Individual Case (CAS) - Discussion: 1991, Publication: 78th ILC session (1991)

Right to Organise and Collective Bargaining Convention, 1949 (No. 98) - Brazil (Ratification: 1952)

A Government representative addressed the situation at the Bank of Brazil in relation to Article 1 of the Convention and the comments made by the United Central Workers' Organisation (CUT). The Bank of Brazil is a mixed enterprise in that the Federal State controls 50 per cent of its shares and the remainder are traded on the stock exchange. This enterprise is regulated by Article 235 of Law No. 6404 of 1974 and is governed by the same laws as apply to free enterprises under article 173(1) of the Federal Constitution. Therefore, general labour laws are applicable at the Bank of Brazil. As concerns the observation made by the Committee of Experts, the directive issued by the President of the Bank was only a draft, which management was supposed to discuss, as in any enterprise. Following the equivocable and erroneous interpretations of the content of the proposition, the President of the Bank met on 25 June 1990 with representatives of the National Confederation of Credit Institutions' Workers and the National Executive Committee of the Staff of the Bank of Brazil for the purpose of informing those present of the actual meaning of the document in question. The clarifications were sent by telex on 20 and 25 June 1990 to all bank employees. The Director of the Bank of Brazil had at no time any intention of dismissing workers who had been active in the trade union movement; to the contrary, on 25 February 1991 the staff of the Bank elected in a strictly democratic and direct election - with the approval of the Governing Body of the Bank - a union worker and representative of CUT, Mr. Luis Oswaldo Santiago Moreira de Souza, as a full member of the Directing Board of the Bank of Brazil.

The workers of the Bank are represented as a group at the national level by 190 unions, ten federations and one confederation; 185 employees are union spokespersons and 175 are available to the union on a full-time basis with full pay. Moreover, eight employees are available to the union under article 543(1) of the Consolidation of Labour Laws. The accusations made against the Bank of Brazil are wholly without basis, and Article 1 of Convention 98 is respected.

As concerns the observation of the Committee of Experts on the application of Article 4 of the Convention, the speaker addressed himself to the three points raised:

1. The provisions stating that the productivity index may be reduced or eliminated according to "the economic ability" of an enterprise (Art. 11 of Law No. 6708 of 30 October 1979) offers a judge a certain flexibility in setting the above-mentioned index at a level within the economic ability of an employer; it is an exceptional measure inspired by the need to preserve jobs in an enterprise which faces economic difficulties and is not a hindrance to collective negotiations. The Labour Tribunal is tripartite in composition, in accordance with article 113 of the Federal Constitution. In the very few cases where the above-mentioned provision has been applied, it was possible for the employer and trade union nominees on the tribunal to discuss the case with the professional judge in order to clarify the points in contention and influence the final decision.

In demonstrating that there had not been a violation of the Convention, the speaker indicated that Law No. 6708 - specifically, Article 11 - was repealed by subsequent wage legislation. Law No. 8178 of 1 March 1991 established "rules relating to prices and wages"; however, it did not reincorporate the provisions of the previous law and did not bring back into force the repealed provisions.

Law No. 8178 was a result of intense political negotiations. Article 13 of the Law gave the executive until 15 April 1991 to submit to the National Congress draft legislation giving application to article 8 of the Federal Constitution and covering collective bargaining. The draft Law (No. 821 of April 1991) has already been submitted to Congress and must be treated as a priority item in conformity with article 64(1) of the Federal Constitution. In its message to the President (Summary of Motives, No. 035 of 11 April 1991), the interministerial committee charged with the elaboration of the draft specifically insisted upon the supremacy of the collective will and on the promotion of direct agreements between employers and workers through collective bargaining.

In summation: (a) Law No. 6708 was repealed and Article 11 of this repealed Law no longer exists either in Law No. 8178 of 1991 or Law No. 8030 of 12 April 1990; (b) even if this provision was in force it would not inhibit collective bargaining because it is simply a flexibility clause designed to benefit - with a view to preserving jobs - enterprises in financial difficulty; (c) the draft Law No. 821 of April 1991 well illustrates the importance which the government attaches to collective bargaining, as is also reflected by the adoption of Law No. 8178.

2. As concerns Article 623 of the Consolidation of Labour Laws, this provision is not applied - as the Government has already stated in its report of 21 June 1988 - and has not resulted in any case being mentioned in the comment made by CUT. As was stated on 14 March 1991 at the presentation of the National Reconstruction Project, wage policy must be elaborated at the national level by the social partners through collective bargaining. The draft of Law No. 821 completely repealed Title VI of the Consolidation of Labour Laws (including Article 623) and completely revised the collective bargaining system.

3. Concerning Article 12 of Law 6708, the speaker reiterated the comments formulated in paragraph 1; the legislation in question has been repealed. The National Wage Policy Council has not survived the administrative reform undertaken by the President at the beginning of his term. Moreover, the Superiour Labour Tribunal revised its jurisprudence under the terms of Resolution No. 02/90 of 19 December 1990 (Diário de de Justicia,) 14 January 1991, page 110) and annulled Decision No. 280 which provided that a collective agreement concluded without previous consultation with the competent official body would not bind a mixed enterprise.

The speaker concluded by insisting that Law No. 6708 had been repealed and that the draft Law assured the promotion of collective bargaining; the situation in Brazil was in conformity with the spirit and the letter of Articles 1 and 4 of the Convention.

The Workers' members thanked the Government representative for his detailed comments. They wished to point out their view that any holder of 49 per cent of the shares of a bank certainly had substantial influence in its management and that they hoped the Government had not intended to suggest otherwise with respect to its ability to influence the management of the Bank of Brazil.

With respect to Article 4 of the Convention, the Workers' members asked that the Government forward to the Committee of Experts for their review texts of legislation referred to by the Government representative. They expressed concern at the repetitive frequency with which Governments indicated that old laws had been repealed and replaced; they asked that the Government indicate when new laws which had been referred to would be enacted as it appeared that a few had not yet, in fact, been enacted. They also believed it would be useful for draft laws to be sent to the ILO for examination before they were enacted.

The Workers' members observed that, according to the Committee of Experts, the Government had provided no information on any measures taken or machinery used to persuade the social partners to adhere to its economic austerity policy and that the Committee had urged the Government to ensure all measures concerning wage fixing are adopted in the context of a dialogue between the Government and the social partners, so that an agreement on wage-fixing policy may be reached between the sectors concerned. The Workers' member understood the Government representative, however, to say that a number of bodies had been consulted with respect to adherence to the Government's economic austerity policy and an agreement on wage fixing policy. They asked that the Government member confirm this point and reiterated the need for the Government to send full texts of laws, enacted or envisaged, so that the Committee as well as the Committee of Experts could have a fuller appreciation of application given to the Convention.

The Employers' members endorsed what the Workers' members had said with respect to this case. They expressed concern, however, at the fact that section 623 of the Consolidation of Labour Laws remained in force althought it was not, in fact applied. This, they felt, was always a problem and strongly urged the Government to consider revoking the provision if, in fact, it was not used. The Employers' members generally observed that it was not clear how current or past legislation fit into the observation of the Committee of Experts; based upon the information in the Experts' report and that provided by the Government policy would make the recovery of the value of wages lost by inflation difficult or impossible. They noted that labour costs could contribute to a continuation of inflation particularly where wage increases were not related to productivity gains. The Government representative had indicated that a productivity index of some sort had been used but the Employers' members wondered whether this index was used to limit the inflationary effect of wages not linked to productivity. Some clarification by the Government representative was needed.

The Workers' member from Sri Lanka said that he thought he heard the Government representative say that Decree No. 229 of 28 February 1967 which confers extensive powers to the authorities to cancel collective agreements or arbitration awards that are not consistent with the rules set out by the Government's wage policy has never been applied. In such a case he wondered why it was necessary to continue to have the Decree in force and whether the Government could not consider repealing it.

The Government representative assured the Workers' members that in setting out the percentage of participation of the Federal Government in the Bank of Brazil he had not intended to suggest that the Government did not influence its management; the directive of the Bank of Brazil which was the subject of the CUT observation could not, however, be considered an Act of State, but was rather the Act of a private enterprise. As concerned the frequency of legislative modifications, as had already been stressed, the draft legislation on collective bargaining was aimed precisely at putting an end to the matter. Law No. 8178 of March 1991 was the only text in force in the area of wage policy; moreover, the National Congress was currently examining a draft Law on collective bargaining. As regards the repeal of article 623 of the Consolidation of Labour Laws, it was included in the above-mentioned draft Law. The productivity index as used in Brazilian labour law reflected a real wage increase in relation to the activities of an enterprise during a financial period. The speaker concluded by assuring that the Government would send all the available texts to the Committee of Experts.

The Government representative stressed that as concerns the problems which remain which had been mentioned in the Committee's conclusions the Government had attempted to show that these problems no longer existed. The Government was merely waiting to send to the Committee of Experts proof of the statements which had been made in the Committee.

The Committee took note the information supplied by the Government and the discussion which took place in the Committee. The Committee also noted the report of the Committee of Experts and the serious problems that persist in particular as regards the need to remove obstacles to wage negotiation and conditions of employment. The Committee was aware of the seriousness of the economic and financial situation of the country for many years now. Nevertheless it recalled that any economic stabilisation policy should be the result of consultation and not force or constraint. The Committee expressed the firm hope that the Government would be in a position to indicate in its next report to the Committee of Experts which measures have been taken and in particular with respect to submission of a Bill to Congress so as to bring the country's law and practice into conformity with the requirements of the Convention.

The Government representative stressed that as concerns the problems which remain which had been mentioned in the Committee's conclusions the Government had attempted to show that these problems no longer existed. The Government was merely waiting to send to the Committee of Experts proof of the statements which had been made in the Committee.