensation and setting up a National Wage Council [note: which was to become the NPC]. This new organization will retain the spirit of tripartism and will ensure that the level of wages and compensation are linked to productivity and to capacity to pay”.
10. 912. According to the complainant, since the day of this unilateral announcement, the Government and the Ministry of Labour and Industrial Relations have adopted unilateral, abusive and even manipulative processes to impose the NPC, thus proceeding to a drastic alteration of the annual wage adjustment mechanism.
11. 913. In this regard, the complainant provides the following chronology of events. After the Minister of Finance budget statement, the Cabinet of Ministers endorsed two decisions on labour laws and the NPC at its deliberations on 28 July and 4 August 2006 respectively. On 28 July, Cabinet “agreed to the setting up of a ministerial committee to review the proposals made and provide policy directions with regard to further changes that would need to be brought to the new legal framework which is to replace the Industrial Relations Act, to make it more attuned to the new economic environment”. On 4 August 2006, the Cabinet of Ministers instituted a High-Powered Committee, chaired by the Deputy Prime Minister, and Minister of Public Infrastructure, Land Transport and Shipping, in view of “setting up of the National Wages Council [which was to become the NPC], based on the recommendations of Professor Lim Chong Yah’s report [i.e. an earlier report rejected by previous governments] with a view to determining wage increases ...”.
12. 914. In an official correspondence sent by the Ministry of Labour and Industrial Relations to all confederations and federations on 29 August 2006, in the midst of national outcry against the budget of the Minister of Finance, mention was made to the setting up of the ministerial committee decided on 28 July 2006 but not to the decision of 4 August 2007 on setting up the “National Wages Council”. The letter only mentioned that the objectives of the ministerial committee were “to consider proposals made to provide policy decisions for the new legal framework to replace the IRA”.
13. 915. Since the letter sent on 29 August 2006, the Ministry of Labour convened trade union confederations and federations to several meetings on “labour law reform”. At no time was the issue of the setting up of the NPC on the official agenda of the meetings. Unions were convened to a meeting on 18 September 2006, with the agenda being “review of the Industrial Relations Act”. Other convening letters had the agenda “labour law reform”. The Minister or its officials used these meetings to sometimes sneak in the issue of NPC in vague terms and on all these occasions, unions had unanimously objected to the process.
14. 916. On 29 November 2006, the Minister of Labour convened a new meeting with trade union confederations to present the “salient features” of the new legislation to replace the IRA. The NPC never figured among the “salient features” of the proposed Act neither in the official paper distributed to the unions, nor in the Minister’s comments during the meeting.
15. 917. The complainant adds that while all the unions were waiting for an official draft on the new legislation to replace the IRA to be circulated, the Minister decided to call a new meeting on 22 December 2006 (letter dated 19 December 2006). The unions could not attend the meeting, given that all unions and the opposition parties were involved in a national action in relation to hunger strikes of workers. On 22 December 2006, the very same day that the Minister convened the unions, he also gave press statements. To the utter surprise of all trade union organizations of the country, the Minister announced that the “salient feature” changement majeure of the new law to replace the IRA will be the institution of a “National Wages Council” to determine annual salary compensation on the basis of criteria other than the inflation rate, as from 2007! This statement was reported in the press on 22 and 23 December 2006.
16. 918. On 3 January 2007, a new meeting was convened, once again, the official agenda being “labour law reform”, a tactic well understood by that time by the unions. The unions therefore protested against the tricky and dishonest procedures through which the issue of the NPC was being raised with them. Even at this meeting, neither the official terms of reference nor the composition and the mode of functioning or designation of representatives of the NPC were mentioned or circulated.
17. 919. Following this meeting, all union confederations and federations of the country sent an official letter to the Minister stating that unions “opposed any attempt to link the long overdue changes to the IRA to the institution of a National Wages Council based on the Lim report. The Government’s persistence in pursuing such a linkage is synonymous to a mere blackmail of workers of the country, who have hard fought for democratic changes to be brought to the repressive Industrial Relations Act. We are officially informing you that the trade union movement will henceforth participate ONLY in ‘consultation’ on the replacement of IRA, not on the introduction of the NWC. This means that the trade union movement WILL NOT participate in any meeting if the said NWC is linked to the replacement of the IRA.”
18. 920. The Minister nevertheless convened the unions to a meeting on 5 February 2007, where again the issue of the NPC was not specifically included in the agenda, the official agenda being “labour law reform and other related matters”, but was yet again raised by the Minister. The Minister said that the Government was delinking the issue of the NPC from the IRA, and was going ahead with the institution of the NPC “administratively”! Instead of coming with a new legislation draft to make the IRA compatible to Conventions Nos 87 and 98 and then hold proper discussions and seek consensus on a new mechanism to determine annual salary compensation, the Minister decided to impose the NPC and delay the new legislation on the IRA. In the said meeting, no official document was communicated to unions about the objectives, the mode of functioning, the composition and the mode of designation of the NPC for discussion and counter proposals.
19. 921. Instead, more than two months later, in a letter dated 9 April 2007, the Ministry of Labour informed unions of its unilateral decision to set up the NPC. The very letter, through which unions were for the first time officially informed of the terms of reference, composition and the mode of designation of the NPC, requested the confederations and federations to submit names to be “nominated” to the NPC within four days.
20. 922. On 13 April 2007, replying to the Ministry’s letter, the unions objected strongly to the unilateral and manipulative procedures, as well as to the objectives, composition and mode of designation of the said NPC. The unions unanimously pointed out that the objective of the NPC constituted an unacceptable alteration of their working conditions and that transforming the annual salary compensation granted on the basis of inflation into a “yearly minimum increase” for which new criteria would be applied, would have the effect of impoverishing workers and pensioners and that this would result in a definite decrease of real wages or payments. Unions also objected to the composition of this new quasi-bargaining structure in which the employers’ side will have ten representatives (five from the Mauritius Employers’ Federation and five from employers’ representatives in the Public Sector). Unions objected to the choice of the chairperson who has for the last 10–15 years been an official representative of employers. They also objected to the fact that the union representatives were being designated by the Minister. Unions stated that in these conditions, they are not in a position to submit names for “nominations”, even more so since the very notion of “nominations” by the Minister constitutes a violation of trade union rights.
21. 923. On 16 April 2007, the Minister convened a meeting, again without the NPC on the agenda. After raising general points on the new IRA and Labour Act, he decided to sneak in once again the issue of the NPC. When the unions questioned him about the omission, he replied that he was dealing with the same subject. The union representatives disagreed with the procedure adopted and voiced their opposition against the matter quite forcefully. While some of the unions were still in the meeting with the Minister, a new letter was faxed to all unions giving a new ultimatum to all trade union confederations and federations (there are 15 in Mauritius) to submit names for nominations by the Minister. Replying to criticism on the absence of consultations, the Ministry stated that the issue was “intimated” to the unions in previous meetings – a clear admission that there had been no proper consultations. In addition, none of the unions’ fundamental objections were taken on board.
22. 924. Finally on 4 May 2007, the public and unions were informed by the press that the Government had designated five persons to be the representatives of trade unions in the NPC, all of whom were its political agents who openly campaigned for the governing party at the last general elections. The people who have been selected by the Government come from five small unions which represent not more than 2 per cent of the organized workforce in the country, thereby openly choosing to ignore completely the opinion and views of 98 per cent of the working people. Some of those selected are not even executive committee members of a union. They have now all been expelled or suspended by their respective confederation and federation after the scandalous nominations. In addition, the chairman of the NPC was from the side of the employers and has represented employers in many tripartite committees for quite a number of years. It must also be added that at no time the views of the unions were sought in this regard.
23. 925. The reason given by the Government for the above, is that there was an emergency in the setting up of the NPC so as to grant workers an annual salary compensation for year 2007; this reason does not stand because the National Tripartite Committee ought to have been called as usual, until proper consultations and consensus is reached by all parties on a new mechanism. The rate of inflation in Mauritius in year 2007 is the highest in the last 15 years, being 10.7 per cent. This inflation rate is in parallel with a massive depreciation of the rupee which on the one hand, has further impoverished workers and on the other hand, has enriched the employers from the main economic sectors. As clearly planned by the Government since the budget speech, after the setting up of the NPC with political nominees, the NPC recommended to grant salary compensation well below the inflation rate for the average salary. Unions estimate that the labour force has lost at least 4 billion rupees with the new mechanism, thus undermining and impoverishing the labour force. While on the other hand, major exporting sectors besides benefiting from under-compensation, benefited some 10 billion rupees as windfall gains derived from the massive depreciation of the rupee.
24. 926. In conclusion, the complainant states that the above facts constitute gross violations of ILO Conventions Nos 87 and 98:
25. – No proper consultation has been carried out to set up a new bargaining structure, even more so as this new bargaining structure has a direct negative impact on the standard of living of workers; changing a bargaining or tripartite structure which has existed for more than 30 years, ought to have followed the same procedures as with the introduction of new legislation. That is, an official draft of the proposed changes should have been given to unions at least one month before implementation so as to enable proper discussions and negotiations on changes that affect the interest of workers and their conditions of employment. In addition to constituting a violation of Conventions Nos 87 and 98, the above also constitutes a flagrant violation of the Consultation (Industrial and National Levels) Recommendation, 1960 (No. 113).
26. – The institution of the NPC represents a modification without the consent of the unions of an historical agreement concluded 30 years ago, on a fundamental issue pertaining to workers’ purchasing power. The imposition of the NPC and the unilateral introduction of new criteria such as “productivity” and “capacity to pay” in determining national wages adjustment represents an annulment and forced renegotiation of an historical agreement, contrary to Convention No. 98. Moreover, in Mauritius, compensation granted for loss of purchasing power has always only been applied to workers’ basic salary, and not to other components of workers’ wages related to productivity criteria (production/productivity bonus, attendance bonus, etc). Furthermore, “productivity” and “capacity to pay” criteria can only be dealt with at sectoral collective bargaining processes, as productivity and capacity to pay differs from one sector to the other, while inflation rate is nationwide.
27. – The Government has used its position in an abusive way to alter a bargaining structure in which it also actually and directly acts as an employer. It is evident that it is the Government itself which has designated the composition of the NPC when in fact it ought to act as an arbitrator as it had always done during national consultations on salary compensation. Thus, by refusing to negotiate with the union movement and then proceed to nominate its political agents in the NPC, the Government has breached Article 2(2) of Convention No. 98, acting in a manner designed to promote workers’ organizations under the domination of employers or employers’ organizations. Finally, by nominating its political agents in the NPC, the Government has acted in a manner that discriminates against all workers and their independent unions, who have not publicly supported the governing party in the last general elections.
28. – For the complainant, it is clear that the Government is honouring its undertaking with the World Bank and the IMF and companies which have financed the present ruling alliance in the last elections. Given the massive discontent in the country against the abolition of salary compensation based on the inflation rate, the Government has adopted authoritative, abusive and manipulative procedures to change in a unilateral and fundamental manner the salary compensation mechanism in the country.
29. – Finally, the Government has not yet amended the IRA as recommended by the Committee a few years back. This legislation is in total contradiction with ILO Conventions Nos 87, 98 and 144. Instead of implementing the recommendations made by the Committee, it has chosen to introduce the NPC which will definitely contribute to worsen industrial relations, violate the rights of workers and bring down their standard of living.
30. 927. The complainant attaches numerous documents in support of its complaint. It requests the Committee to recommend: dissolution of the NPC which was instituted unilaterally in violation of ILO Convention No. 98; amendment of the IRA in line with the recommendations previously made by the Committee on Freedom of Association; exclusive use of the inflation rate criterion to determine the national wage adjustment, so as to re–establish workers’ purchasing power; other criteria such as productivity and capacity to pay, should be used at the level of sectoral collective bargaining and sectoral minimum periodical adjustments of remuneration orders (private sector) and Pay Research Bureau (public sector); reinstatement of the previous National Tripartite Committee to determine nationwide wage adjustment based on the inflation rate, pending an agreement with the union movement on an alternative mechanism.
31. B. The Government’s reply
32. 928. In its communication dated 3 August 2007, the Government states that for a number of years and up to June 2006, the quantum of salary increase to compensate workers for the rise in the cost of living was determined at an annual National Tripartite Committee meeting in May chaired by the Minister of Finance and Economic Development. Ministers of finance have claimed to have always factored in the state of the economy and the ability of firms to pay in deciding on the quantum of compensation payable. Being an employer and also a constituent of that tripartite forum, the Government has been perceived as acting as both judge and party when deciding on the quantum of the compensation.
33. 929. In an ILO study carried out in 1986 on government regulation of wages and industrial relations in the private sector, the following observations were made by the consultants:
34. … it does not appear that the cost of living allowance (COLA) decisions have been closely aligned with such macroeconomic considerations as balance of payments positions, the levels of employment and unemployment, or productivity movements as indicated by real GNP per capita or other measures.
35. (ii) Any sharp worsening of the Mauritian terms of trade or change in the international competitiveness of Mauritian exporters is likely to upset the present basis for Cost of Living Allowance decisions. In such a context, the present system is likely to place a tremendous responsibility on the government. With the main wage adjustment decisions being part of the political process, rather than the outcome of collective bargaining and a direct exposure to market forces, it is not evident that Cost of Living Allowance decisions would be made sufficiently responsive to changing economic conditions.
36. 930. In March 2000, a tripartite delegation led by the then Minister of Finance and including also a representative each of the three trade unions confederations, i.e. the Mauritius Labour Congress, the National Trade Union Confederation and the Mauritius Trade Union Congress, went to Singapore to study that country’s experience in the management of industrial relations in a competitive economy, especially in the context of determining the future wages and salaries policy in Mauritius. It was reported that there was consensus among the various stakeholders of the Mauritian delegation that a new salary compensation mechanism had to be worked out, based on the Singapore model but modified to suit Mauritius, and for the new mechanism to take into consideration factors like GDP growth, productivity and the need for Mauritius to stay competitive vis-à-vis other countries. It was felt that workers would derive more benefits when long-term interest overrides short-term gains.
37. 931. In 2002, the Government commissioned Professor Lim Chong Yah of Singapore to conduct a study on the existing legal, regulatory and institutional frameworks governing wage determination in Mauritius. In his report, Professor Lim Chong Yah stated, inter alia, the following:
38. (a) The Tripartite Committee determines the cost-of-living adjustment (COLA), also known as additional remuneration payment, based on changes in CPI. However, any major cost of living adjustment is itself an invitation to a vicious cycle of pay chasing prices chasing pay.
39. (b) .... workers are well rewarded when the economy is performing badly, such as in the aftermath of a cyclone, and receive small pay increases when the economy is doing well. This is contrary to the basic dictum that workers should benefit from the economic progress of the country.
40. (c) The annual round of the Tripartite Committee should cease to raise wages based only on CPI increases.
41. 932. This report was referred to the National Economic and Social Council, which is the apex consultative body regrouping all stakeholders, for views and the trade union representatives on the Council rejected the report. In view thereof, no further action was taken on the report.
42. 933. With regard to the setting up of the National Wage Council, the Government indicates that in the budget speech for financial year 2006–07, it was announced that the National Tripartite Committee mechanism determining annual wage compensation would be abolished and replaced by a National Wage Council which would retain the spirit of tripartism and would ensure that the level of the compensation was also linked to productivity and capacity to pay. The budget 2006–07 was voted in Parliament without any amendment being brought to the proposed establishment of the National Wage Council. Besides, in the recurrent budget for 2007–08, the estimated expenditure in respect of the operating expenses of the National Pay Council – NPC (which replaced the National Wages Council) was voted by the National Assembly.
43. 934. On consultations with the stakeholders, the Government indicates that as the review of the labour laws, that is the Industrial Relations Act and the Labour Act, was ongoing, the Ministry of Labour and Industrial Relations considered it advisable to make appropriate provisions in the legislation which is to replace the Industrial Relations Act (IRA), for the establishment of the NPC.
44. 935. There were already ongoing consultation meetings on the labour law reforms with employers and workers. At the first such meeting after the budget speech, held on 18 September 2006, with the trade union Common Platform (comprising all the federations of trade unions), the Minister of Labour, Industrial Relations and Employment informed the trade unions representatives of the proposed replacement of the National Tripartite Committee by a new mechanism which would remain tripartite and which would take on board other factors such as productivity. The Trade Union Common Platform representatives expressed their disagreement to the proposed setting up of the National Wage Council. It is to be noted, however, that of the three representatives of the General Workers’ Federation who were present at that meeting, only one intervened but did not make any observation on the proposed setting up of the NPC (the Government attaches a copy of the minutes of the meeting which was sent to all present).
45. 936. Another meeting was held on 29 November 2006 with the representatives of the trade union confederations to discuss the salient features of the new legislation replacing the IRA. At that meeting the Minister of Labour, Industrial Relations and Employment also provided information on the setting up of the NRC, that is, that it would be tripartite and be presided by an independent chairperson and would comprise five representatives of workers, employers and Government. The NPC would make recommendations on the annual compensation payable, based on rises in the cost of living, on productivity and capacity to pay. During the meeting the trade union representatives insisted that the consumer price index should be isolated from the other factors determining the quantum of the increase to be granted. They also expressed the wish to have another meeting with the Minister to discuss further the proposals concerning the NPC (the Government attaches a copy of the minutes of the meeting).
46. 937. At a meeting with the three confederations of trade unions held on 3 January 2007, the Minister again informed of the Government’s proposal to replace the annual tripartite meeting by the NPC, as already announced in the budget speech and in previous meetings, and that the NPC would take into consideration the inflation rate and also other factors such as productivity, capacity to pay, etc. (the Government attaches a copy of the minutes of the meeting).
47. 938. The stated purpose of all meetings convened during that period had been for discussion of the labour law reforms as, at that stage, the NPC was to be part and parcel of the new legislation to replace the IRA. It was not deemed necessary in the circumstances to make specific mention of the NPC in the convocation letters to these meetings.
48. 939. While giving due consideration to the matter, on 26 January 2007 the Government decided, in view of the fact that the review of the labour laws would not be completed by June 2007, by which time the compensation for 2006–07 had to be finalized, that:
49. (a) the National Wage Council be set up administratively in the first instance and be renamed National Pay Council – NPC;
50. (b) the NPC be constituted of five representatives of Government, five representatives of employers to be appointed following consultations with the Mauritius Employers’ Federation and five representatives of workers to be appointed following consultations with workers’ organizations;
51. (c) the NPC would make recommendations with regard to a yearly minimum wage increase taking into consideration, inter alia, the:
52. (i) rise in consumer price index;
53. (ii) national ability to pay;
54. (iii) national productivity and competitiveness;
55. (iv) employment and unemployment rate;
56. (d) the NPC would submit its recommendations to Government and, once approved, these recommendations would be given force of law to ensure compliance by all concerned.
57. 940. In maintaining other economic factors besides the increase in the consumer price index, the Government was inspired also by the provisions of Paragraphs 11 and 13 of ILO Recommendation No. 135 on minimum wage fixing which stipulate the following:
58. V. Adjustment of minimum wages
59. 11. Minimum wage rates should be adjusted from time to time to take account of changes in the cost of living and other economic conditions. …
60. 13(1). In order to assist in the application of Paragraph 11 of this Recommendation, periodical surveys of national economic conditions, including trends in income per head, in productivity and in employment, unemployment and underemployment, should be made to the extent that national resources permit.
61. 941. In Mauritius, adjustment taking account changes in the cost of living and other economic conditions was made on an annual basis under the National Tripartite Committee and this has not changed under the new system.
62. 942. In a meeting held on 5 February 2007, the Minister of Labour, Industrial Relations and Employment informed the trade union representatives that Government had opted to set up the NPC administratively. The trade union representatives were given the opportunity to express their views. One of the trade union representatives moved that no further discussion be held on the issue, since all the trade unions were against the setting up of the NPC (the Government attaches a copy of the minutes of the meeting).
63. 943. The Government subsequently took steps to identify an independent person with the appropriate profile to chair the NPC. Once this issue was finalized, the federations of trade unions and the employers were invited, on 9 April 2007, to submit by 13 April the names of their representatives who could be appointed as members of the NPC. The employers submitted the names of their five representatives while the federations of trade unions collectively informed the Minister, in a letter dated 13 April 2007, that they would not be submitting any names as they were not agreeable to the setting up of the NPC.
64. 944. In view of the stand of the trade unions, the Minister of Labour, Industrial Relations and Employment met the representatives of the three confederations on 16 April 2007 and made an appeal to them to reconsider their position. A letter was also issued to them on the same day for submission of the names of their representatives by 19 April 2007 at latest. In a letter dated 18 April 2007, the federations of trade unions collectively informed the Minister that they maintained their decision not to be represented on the NPC. Despite the appeal which the Minister made to the federations of trade unions even to participate in the Council under protest, they maintained their stand.
65. 945. In line with its publicly announced policy on the matter and, given the urgency to determine the quantum of compensation and make necessary budgetary provision for the compensation to be payable as from 1 July 2007, the Government decided to proceed with the setting up of the NPC. Appropriate steps were taken to ensure that despite the refusal of the federations of trade unions, workers’ interests were duly taken on board at the level of the NPC. Representatives of trade unions and one federation which had expressed willingness to serve on the NPC were appointed. There are currently 339 registered trade unions in Mauritius, but they only represent around 20 per cent of workers.
66. 946. The Government’s decision to proceed with the setting up of the NPC is in line with the observations of the Committee of Experts on the Application of Conventions and Recommendations in its General Survey of 1982 on tripartite consultation Convention No. 144, to the effect that:
67. … in the first place, the views expressed in the course of consultations are not a form of participation in decision making but simply one stage in the process of reaching a decision. During the preliminary work on the instruments concerned, the Office accordingly observed that it was a generally accepted principle that the outcome of the consultations should not be regarded as binding and that the ultimate decisions must rest with the Government or legislature, as the case may be.
68. The Committee of Experts has maintained the same observations in its General Survey of 2000 and has further observed that the public authorities “are not bound by any of the opinions expressed and remain entirely responsible for the final decision”.
69. 947. In making alternative arrangements for the appointment of workers’ representatives on the NPC, the Government was guided by the observations of the Committee of Experts in its General Survey of 1992 on wage-fixing machinery, that is:
70. ... it is left to the employers and workers concerned or their organizations to appoint their representatives on the bodies that in one way or another take part in the fixing of minimum wages. This does not prevent the competent authorities, in certain cases where the organizations concerned have made no appointment, from designating representatives of the said organizations on the minimum wage-fixing bodies.
71. 948. With regard to the complainant’s contention that the defunct National Tripartite Committee recommended the quantum of salary compensation based solely on the CPI increase, the Government replies that this contention is not correct. The rates of compensation were decided by Government in the light of other factors as indicated above. In fact, the rates of compensation awarded in past years have not always reflected the actual increase in the CPI, which implies that other economic factors have been taken into consideration.
72. 949. As for the allegations of violations of Conventions Nos 87 and 98, the Government indicates that there have been extensive consultations on the setting up of the NPC, although consensus could not be reached. Attention is drawn to the fact that the NPC is not a bargaining structure as such. It is a mechanism which allows all parties to present their case, all relevant technical data to be collected and analysed so that appropriate recommendations can be made to the Government. The final decision rests with the Government. The NPC is also expected to meet regularly to take stock of the evolution of the economic situation to be in a better position to make informed recommendations to the Government in due course. The new legislation to replace the IRA will provide for the proper mechanism for collective bargaining. Moreover, the setting up of the National Tripartite Committee 30 years ago was an initiative of the Government and not the result of any agreement with trade unions or employers. In response to the needs of the new economic situation and in the light of the observations made by various consultants, the Government decided to change the system, favouring a more structured approach for the determination of the annual compensation. There has not been any breach of section 2(2) of Convention No. 98, as alleged. As indicated earlier, the trade unions were constantly informed of developments regarding the proposed NPC and they were, not once but twice, invited to be represented on the NPC. There was even a verbal appeal made by the Minister of Labour, Industrial Relations and Employment to them to attend under protest. The trade unions indicated that they were not prepared to discuss the issue any further and flatly refused to form part of the NPC. There is no reason to believe that the five workers’ representatives who expressed willingness to serve on the Council have in any manner forfeited their independence of thought or action.
73. 950. The Government finally indicates that the recommendations of the NPC for compensation payable for 2006–07 have been endorsed in toto by Government and have been very well received by workers generally, employers and the public at large. The rate of compensation payable has, in fact, created a feeling of optimism and confidence, a positive mood in the country.

C. The Committee’s conclusions

1. 951. The Committee notes that the background of this case concerns the longstanding efforts to amend the Industrial Relations Act, with ILO technical assistance, pursuant to the conclusions and recommendations reached by this Committee in Case No. 2281 concerning Mauritius (333rd Report, paras 613–641). During the last examination of the follow-up to its recommendations, the Committee noted that past efforts made to amend the IRA had not resulted in the adoption of legislation based on broad consensus of social partners and that the Government was considering the drafting of a new bill, based on the proposals made by employers’ and workers’ organizations, as new issues had surfaced during discussions. The Committee had expressed the hope that these efforts would be vigorously pursued by all parties, and that the Government would do its utmost to ensure adoption of a legislation that was in full conformity with Conventions Nos 87 and 98 [342nd Report, paras 132–137].
2. 952. The Committee notes from the facts presented to it in this case, that in that context, the Government undertook consultations on labour law reforms. The present complaint concerns the introduction in these consultations of an unagreed element, namely, changes in the system of minimum wage setting which had been in place in Mauritius for the last 30 years, and furthermore, the Government’s decision to eventually stop pursuing consultations on this matter, introduce the amendments administratively and appoint workers’ representatives coming from outside the representative workers’ organizations in the newly established wage-setting body.
3. 953. The Committee notes that the complainant alleges that by setting up the National Pay Council/Committee (NPC) on 9 April 2007, the Government violated an historical tripartite agreement which had been in force for some 30 years so as to guarantee social peace in the country. The essential premise of this agreement was that the National Tripartite Committee on (Annual) Salary Compensation (National Tripartite Committee) would determine wage adjustments on the basis of the consumer price index annual rise in the rate of inflation. The newly created NPC would, on the contrary, determine a minimum wage compensation based not only on the inflation rate but also on criteria such as “national ability to pay”, “national productivity and competitiveness” and “employment and unemployment rate”. The complainant emphasizes that these changes which led to an overall salary reduction were carried out without any proper consultation and on the contrary, through authoritative, manipulative and abusive processes; it emphasizes in particular, that in accordance with standard practice, an official draft of the proposed changes should have been given to unions at least one month before implementation so as to enable proper discussions and negotiations on changes that affect the interest of workers and their conditions of employment. The complainant considers moreover that criteria such as “productivity” and “capacity to pay” can only be dealt with through sectoral collective bargaining processes or through the numerous bodies which exist for the determination of minimum wages at the sectoral level; productivity and capacity to pay differ from one sector to the other, while the inflation rate is the same nationwide and it is therefore appropriate to determine the relevant wage adjustment at the national level. Furthermore, the complainant objects to the composition and the mode of designation of union representatives in the new bargaining structure which it considers favours the employers’ side (ten representatives – five from the employers and five from the Government side as public employer) and gives undue power to the Government to interfere in the nomination of trade union representatives and designate the chairperson of this body, whereas beforehand, the Government had always played a neutral role. Indeed, according to the complainant, the chairperson is an employer representative and has been active during the last 10–15 years in representing employer interests in tripartite bodies. Moreover, the complainant emphasizes that at no time were the views of the unions sought in this regard. The very letter through which unions were for the first time officially informed of the terms of reference, composition and the mode of designation of the NPC, requested the confederations and federations to submit names to be nominated to the NPC within four days. Finally, the complainant emphasizes that when the totality of the union movement pointed out the above issues to the authority, thus refusing to nominate representatives in the NPC, the Government nominated five of its political agents as trade union representatives; these come from five small unions which represent not more than 2 per cent of the organized workforce in the country; some of those selected are not even executive committee members of a union since they were all expelled or suspended by their respective confederations and federations after the scandalous nominations.
4. 954. The Committee notes that according to the Government, the creation of the National Tripartite Committee 30 years ago was based on a government initiative and was not the result of any agreement with trade unions. In response to the needs of the new economic situation, and in the light of the observations made by various consultants, the Government decided to change the system, favouring a more structured approach for the determination of the annual compensation. The rates of compensation were never decided upon exclusively on the basis of the rate of inflation and the Government always took into consideration other economic factors when making such a determination, on the basis of the recommendations of the National Tripartite Committee. The establishment of a new body [initially named National Wage Council and later on National Wage Commission and then National Pay Commission (NPC)], was announced in the budget speech for financial year 2006–07. The Minister of Labour, Industrial Relations and Employment informed the trade union representatives of the proposed replacement of the National Tripartite Committee at the meetings of 18 September and 29 November 2006 and 3 January 2007, in the framework of discussion of the labour law reforms. Provisions on the NPC were to be inserted in the draft legislation which would replace the IRA. However, on 26 January 2007, the Government decided to set up the NPC administratively, and not by law, and to determine the issues of its composition and functioning; the reason for this was that the review of the labour laws would not be completed by June 2007, by which time the compensation for 2006–07 had to be finalized. The unions were informed of this decision on 5 February 2007 and given the opportunity to express their views. On 9 April 2007 they were invited to submit, by 13 April, the names of their representatives to be appointed as members of the NPC. Given that the unions refused to appoint representatives, the Minister of Labour, Industrial Relations and Employment appointed representatives of trade unions and one federation which had expressed their willingness to serve on the NPC; on the issue of representativeness, the Government adds that the 339 registered trade unions in Mauritius only represent around 20 per cent of workers.
5. 955. The Committee would first refer to the Consultation (Industrial and National Levels) Recommendation, 1960 (No. 113), Paragraph 1 of which provides that measures should be taken to promote effective consultation and cooperation between public authorities and employers’ and workers’ organizations without discrimination of any kind against these organizations. In accordance with Paragraph 5 of the Recommendation, such consultation should aim at ensuring that the public authorities seek the views, advice and assistance of these organizations, particularly in the preparation and implementation of laws and regulations affecting their interests [Digest of decisions and principles of the Freedom of Association Committee, fifth edition, 2006, para. 1068]. It is important that consultations in future take place in good faith, confidence and mutual respect, and that the parties have sufficient time to express their views and discuss them in full with a view to reaching a suitable compromise. In particular, in view of the implications for the standard of living of the workers of the Government’s wage policy in general, the Committee has pointed out the importance it attaches to the effective promotion of consultation and cooperation between public authorities and workers’ organizations in this respect, in accordance with the principles laid down in Recommendation No. 113, for the purpose of considering jointly matters of mutual concern with a view to arriving, to the fullest possible extent, at agreed solutions [Digest, op. cit., para. 1087]. The process of consultation on legislation and minimum wages helps to give laws, programmes and measures adopted or applied by public authorities a firmer justification and helps to ensure that they are well respected and successfully applied. The Government should seek general consensus as much as possible, given that employers’ and workers’ organizations should be able to share in the responsibility of securing the well-being and prosperity of the community as a whole. This is particularly important given the growing complexity of the problems faced by societies. No public authority can claim to have all the answers, nor assume that its proposals will naturally achieve all of their objectives [Digest, op. cit., para. 1076]. Thus, any decisions concerning the participation of workers’ organizations in a tripartite body should be taken in full consultation with all the trade unions whose representativity has been objectively proved [Digest, op. cit., para. 1090].
6. 956. The Committee regrets that the consultations with the social partners were unilaterally interrupted without giving sufficient time to fully discuss the views of the parties and give every opportunity to arrive at a common position. It also regrets the allegations to which the Government has not replied, that consultations were carried out without having given the social partners a copy of the draft legislation in question, as the lack of a written text unavoidably limits the scope of possible discussion and a clear understanding of all the issues that may need to be addressed. The Committee also regrets the allegations that the chairperson of the new body cannot be considered to be a neutral party, having the confidence of all parties concerned, to which the Government has not replied. Finally, the Committee regrets that faced with the unions’ denial to participate in the newly created NPC, the Government unilaterally appointed representatives from trade unions and one federation representing not more than 2 per cent of the organized workforce. The Committee recalls in this regard that any decisions concerning the participation of workers’ organizations in a tripartite body should be taken in full consultation with all the trade unions whose representativity has been objectively proved [Digest, op. cit., para. 1090]. The Committee also notes with regret that contrary to the effective administrative introduction of the NPC, the amendments to the IRA requested by the Committee in earlier cases, have still not been adopted. The Committee therefore requests the Government to conclude the revision in consultation with the social partners as soon as possible.
7. 957. In view of the fact that the NPC has been established and functioning for more than a year, the Committee requests the Government to take a renewed initiative aimed at full and frank consultations with representatives of the social partners whose representativity has been objectively proved, with a view to holding in-depth discussions on ways and means to improve the functioning, composition and objectives of the NPC so as to arrive at a conclusion in this regard, which is satisfactory to all parties concerned. The Committee requests to be kept informed of developments in this respect.

The Committee's recommendations

1. 958. In the light of its foregoing conclusions, the Committee requests the Governing Body to approve the following recommendation:
   • The Committee requests the Government to take a renewed initiative aimed at full and frank consultations with representatives of the social partners whose representativity has been objectively proved, with a view to holding in-depth discussions on ways and means to improve the functioning, composition and objectives of the NPC so as to arrive at a conclusion in this regard, which is satisfactory to all parties concerned. The Committee requests to be kept informed of developments in this respect.