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
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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
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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
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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
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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