DOMINICAN UNIONS, BUSINESS GROUPS AGREE ON WAGE

UNCLAS SANTO DOMINGO 001070 SIPDIS SIPDIS DEPT FOR WHA/CAR, WHA/EX, DRL; SOUTHCOM ALSO FOR POLAD AMSELEM. E.O. 12958: N/A TAGS: ECON ELAB PGOV DR SUBJECT: DOMINICAN UNIONS, BUSINESS GROUPS AGREE ON WAGE INCREASES FOR MOST WORKERS REF: SANTO DOMINGO 0556 ¶1. SUMMARY: Representatives from umbrella labor unions and business groups reached an agreement on April 25 to hike the country's minimum wage by 15 percent and raise salaries by 5 percent for all other private employees earning up to 30,000 pesos (around USD 1,000) per month. These negotiations, which take place on an annual basis, usually deal only with the minimum wage. This year's agreement is the first of its kind that seeks to raise wages for employees earning above the minimum; however, officials in the Secretartiat of Labor have indicated that they will enforce only the hike in the minimum wage, which is retroactive to April 1. END SUMMARY. ¶2. The custom in the Dominican Republic is that at the beginning of each year, representatives from the major umbrella labor unions and business groups meet on a tripartite basis with government representatives to reach consensus on a percentage by which to increase the country's minimum wage. These agreements take place within the framework of a government institution known as the "National Committee on Salaries." The results are generally translated into national policy and enforced by the Dominican government. ¶3. This year, for the first time, union representatives have demanded raises for workers earning less than 30,000 pesos per month -- about USD 1000, a cutoff that is well above the minimum wage and includes the majority of the Dominican workforce (including many Dominican employees of the U.S. Embassy). Unions justified their demands by asserting that these workers' salaries had failed to keep up with inflationary losses over these past several years. ¶4. Unions had originally demanded wage increases of 25 to 30 percent for all workers earning less than 30,000 pesos per month. Business representatives offered a 10 to 12 percent hike in the minimum wage only, insisting that wage increases for workers earning above the minimum were outside the legal scope of their discussions. After 13 failed negotiating sessions, the two groups appeared to have made little progress. Unions repeatedly announced their determination to hold country-wide strikes over the issue, but repeatedly postponed these plans in order to go back to negotiations. ¶5. On April 25, after labor unions had held their first small protest, the Commision finally reached agreement on a 15 percent hike in the country's minimum wage, retroactive to April 1. Further, they agreed on the concept of a 5 percent raise for all other employees earning up to 30,000 pesos per month. The 5 percent wage hike for was considerably less than the 25 to 30 percent union demand and failed to recapture purchasing power lost to inflation. Nonetheless, the agreement appeared to mark a considerable strategic victory for the unions, as it seemed to establish a precedent that annual wage deliberations can apply to skilled labor and to middle class employees. ¶6. Government spokesmen have not objected to this development; in fact, during the long series of frustrated meetings they appeared to be pushing business representatives to be more accommodating. By acknowledging a 30,000 peso-per-month cutoff, participants appeared to include a considerable majority of workforce. The question is whether the broader private sector, including small businesses, will accept and apply the results. Further, prospects are unknown for formal enforcement action for non-unionized firms. ¶7. In conversations with employees from the Embassy's management section, Secretariat of Labor personnel indicated that the Secretariat will issue a government decree mandating only the minimum wage increase. Officials characterized the 5 percent increase for workers earning above the minimum as an agreement between the private sector and unions only, not carrying the authority of the National Committee on Salaries. This appears to imply that this aspect of the agreement will be voluntary. Press reports have failed to capture that crucial nuance. ¶8. Drafted by Alexander T. Bryan. ¶9. This and other extensive material can be found on our SIPRNET site, http://www.state.sgov.gov/p/wha/santodomingo/ . BULLEN