URUGUAYAN PARLIAMENT PASSES COLLECTIVE BARGAINING

UNCLAS MONTEVIDEO 000509 SENSITIVE SIPDIS STATE FOR WHA/BSC MARY DASCHBACH E.O. 12958: N/A TAGS: UY PGOV ELAB SUBJECT: URUGUAYAN PARLIAMENT PASSES COLLECTIVE BARGAINING LAW Summary -------------- ¶1. (U) On September 2, the Uruguayan Congress passed a law establishing government regulation of collective bargaining. Despite criticism from business leaders, the bill passed with support from both the leftist Frente Amplio coalition and the more conservative National Party, largely due to the addition of a "peace clause" negotiated behind the scenes by the two leading candidates in October's upcoming presidential election, Jose Mujica and Luis Alberto Lacalle, prior to the bill's passage by the Senate August 18. End Summary. The Collective Bargaining Law -------------- ¶2. (U) Historically, the government of Uruguay largely has abstained from involvement in labor relations, with the one major exception found in the Salary Councils established in 1943 to set the minimum wage for different labor sectors. Following the election of Tabare Vazquez in 2004, the Frente Amplio government sought increased regulation of labor relations, including collective bargaining, culminating in the introduction of a collective bargaining bill by the executive branch in October 2007. ¶3. (U) In accordance with recommendations by the International Labor Organization, the law establishes a larger role for the government in the adjudication of labor disputes. The bill's most significant contribution is the creation of a Superior Tripartite Council made up of 21 officials: nine from the executive branch of government, six from the business community, and six from organized labor. This new council takes on the role of the Salary Councils in determining the minimum wage, but also assumes the capacity to make determinations related to labor negotiations. The bill also designates trade unions to negotiate on behalf of workers whose companies are not unionized, and obliges labor and management to negotiate in "good faith". ¶4. (U) Prior to the bill's arrival in the Senate, public debate was split largely along lines both of party and labor/management, with the Frente Amplio and unions eagerly supporting the bill while the National and Colorado parties, as well as local business chambers, actively opposed it. The main argument of the opposition was that the law would give too much power to the government in labor negotiations, particularly since the membership of the Superior Tripartite Council would be unbalanced, with three additional seats held by government compared to both business and labor. Local business leaders also argued that the bill would hurt small enterprises, and protested the lack of a "peace clause" stating that a labor conflict or strike would invalidate an agreement. Despite these objections, the Congress of Deputies passed the bill on July 23, with almost all votes coming from Frente Amplio representatives. Mujica and Lacalle Lobby for the Peace Clause -------------- - ¶5. (U) With interparty tensions running high following the bill's passage in the Congress of Deputies, Frente Amplio presidential candidate Jose Mujica and his allies worked behind the scenes to create compromise language that would allow for more bipartisan support for the bill in the Senate, primarily through the incorporation of a peace clause. According to a local newspaper, Mujica had considered a peace clause since June, when he told a group of business leaders that some of their suggestions for the bill were worthy of consideration. Following the approval of former labor minister (and Mujica confidante) Eduardo Bonomi, the addition of the peace clause to the bill was introduced in the Senate by Victor Vaillant of the Frente Amplio on July 30. ¶6. (U) While Mujica played a role in modifying the bill to allay the concerns of the business community, Luis Alberto Lacalle, presidential candidate for the National Party, quietly lobbied his partisans to approve it despite their still-unsatisfied objections. As National Party senator and negotiator Francisco Gallinal told a local newspaper, "Lacalle has said that there are laws that we are going to abolish and others that we are going to maintain and improve," implying that the collective bargaining law falls in the latter of the two categories. ¶7. (U) The backstage compromises engineered by the two party leaders led to the near-unanimous passage of the amended bill in the Senate, with 23 of the 25 senators voting in favor; only the minority Colorado Party stood in opposition. Following the approval of the peace clause by the Congress of Deputies September 2, the bill now only awaits President Vazquez's signature to become law; however, National Party representatives have announced that the law will be modified subtantially if Lacalle is elected president. Comment -------------- ¶8. (SBU) The fairly rapid agreement between the two sides can be seen as an outgrowth of the move to the center by both presidential candidates. With Mujica and Lacalle close in the polls, neither candidate can afford to estrange the powerful interest groups affected by the bill, thereby explaining Mujica's direct appeal to the business community and Lacalle's concession to organized labor. (Note: In his courting of unions, Lacalle has even gone so far as to set a precise date and time - December 8th, at 10 am - at which he would meet with leaders of the Pit-Cnt syndicate if he were to win the election. End Note.) While Mujica and the Frente Amplio likely will benefit the most from the law's long-awaited passage, the National Party's support for the bill helps Lacalle to avoid being seen as obstructing workers' rights as the election approaches. End Comment. Matthewman