Background

To counter rising inflation, the Inflation Restraint Act (Bill 179) was enacted, and later replaced by the Public Sector Prices and Compensation Review Act (Bill 111).  The Acts restricted collective bargaining in the public and para-public sectors by extending the expiry of collective agreements and limiting wage increases. 

Complainants' Allegation

The economic situation at the time did not require emergency legislation.  The Government ignored the unions' opinions and views.  The Acts violate Conventions Nos. 87, 98, 151 and 154 by:

ß       Extending by 1 year compensation plans being negotiated or due to expire

ß       Limiting public wage increases to 5% (in some cases 9%)

ß       Nullifying previously negotiated wage increases that exceeded the increases allowed by the Acts

ß       Interrupting all trade union bargaining on non-monetary issues for the period in which collective agreements were extended

ß       Imposing "ability to pay" as a criteria for arbitrated wage settlements

Government's Reply

Bill 179 and its successor Bill 111 were enacted to counteract the emergency situation of inflation.  The wage restraints and restrictions placed on collective bargaining were an extraordinary measure to stabilize the economy.  The Government made efforts to secure industrial peace to the extent possible during the economic crisis.   Neither Act is in force any longer.

CFA Conclusions

It is not for the CFA to question the economic arguments presented by the Government but, rather, to assess whether the measures taken infringe freedom of association principles.  The CFA has recognized that economic stabilization measures that restrict workers' right to collectively bargain can be acceptable if they are an exceptional measure restricted to the degree necessary, are in effect for a reasonable time period and include adequate safeguards to protect workers' standard of living.  The Government met or made serious efforts in relation to these criteria in adopting Bill 179. 

Bill 179, however, infringed the principles of freedom of association by nullifying previously negotiated wage increases.  Such contracts should be respected.

Bill 111 continued a policy of restraint by imposing "ability to pay" and "government fiscal policy" as criteria for wage settlements.  Restriction on the right to strike must be compensated by adequate, impartial and speedy conciliation/arbitration processes that must be independent and have the confidence of the parties.  Imposing legislative criteria diminishes the parties' confidence in the system.

Collective bargaining on non-monetary issues was impeded during the effective period of the legislation.  Even where wage restrictions are acceptable, negotiation on non-monetary issues should not be disrupted.

CFA Recommendations

1.     Bill 179 did not go beyond acceptable limits on collective bargaining.  The interruption of previously negotiated agreements is a violation of freedom of association principles.

2.     Where wage restraints are imposed, collective bargaining should continue on non-monetary issues

3.     In public or essential services, restrictions on the right to strike should be accompanied by conciliation/arbitration mechanisms.

4.     Since the legislation at issue has expired, the CFA hopes the parties will attempt to overcome any residual negative effects on labour relations.