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### Viewing cable 08BUENOSAIRES1580, ARGENTINA: SUPREME COURT RULING OPENS THE DOOR FOR TRADE

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08BUENOSAIRES1580 | 2008-11-19 19:07 | 2011-03-15 07:07 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Buenos Aires
Appears in these articles: http://www.lanacion.com.ar/1357489-elogios-por-un-fallo-de-la-corte

`

    VZCZCXYZ0000
    OO RUEHWEB

    DE RUEHBU #1580/01 3241939
    ZNR UUUUU ZZH
    O 191939Z NOV 08
    FM AMEMBASSY BUENOS AIRES
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 2500
    RUEHC/DEPT OF LABOR WASHINGTON DC
    RUCNMER/MERCOSUR COLLECTIVE
    RUEHGV/USMISSION GENEVA 0737

` `

    UNCLAS BUENOS AIRES 001580

    USDOL FOR TMCCARTER

    SENSITIVE
    SIPDIS

    E.O. 12958: N/A
    TAGS: ELAB PGOV AR
    SUBJECT: ARGENTINA: SUPREME COURT RULING OPENS THE DOOR FOR TRADE
    UNION COMPETITION

    ¶1. (SBU) SUMMARY: The Argentine Supreme Court declared Article 41 of
    the Trade Unions Law unconstitutional and upheld the right of a
    workers' union that lacks official legal recognition to elect its
    own delegates.  The ruling, if widely applied to organized labor,
    would expand representation rights to any labor delegate affiliated
    with unions simply registered with the Labor Ministry (MOL).  This
    could potentially increase competition among labor unions and
    threaten the monopolistic model of union representation in Argentina
    that has prevailed for more than 60 years.  General Labor
    Confederation (CGT) representatives immediately rejected the ruling,
    calling it ""a provocation that would cloud the social climate.""

    ¶2.  (SBU) GOA officials swiftly sought to minimize the ruling's
    impact.  Labor Minister Carlos Tomada stated that the ruling would
    only apply to the specific case decided by the Supreme Court.
    Interior Minister Florencio Randazzo indicated that the ruling's
    applicability would be limited to the public sector.  Meanwhile,
    opposition parties are working on different initiatives either to
    reform the Trade Unions Law or to bring Article 41 in line with the
    Supreme Court's ruling.  However, the bills will most likely not
    pass in the Kirchner-controlled Congress.  END SUMMARY.

    -------------------------------------------
    ""SIMPLE"" REGISTRATION VS. LEGAL RECOGNITION
    -------------------------------------------

    ¶3. (SBU) For over 60 years, Peronists have controlled the General
    Confederation of Labor (CGT), which has had a virtual monopoly over
    worker representation since state-structured unionization was first
    introduced by Labor Minister and then-President Juan Domingo Peron
    in the mid-1940s.  The CGT has approximately 3 million members, and
    represents over two-thirds of the unionized workforce.
    Approximately 40 percent of Argentina's workforce is unionized.

    ¶4.  (SBU) Under Argentine law, the GOA recognizes two types of
    unions, each with a different set of rights: 1) unions that are
    simply registered with the MOL and have a limited scope of rights;
    and 2) unions that are not only registered with the MOL, but have
    also been officially recognized as the most representative union in
    a given sector.  Legally recognized unions can exercise a wider
    range of privileges, such as calling for elections to appoint
    delegates, exercising the right to strike, negotiating bargaining
    agreements, appointing delegates to international organizations, and
    compelling employers to directly deduct union dues from unionized
    workers' salaries.  For years, the government has only granted legal
    recognition to the CGT and its affiliates, although former President
    Nestor Kirchner and his wife, current President Cristina Fernandez
    de Kirchner, have flirted with the idea of granting legal
    recognition to a rival confederation known as the Argentine Workers
    Confederation (CTA) since 2003.

    -------------------
    A LANDMARK DECISION
    -------------------

    ¶5. (SBU) In 2003, the Public Employees' Association (ATE), a
    CTA-affiliated union, was prevented from holding elections by the
    CGT-affiliated Civil Servants of the Armed Forces Union (PECIFA).
    PECIFA cited Article 41 of the Trade Unions law which stipulates
    that only state-recognized unions are entitled to call elections to
    vote for delegates, and that these delegates must be members of that
    union.  ATE filed a petition in protest that same year, and its
    petition was subsequently dismissed by both the Ministry of Labor
    and the Labor Court of Appeals.

    ¶6. (SBU) On November 11, the Argentine Supreme Court deemed Article
    41 to be in breach of the constitution, which guarantees freedom of
    association and union democracy, as well as of several international
    conventions adopted by Argentina, including the International Labor
    Organization (ILO) Convention 87 on Freedom of Association and
    Protection of the Right to Organize.  (Note: Since 1989, the ILO has
    called on Argentina to reform its labor laws to bring it into
    compliance with Convention 87.)  In their ruling, the judges said
    ""by favoring or not favoring a given trade union with respect to
    others, governments can influence workers' decisions when they
    select a union to join.""  In addition, the ruling asserted that the
    MOL's ""discretion"" in awarding official union recognition ""violates
    international treaties.""  The ruling, if broadly applied, would
    expand representation rights to labor delegates affiliated with
    unions that are simply registered with, but not legally recognized
    by, the Labor Ministry (MOL).

    ---------------------
    CTA HAILS DECISION...
    ---------------------

    ¶7.  (SBU) The Supreme Court's decision surprised government

    officials and CGT and CTA representatives alike.  The CTA, which has
    been unsuccessfully demanding legal recognition by the MOL for 16
    years, celebrated the decision.  (Note: The CTA is an autonomous,
    politically non-partisan organization, with an estimated 1.5 million
    members, including public and private employees, as well as
    unemployed and retired people.)  The CTA and other labor groups not
    affiliated with the CGT had long contended that the Trade Unions Law
    guaranteed the CGT and its affiliated unions a virtual monopoly over
    unionized labor.  They argued that this contravened ILO Convention
    87 and prevented the CTA and CTA-affiliates from obtaining full
    legal standing.  Although the Supreme Court's decision refers
    specifically to Article 41 of the Trade Unions Law, several labor
    experts consider this a landmark decision as it upholds the
    supremacy of international treaties over domestic labor law.  CTA
    legal representative Horacio Meguira asserted that the decision will
    compel the Congress to amend the current Trade Unions Law in order
    to honor Argentina's international obligation to guarantee the right
    to freely organize.

    ¶8.  (SBU) The GOA has considered the possibility of granting legal
    recognition to the CTA since Nestor Kirchner took office in 2003,
    and had relaxed some labor regulations to allow the CTA to gain
    extra rights in recent years, such as a seat on the Wage Council and
    on the Board of the National Institute of Social Services for
    Retirees and Pensioners (PAMI).  CTA lawyers say they believe the
    verdict not only cracks open the CGT's monopoly on worker
    representation, but also sets a precedent for legal rulings in favor
    of union freedom and democracy in future cases.

    ----------------------------------------
    ...WHILE GOA SEEKS TO MINIMIZE IMPACT...
    ----------------------------------------

    ¶9. (SBU) GOA officials swiftly sought to minimize the ruling's
    impact.  Labor Minister Carlos Tomada stated that the ruling would
    only apply to ATE, and indicated that unions that wanted similar
    treatment would have to go through the courts.  He dismissed
    outright the possibility of amending the Trade Unions Law.  Justice
    Minister Anibal Fernandez opined that the Supreme Court had resolved
    an abstract case between two unions in the public sector, and
    Interior Minister Florencio Randazzo stated that the decision was
    limited to civil servants in the public sector.

    -----------------------------------
    ...AND THE CGT CALLS IT ""A MISTAKE""
    -----------------------------------

    ¶10. (SBU) CGT representatives strongly criticized the decision.
    Hugo Moyano, CGT Secretary General and Vice President of the
    Peronist Party (PJ), called the ruling ""a mistake.""  CGT spokesman
    Hector Daer said the confederation would accept the decision, but
    would urge the government to make a ""political decision regarding
    the issue.""  CGT Human Rights Secretary and leader of the Judicial
    Workers' Union Julio Piumato called it ""a provocation that would
    cloud the social climate.""  CGT Assistant Secretary Juan Belen
    characterized the decision as ""crazy"" and said it ""lacks common
    sense.""  Others stated the judicial decision seeks to divide the
    labor movement.  CGT legal representative and National Deputy of the
    Kirchners' ruling Victory Front coalition Hector Recalde blamed
    journalists for having ""distorted the Supreme Court's decision"" and
    defended current domestic regulations.  He warned that allowing
    several trade unions the power to represent workers in the same
    company or line of work could ""dilute the strength of unions, at a
    time when the economy is becoming increasingly concentrated.""

    ¶11. (SBU) Moyano and other CGT leaders have been supportive of both
    Kirchner administrations and have even delayed or minimized labor
    demands to accommodate the government.  Energized by the Supreme
    Court decision as well as the prospect of imminent layoffs due to
    the expected economic downturn, CGT leaders have suddenly turned
    belligerent and are publicly calling for a 500 peso (US$155)
    year-end bonus for all workers plus restrictions on layoffs,
    including the imposition of double or triple severance pay on
    employers, in addition to calling on the GOA to circumscribe the
    impact of the Supreme Court decision.

    -------------------------------------------
    CHAMBERS OF COMMERCE BELIEVES DECISION WILL COMPLICATE LABOR
    RELATIONS
    -------------------------------------------

    ¶12.  (SBU) Representatives of commercial and industrial chambers
    also expressed concern over the ruling, but for diametrically
    opposed reasons.  They predicted that competition among labor unions
    would result in tougher labor demands.  The President of the
    Argentine Industrial Chamber (UIA) Juan Carlos Lascurain said the
    chamber's legal team was analyzing the ruling, but opined that

    freedom of association is always a ""complicated"" issue.  The
    President of the General Economic Confederation (CGE) Guillermo
    Gonzalez Galicia said the decision would mean that industry would
    have to negotiate with more than one representative, each with
    different labor demands, making it even more difficult for industry
    to reach agreements with labor.  The President of the Argentine
    Confederation of Medium-Sized Companies (CAME), Mr. Osvaldo Cornide,
    echoed the sentiment, saying that small- and medium- size companies
    always benefited from negotiating with one union per sector, and
    that the ruling would imply labor relations chaos.  CTA lawyer
    Meguira downplayed these concerns saying that there are many
    examples where different unions have negotiated jointly with
    employers.   He cited seven unions in commercial air transport and
    12 in the maritime and ports sector as examples.

    ---------------------------
    Experts Praise the Decision
    ---------------------------

    ¶13. (SBU) Labor and constitutional experts alike praised the Supreme
    Court's Decision.  Enrique Rodriguez, former Labor Minister under
    ex-President Carlos Menem, opined that the ruling would allow more
    than one union per sector to obtain legal recognition.
    Constitutional scholar Daniel Sabsay said it would eliminate
    monopoly control over labor relations and encourage greater
    democracy in trade union activity.  Both Sabsay and Rodriguez agreed
    that the CTA should now receive legal recognition.

    -----------
    NEXT STEPS
    -----------

    ¶14. (SBU) While Labor Minister Tomada denied any plans to amend the
    current Trade Unions Law, Senator Gerardo Morales, the Chairman of
    the Labor and Social Security Committee in the Senate and Head of
    the opposition Radical Party (UCR), announced his intention to amend
    current regulations to establish freedom of association and
    affiliation, ensure internal democracy in trade unions, allow
    minority representation in unions, prohibit reelection of labor
    leaders, and demand greater transparency in the management of union
    funds and union-managed healthcare organizations.  Radical Deputy
    Miguel Giubergia introduced a bill on November 14 to bring Article
    41 of the current Trade Union Law in line with the Supreme Court's
    ruling.  Other opposition blocs like the Civic Coalition, dissident
    Socialists, and leftist groups are drafting their own bills to
    establish a more democratic labor union system.  Meanwhile, FPV
    Deputy and CGT lawyer Recalde said he is working on a bill to limit
    the ruling's impact, although the CFK administration and FPV
    Congressional leaders have not yet backed this initiative publicly.
    Although opposition blocs are enthusiastic about reforming the Trade
    Unions Law, their initiatives will most likely not pass in the
    Kirchner-controlled Congress.

    -------
    COMMENT
    -------

    ¶15.  (SBU) The Supreme Court's ruling demonstrates that judicial
    independence still has a pulse in Argentina.   The ruling attacks
    the core of this country's Peronist-corporatist Model, seeking to
    check the previously unchallenged power of the CGT.  If applied
    broadly, the ruling not only threatens CGT hegemony over labor
    relations, but also the very foundation upon which Peronism is
    based.  Argentina's trade union system has long been the central
    pillar of the corporatist model put in place by Peron 60 years ago,
    and it has successfully resisted reform efforts by military and
    democratic governments seeking a more pluralistic system for over
    half a century.  It is not surprising that the CGT and, the current
    neo-Peronist government will seek to limit the ruling's
    applicability, but the Court's decision could be a positive step if
    it helps introduce greater competition, democracy, and transparency
    into Argentina's labor movement.  END COMMENT.

    WAYNE

`