Post on 13-Mar-2020
Sector agreements, wage and productivity in Uruguay
Graciela Mazzuchi
Collective Bargaining, wages and productivity
ILO/IZA Conference
“Assessing the Effects of Labour Market Reforms – A Global Perspective”
10-11 March 2016
Presentation outlines
Collective bargaining 2005-2008
Collective bargaining 2010 wage guidelines with productivity indicators (macro and sector)
Collective bargaining 2012 wage guidelines with productivity indicators (macro)
Collective bargaining 2015:wage guidelines with fixed adjustments according to the situation in each sector.
The views of stakeholders on the results
Final comments
Tripartite Bargaining 2005 -2015
The first leftist government in Uruguay, carried out significant changes in labor matters,
going from a State that didn't take part in labor relations to one that was active,
promoting social dialogue and tripartite collective bargaining,
regulating the collective legal framework and
protecting workers as individuals.
o Institutional changes
Higher Tripartite Council, Rural Council (first time), Bipartite public sector, Domestic service Council in 2008 (first time)
o Legal changes (Collective rights)
Union rights act (libertad sindical) (dic 2005)Colective bargaining law for public sector (jun 2009)Colective bargaining law for public sector (set 2009)
Tripartite Bargaining 2005 -2015
Wage guidelines
2005 and 2006: annual agreement with semester adjustments: future inflation after corrected, plus fixed adjustments (up to 4.02%)
2008: 24 or 30 month agreement (semester or annual adjustments), future inflation, plus fixed adjustements from 3.5 to 5.5% (greater for lower wages), and additional wage increase according to the situation in each sector.
Easy with a clear goal: to make up for the real wage loss of purchasing power
Results
70
80
90
100
110
120
130
140
150
1998 2000 2002 2004 2006 2008 2010 2012
GDP
60
70
80
90
100
110
120
1998 2000 2002 2004 2006 2008 2010 2012
Real Wage
Unemployment 2005 more than 11%, 2009: 7.3%
Private workers with social security coverage2005: 866,5542009: 1,102,919
200 agreements each round,85-95% by consensus, most followed the guidelines
Tripartite Bargaining 2010-2012
In this period a new Administration of the same
political party started.
They had to face a new round of wage negotiation since most agreements would expire that year.
In 2010 the government saw that, although the economy was growing, there was uncertainty in the international economic situation.
They considered that the wage loss had been rectified so they released new guidelines for the private sector to moderate the wage growth in order to avoid inflationary pressure and to take into account the huge differences between sectors.
Wage guidelines 2010
Term: 3 to 5 years with annual adjustments
Expected inflation (corrected)
Macro component: expected growth of the economy over employment (50% weighed)
Sector component: sales growth over sector employee (50% weighed)
Problems: formula and information
Macro: aggregate, no changes in quality
Sector: problems with deflate
Critisisms
Macro is estimated and corrected in two stages
Sector:
the level of detail is too big
errors in the classification
sales are volatiles
small sized enterprises are not included
the number of enterprises is fixed
there aren't price index by sector
contributors doesn't reflect variations in work hours
the regularization of workers distorts the number of contributors
Results 2010
Acuerdos y decretos con contenido salarial Total Porcentajes
Consensos 187 84,2
Acuerdos por mayoría 27 12,2
Decretos 8 3,6
Total 222 100,0
Con crecimiento fijo 190 85,6
Sub tot con crecimiento variable según indicador 33 14,9
Macro 28 12,6
Productividad macro 16 7,2
Otros 12 5,4
Sector 20 9,0
Productividad sector 8 3,6
Otros sector 12 5,4
Wage guidelines 2012
Term: 3 years with annual adjustments
Expected inflation (corrected)
Macro component: expected growth of the economy over employment (50% weighed)
Sector component: Indicator to agree on negotiation (50% weighed) with increases according to the evolution of the sector
Productivity bargaining is suggested at the enterprise level
Sector Adjustments
Negative 0
From 0 to 4% From 0 to 2%
More than 4% From 2 to 4%
Results 2012
Acuerdos y decretos con contenido salarial Total Porcentajes
Total 61 100,0
Con crecimiento fijo 45 73,8
Sub tot con crecimiento variable según indicador 16 26,2
Macro 11 18,0
Productividad macro 7 11,5
Otros 5 8,2
Sector 5 8,2
Productividad sector 3 4,9
Otros sector 2 3,3
Wide lines 2013
Two alternatives were suggested and both considered the economic situation and the sector but with a fixed table where the growth depends on what happens to the GDP and the sector (poor, average or good).
PIB <2% 2-4% >4%
SECTOR
Bien 1% 2,25% 3%
Regular 0,50% 1,25% 2%
Mal 0% 0,25% 0,50%
Número Porcentaje
Acuerdos y decretos con contenido salarial 71 100,0
Con crecimiento fijo 57 80,3
Con ajuste único 6 8,5
Con crecimiento basado en indicadores 8 11,3
Con productividad 3 4,2
Results 2013
60
70
80
90
100
110
120
130
140
150
160
1998 2000 2002 2004 2006 2008 2010 2012 2014
GPD
2004-2014 +61%
Results
60
70
80
90
100
110
120
130
1998 2000 2002 2004 2006 2008 2010 2012 2014
Evolución del salario real
Medio
Público
Privado
2015/2005GDP/employment=+45%Real wage =+54%
Significant increase in the formalization of work
Contributors 2004: 916.147
2015: 1.454.331
Increase in the real minimum wage: ene2016/ene2004= 271%
Decrease of wage dispersion: Gini 0.45 in 2004 to 0.36 in 2014
Contributors to the trade unions 1990 = 227.800
2003= 126.600
2015= 230.400
Results
But not very well in terms of number of agreements that incorporate productivity adjustments
Porcentaje de acuerdos ajustes por productividad macro o sectorial
2010 10,8
2012 16,4
2013 4,2
Results
Term: 3 years with semestral adjustmen
Adjustment by sector: dynamic (increase +4%), médium (between 0 and 4%) in difficulty if not grow
Corrective at the end of year (real inflation and adjustment)
Safeguard: if inflation exceeds 12% salary adjustment for the difference between inflation and gains made
Higher wage increases for submerged (+2.5 or 3.5 per year)
Adjustment 11.5, 10, 9.5 and 11.7% per year for minimum wage
Wage guidelines 2015
1st year 2nd year 3rd year Accumulated
Sectors
Dynamic 10 9 8 29,5
Médium 8,5 7,5 7 24,8
In difficulty 8 6,5 6 21,9
Reasons for poor results in productivity
adjustments according to negotiators
Significant cultural change
Sectors are very heterogeneous
Wrong information at the wrong time
Information is provided only by employers
There were some mistakes in the indicators that led to widespread distrust
Low-wage workers preferred negotiating price floors
Government negotiators were not sufficiently trained
Final comments
The 1st Adm. (2005 – 2009) made up for the real wage loss in the previous Adm.
The 2nd Adm. (since 2010) tried to associate wage increase with productivity growth, admitting the idea of limiting wage increase or linking it to the economic growth.
The idea has reasonable grounds but success in implementation has important requirements to change old traditions.
The change will be adopted if all stakeholders have all the conditions for understanding, right information to calculate indicators with clarity and transparency and are willing to adopt it.
Suggestions
Put the issue on the public agenda to be discussed, explained and debated.
Make simpler formulas trying to avoid corrections over time that hinder calculations and understanding.
Generate good quality information by all the parties involved.
Train the team, prepare the negotiators so that they can deal with the new way of negotiation.
Create a Productivity Institute to promote this discussion and give advice to enterprises in order
to solve growth problems.