ARGENTINA: SUPREME COURT RULING OPENS THE DOOR FOR TRADE

UNCLAS BUENOS AIRES 001580 USDOL FOR TMCCARTER SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ELAB PGOV AR SUBJECT: ARGENTINA: SUPREME COURT RULING OPENS THE DOOR FOR TRADE UNION COMPETITION ¶1. (SBU) SUMMARY: The Argentine Supreme Court declared Article 41 of the Trade Unions Law unconstitutional and upheld the right of a workers' union that lacks official legal recognition to elect its own delegates. The ruling, if widely applied to organized labor, would expand representation rights to any labor delegate affiliated with unions simply registered with the Labor Ministry (MOL). This could potentially increase competition among labor unions and threaten the monopolistic model of union representation in Argentina that has prevailed for more than 60 years. General Labor Confederation (CGT) representatives immediately rejected the ruling, calling it "a provocation that would cloud the social climate." ¶2. (SBU) GOA officials swiftly sought to minimize the ruling's impact. Labor Minister Carlos Tomada stated that the ruling would only apply to the specific case decided by the Supreme Court. Interior Minister Florencio Randazzo indicated that the ruling's applicability would be limited to the public sector. Meanwhile, opposition parties are working on different initiatives either to reform the Trade Unions Law or to bring Article 41 in line with the Supreme Court's ruling. However, the bills will most likely not pass in the Kirchner-controlled Congress. END SUMMARY. -------------- "SIMPLE" REGISTRATION VS. LEGAL RECOGNITION -------------- ¶3. (SBU) For over 60 years, Peronists have controlled the General Confederation of Labor (CGT),which has had a virtual monopoly over worker representation since state-structured unionization was first introduced by Labor Minister and then-President Juan Domingo Peron in the mid-1940s. The CGT has approximately 3 million members, and represents over two-thirds of the unionized workforce. Approximately 40 percent of Argentina's workforce is unionized. ¶4. (SBU) Under Argentine law, the GOA recognizes two types of unions, each with a different set of rights: 1) unions that are simply registered with the MOL and have a limited scope of rights; and 2) unions that are not only registered with the MOL, but have also been officially recognized as the most representative union in a given sector. Legally recognized unions can exercise a wider range of privileges, such as calling for elections to appoint delegates, exercising the right to strike, negotiating bargaining agreements, appointing delegates to international organizations, and compelling employers to directly deduct union dues from unionized workers' salaries. For years, the government has only granted legal recognition to the CGT and its affiliates, although former President Nestor Kirchner and his wife, current President Cristina Fernandez de Kirchner, have flirted with the idea of granting legal recognition to a rival confederation known as the Argentine Workers Confederation (CTA) since 2003. -------------- A LANDMARK DECISION -------------- ¶5. (SBU) In 2003, the Public Employees' Association (ATE),a CTA-affiliated union, was prevented from holding elections by the CGT-affiliated Civil Servants of the Armed Forces Union (PECIFA). PECIFA cited Article 41 of the Trade Unions law which stipulates that only state-recognized unions are entitled to call elections to vote for delegates, and that these delegates must be members of that union. ATE filed a petition in protest that same year, and its petition was subsequently dismissed by both the Ministry of Labor and the Labor Court of Appeals. ¶6. (SBU) On November 11, the Argentine Supreme Court deemed Article 41 to be in breach of the constitution, which guarantees freedom of association and union democracy, as well as of several international conventions adopted by Argentina, including the International Labor Organization (ILO) Convention 87 on Freedom of Association and Protection of the Right to Organize. (Note: Since 1989, the ILO has called on Argentina to reform its labor laws to bring it into compliance with Convention 87.) In their ruling, the judges said "by favoring or not favoring a given trade union with respect to others, governments can influence workers' decisions when they select a union to join." In addition, the ruling asserted that the MOL's "discretion" in awarding official union recognition "violates international treaties." The ruling, if broadly applied, would expand representation rights to labor delegates affiliated with unions that are simply registered with, but not legally recognized by, the Labor Ministry (MOL). -------------- CTA HAILS DECISION... -------------- ¶7. (SBU) The Supreme Court's decision surprised government officials and CGT and CTA representatives alike. The CTA, which has been unsuccessfully demanding legal recognition by the MOL for 16 years, celebrated the decision. (Note: The CTA is an autonomous, politically non-partisan organization, with an estimated 1.5 million members, including public and private employees, as well as unemployed and retired people.) The CTA and other labor groups not affiliated with the CGT had long contended that the Trade Unions Law guaranteed the CGT and its affiliated unions a virtual monopoly over unionized labor. They argued that this contravened ILO Convention 87 and prevented the CTA and CTA-affiliates from obtaining full legal standing. Although the Supreme Court's decision refers specifically to Article 41 of the Trade Unions Law, several labor experts consider this a landmark decision as it upholds the supremacy of international treaties over domestic labor law. CTA legal representative Horacio Meguira asserted that the decision will compel the Congress to amend the current Trade Unions Law in order to honor Argentina's international obligation to guarantee the right to freely organize. ¶8. (SBU) The GOA has considered the possibility of granting legal recognition to the CTA since Nestor Kirchner took office in 2003, and had relaxed some labor regulations to allow the CTA to gain extra rights in recent years, such as a seat on the Wage Council and on the Board of the National Institute of Social Services for Retirees and Pensioners (PAMI). CTA lawyers say they believe the verdict not only cracks open the CGT's monopoly on worker representation, but also sets a precedent for legal rulings in favor of union freedom and democracy in future cases. -------------- ...WHILE GOA SEEKS TO MINIMIZE IMPACT... -------------- ¶9. (SBU) GOA officials swiftly sought to minimize the ruling's impact. Labor Minister Carlos Tomada stated that the ruling would only apply to ATE, and indicated that unions that wanted similar treatment would have to go through the courts. He dismissed outright the possibility of amending the Trade Unions Law. Justice Minister Anibal Fernandez opined that the Supreme Court had resolved an abstract case between two unions in the public sector, and Interior Minister Florencio Randazzo stated that the decision was limited to civil servants in the public sector. -------------- ...AND THE CGT CALLS IT "A MISTAKE" -------------- ¶10. (SBU) CGT representatives strongly criticized the decision. Hugo Moyano, CGT Secretary General and Vice President of the Peronist Party (PJ),called the ruling "a mistake." CGT spokesman Hector Daer said the confederation would accept the decision, but would urge the government to make a "political decision regarding the issue." CGT Human Rights Secretary and leader of the Judicial Workers' Union Julio Piumato called it "a provocation that would cloud the social climate." CGT Assistant Secretary Juan Belen characterized the decision as "crazy" and said it "lacks common sense." Others stated the judicial decision seeks to divide the labor movement. CGT legal representative and National Deputy of the Kirchners' ruling Victory Front coalition Hector Recalde blamed journalists for having "distorted the Supreme Court's decision" and defended current domestic regulations. He warned that allowing several trade unions the power to represent workers in the same company or line of work could "dilute the strength of unions, at a time when the economy is becoming increasingly concentrated." ¶11. (SBU) Moyano and other CGT leaders have been supportive of both Kirchner administrations and have even delayed or minimized labor demands to accommodate the government. Energized by the Supreme Court decision as well as the prospect of imminent layoffs due to the expected economic downturn, CGT leaders have suddenly turned belligerent and are publicly calling for a 500 peso (US$155) year-end bonus for all workers plus restrictions on layoffs, including the imposition of double or triple severance pay on employers, in addition to calling on the GOA to circumscribe the impact of the Supreme Court decision. -------------- CHAMBERS OF COMMERCE BELIEVES DECISION WILL COMPLICATE LABOR RELATIONS -------------- ¶12. (SBU) Representatives of commercial and industrial chambers also expressed concern over the ruling, but for diametrically opposed reasons. They predicted that competition among labor unions would result in tougher labor demands. The President of the Argentine Industrial Chamber (UIA) Juan Carlos Lascurain said the chamber's legal team was analyzing the ruling, but opined that freedom of association is always a "complicated" issue. The President of the General Economic Confederation (CGE) Guillermo Gonzalez Galicia said the decision would mean that industry would have to negotiate with more than ONE representative, each with different labor demands, making it even more difficult for industry to reach agreements with labor. The President of the Argentine Confederation of Medium-Sized Companies (CAME),Mr. Osvaldo Cornide, echoed the sentiment, saying that small- and medium- size companies always benefited from negotiating with ONE union per sector, and that the ruling would imply labor relations chaos. CTA lawyer Meguira downplayed these concerns saying that there are many examples where different unions have negotiated jointly with employers. He cited seven unions in commercial air transport and 12 in the maritime and ports sector as examples. -------------- Experts Praise the Decision -------------- ¶13. (SBU) Labor and constitutional experts alike praised the Supreme Court's Decision. Enrique Rodriguez, former Labor Minister under ex-President Carlos Menem, opined that the ruling would allow more than ONE union per sector to obtain legal recognition. Constitutional scholar Daniel Sabsay said it would eliminate monopoly control over labor relations and encourage greater democracy in trade union activity. Both Sabsay and Rodriguez agreed that the CTA should now receive legal recognition. -------------- NEXT STEPS -------------- ¶14. (SBU) While Labor Minister Tomada denied any plans to amend the current Trade Unions Law, Senator Gerardo Morales, the Chairman of the Labor and Social Security Committee in the Senate and Head of the opposition Radical Party (UCR),announced his intention to amend current regulations to establish freedom of association and affiliation, ensure internal democracy in trade unions, allow minority representation in unions, prohibit reelection of labor leaders, and demand greater transparency in the management of union funds and union-managed healthcare organizations. Radical Deputy Miguel Giubergia introduced a bill on November 14 to bring Article 41 of the current Trade Union Law in line with the Supreme Court's ruling. Other opposition blocs like the Civic Coalition, dissident Socialists, and leftist groups are drafting their own bills to establish a more democratic labor union system. Meanwhile, FPV Deputy and CGT lawyer Recalde said he is working on a bill to limit the ruling's impact, although the CFK administration and FPV Congressional leaders have not yet backed this initiative publicly. Although opposition blocs are enthusiastic about reforming the Trade Unions Law, their initiatives will most likely not pass in the Kirchner-controlled Congress. -------------- COMMENT -------------- ¶15. (SBU) The Supreme Court's ruling demonstrates that judicial independence still has a pulse in Argentina. The ruling attacks the core of this country's Peronist-corporatist Model, seeking to check the previously unchallenged power of the CGT. If applied broadly, the ruling not only threatens CGT hegemony over labor relations, but also the very foundation upon which Peronism is based. Argentina's trade union system has long been the central pillar of the corporatist model put in place by Peron 60 years ago, and it has successfully resisted reform efforts by military and democratic governments seeking a more pluralistic system for over half a century. It is not surprising that the CGT and, the current neo-Peronist government will seek to limit the ruling's applicability, but the Court's decision could be a positive step if it helps introduce greater competition, democracy, and transparency into Argentina's labor movement. END COMMENT. WAYNE