Industrial RelationsMGT 4330Chapter 02

Latin America-IntroductionImport substitution neo-liberal

economicElite LeaderHigh level of state involvement

◦State heavily involved in the setting of the rules related to IR

◦Exception: Uruguay Urban Worker

Latin America-IntroductionState-led labor incorporation

◦The primary goal was controlling and depoliticizing the labor movement.

◦Brazil and ChileParty-let labor incorporation

◦Mobilized labor to generate political support for the urban elites.

◦Argentina and Peru

Latin America-IntroductionLabor movement in the region has been

exposed to very restrictive structures and institutions. ◦State reserve rights to control union◦Limits on the rights of workers to organize, go

on strike and negotiate collective agreement.◦“assist” workers◦Act outside factory gate

Labor unions are important political forces.◦Riots◦Election

Latin America-IntroductionEmployers have relatively powerful

bargaining position.◦Foreign-owned investment are self-

sufficient that they did not rely on the state in their operation.

Globalization presents challenges for labor movement.◦ In neo-liberal societies companies have the

freedom to produce where the wages are lowest and sell where the wages are high.

The legislative and institutional frameworkWorkers’ associations

◦Argentina personería gremial (trade union status) inscriptas (registered)

◦Mexico Unions must register with the National

Secretary of Labor and Social Care Administrative authority blocks the

creation of a union if the union cannot be controlled by government officials or by the employer

The legislative and institutional frameworkWorkers’ associations

(cont’d)◦Brazil

The law permits only one union per industry or profession in a given jurisdiction (union unity)

Workers are free to choose not to join a union, but not free to refuse to be represented by it.

The legislative and institutional frameworkCollective Bargaining

◦Argentina Collective Conventions Act Norms established by a high-level industry union

cannot be derogated by lower-level agreements

◦Brazil Consolidation of Labor Laws Normally occurs on the “base date” (an agreed

annual date on which conventions are revised and renegotiated)

Local government must be informed. Workers and employers must bargain at least

every two years and the instruments may be renewed only once

The legislative and institutional frameworkCollective Bargaining (cont’d)

◦Mexico Federal Law of Labor Most bargaining occurs at the firm level Agreements automatically renewed once if not

revised, but the law provides that wages must be renegotiated every year

If more than one union is represented within a Mexican firm the most representative (in terms of number of members) must sign collective agreements. If this majority is lost at any time during the agreement’s duration, the Board of Conciliation and Arbitration can declare an end to the agreement.

The legislative and institutional frameworkPublic sector provisions

◦Brazil Public servants could neither organize

union nor strike (Before 1988) The 1988 Constitution recognized the

right of public sector workers to organize trade unions, but the law was not explicit in guaranteeing collective bargaining.

In 2005, the Labor Supreme Court finally decided that public servants had the same job security rights as employees in private sector.

The legislative and institutional frameworkPublic sector provisions (cont’d)

◦Argentina Argentina applies to all salaried workers’

unions, in both the private and public sectors. Contrary to the private sector law, the new

regulation established that unions would be proportionally represented in the bargaining process according to their number of members.

◦Mexico Federal Act on State Employees Democratic Federation of Unions of Public

Servants

ArgentinaActors

◦General Confederation of Labor◦Argentine Workers Center◦Constitution of national organizations by

industry◦1,400 Unions◦Unions monopolized the delivery of

health services for their own members, deducting mandatory health fees from pay checks and so gaining economic independence.

ArgentinaActors

◦Employer associations Employers’ associations in sectors with strong

association tradition, which are very representative and which, among other activities, negotiate collective conventions with workers’ unions

industries in which the chambers are fragmented – if there is a workers’ union at the industry level, it acts to gather employers’ interests together

Sectors in which different chambers sign different conventions with a single trade union

Sectors in which employers’ representation is either not clear or does not exist –in which case, the State tries to act as the employers’ bargaining agent.

BrazilActors

◦Unique Workers’ Central (CUT)◦The Union Power◦11,000 Unions◦55 per cent of the existing unions were not

affiliated to any of the 17 central federation◦There cannot be two unions of

“metalworkers” in the same city – but there can be a union of drillers, one of spinning drillers, one of hammers, and so on.

◦56 per cent of all employers’ unions are affiliated to a confederation

MexicoActors

Labor Congress National Workers’ Union The Mexican system is highly centralized

at its upper levels, with a single peak association (Labor Congress) affiliating most of the existing unions and controlling collective bargaining; at its lower levels, worker representation is extremely fragmented.

Mexico system favors firm-level bargaining and thus employers’ associations have no influence.

Argentina The great majority of trade unions and federations

are affiliated to the General Confederation of Labor (CGT). The Argentine Workers Center (CTA), created in the early 1990s as an alternative to the CGT, is well organized in the public sector and affiliates 19 private sector unions

According to the level of organization, there can be unions, federations and confederations or centrals, and as to the economic scope, they can be of company, economic sector, economic activity or professions. Activity or sector unions prevail. Workers’ representatives are protected by law. They cannot be dismissed and employers must pay their salaries even if they are totally dedicated to union activities.

Argentina Collective bargaining in Argentina has

focused on wages bargainingSince 1991, major changes in the

economy and in labor market regulations have impacted the dynamics of collective bargaining◦ the decentralization of the negotiation

process; ◦ the adaptability of the issues negotiated;

and ◦ the incorporation of criteria related to

productivity among the firms.

BrazilCollective bargaining Collective bargaining in Brazil has

traditionally focused on wages bargaining

Without access to information on a firm’s economic performance, unions must restrict their demands to what the employer unilaterally defines as “possible” in the new, competitive economic environments.

BrazilCollective bargaining The new favorable economic and

political environment in Brazil helped to strengthen the unions’ bargaining position. Economic growth after 2003 changed the bargaining landscape in at least two important ways:◦ first, flexible working hours entered the

bargaining agenda in quite an unexpected way;

◦second, the Participation in Profits and Results

BrazilIn 1998, the Cardoso administration

instituted the “bank of hours”, extending the traditional wage basis from the week to the year. The system is well known: during periods of economic growth, workers work more hours without overtime pay; these hours are added to a “bank of hours” that will offset periods of economic downturn, during which workers will work fewer hours for the same annual salary.

MexicoThe majority of the bargaining activity

occurs at the firm level and results in collective contracts or conventions.

From 2003 to 2007, there were almost 21,000 agreed conventions alone, of which 12,500 were motivated by wage revisions, 2,000 by contract revisions and 1,500 by compliance with the agreed contract or convention.

Of the issues bargained in the 1990s, however, the most important was task assignment

Mexico

Decline of Unions

Argentina In Argentina the process of de-

industrialization dates back to the 1970s, when the liberal policies of the military government exposed Argentine industry to foreign competition

Besides, the military would persecute and kill hundreds of union leaders. Unions lost 40% of their density from 1975 to 1985

BrazilIn Brazil, the stability of union

density results from the ability of the labor movement to cope with the structural changes within the labor market.

MexicoIn Mexico, the loss in affiliation has similar

causes: ◦privatization; ◦ the deindustrialization of the central areas of

the country; ◦ the growth of the services and informal

sectors;◦ growth of micro and small companies ◦ failure of the union leaders to attract affiliates

in the new, emerging industries ◦Many of the traditionally unionized companies

moved to the north, establishing labor relations not mediated by unions.

MexicoWithin the union structure are the

institutions affiliated with the peak official organization, the Labor Congress (Congreso del Trabajo - CT), as well as independent unions.

In 1978, 84% of all union members were represented by the CT, or 74% of private sector’s affiliated workers and 99.8% of the public sector’s.