The labor force in Uruguay was small (1.4 million in 1990), about 80 percent urban, and educated at least to a high school level. In 1988 about 30 percent of workers were employed in the public sector, 23 percent in industry, 15 percent in agriculture, 12 percent in trade and commerce, and 20 percent in services and other activities. During the 1970s, workers experienced a sharp decline in real wages, which they only partially regained in the 1980s. The problems of the labor force, reflecting the overall difficulties of the Uruguayan economy, led to widespread strikes and unrest that hindered economic growth during the 1980s. In view of Uruguay's fundamental structural difficulties, an accommodation with the labor movement remained an important issue for the government.

The Labor Movement

Several of the uncommon economic and political characteristics of Uruguay influenced the development of its labor movement during the early 1900s. First, because the only sizable concentration of workers was in Montevideo, the labor movement was largely restricted to that city and was thus not really a national phenomenon. Second, the small number of workers employed by most individual firms limited the tendency of workers to form mass organizations. Third, the government played a central role in labor policy. State enterprises and government organizations became the nation's largest employer. In addition, legislation established many private-sector labor policies that preempted organized labor.

Uruguay's laborers, like the economy as a whole, made great strides during the early decades of the 1900s. Ironically, this progress slowed the growth of a cohesive labor movement. President Batlle y Ordóñez, who firmly supported the working class and the right to strike, was an important figure for laborers during this period. His ideology of Batllism--in sharp contrast to the repression of labor in many other Latin American nations--aimed to reconcile labor and capital, or employees and owners. The Batllist government created the Office of Labor and ensured that a share of the increasing livestock export earnings was transferred to the urban working class. By the late 1920s, legislation limited the workweek and workday, established a minimum wage, and required that benefits be paid to injured or retired laborers. This congenial atmosphere gained the official labor movement only limited support. In 1926, for example, only 6,000 out of 65,000 industrial workers were dues-paying union members.

The cordial relationship between labor and government deteriorated as Uruguay's economic growth stalled in the 1930s. The government became less tolerant of unions. The unions, in turn, became more militant. Communism replaced anarchism as the dominant political ideology of labor leaders. During and after World War II, a sometimes-violent split between the communist and noncommunist labor elements developed. This ideological division prevented the labor movement from speaking with one voice and limited its national impact. In contrast to Argentina, where the Peronist labor movement gained great political power during the 1950s, the labor movement in Uruguay remained fragmented.

An important question for the labor movement in Uruguay has been whether public-sector workers have the right to strike. Government employees--both in government agencies and in state enterprises--constituted the largest group of salaried workers in the country. Thus, the government's civil-service wage policy set the tone for wages in general. The government also participated directly in setting private-sector wage policy, along with unions and owners, through the tripartite advisory boards--the wage councils--established in the 1940s. When public employees tried to strike, the government responded harshly. After a 1952 strike in the petroleum refinery, for example, the government enacted a mild form of martial law.

The confrontation between government and labor became pronounced in the late 1960s. The Communist Party of Uruguay had come to dominate the unions after the Cuban Revolution, and the unions' objectives were as much political as they were economic. The government would not tolerate labor's leftist political program, especially given the charged atmosphere of the period. Nor was the government in a position to fulfill the unions' wage demands; a wage and price freeze was imposed, and the wage councils were abolished in June 1968. Strikes and repression became frequent. The confrontation reached its climax in 1973, when the major labor group, the National Convention of Workers (Convención Nacional de Trabajadores--CNT), organized a general strike to protest the military coup. The strike--the labor movement's last stand--dissolved within two weeks. The military regime that seized power in 1973 outlawed the CNT and arrested its leaders. Union activity ceased for almost ten years. During the 1970s, 12,000 public-sector workers and at least 5,000 private-sector workers were dismissed because of their trade union or political activities.

The military government allowed unions to resurface in 1981 through the Law of Professional Associations. Labor organizations were allowed to exist on three levels: by individual enterprise, by occupational category, and on a national scale. But the government took pains to depoliticize the labor movement. The secret ballot was to be used on the individual-enterprise level, both for election of leadership and for strike votes. Leaders of previously outlawed organizations were admonished to limit their political activity. The law's timing was more important than these limitations, however. As economic activity slowed during the 1981-84 recession, union activity was minimal. Nevertheless, the unions did play a role in the "democratic counteroffensive" that led to the restoration of civilian rule in the mid-1980s. Successful general strikes before and after Sanguinetti's election helped dissuade the military from interfering in the political process.

Relations between labor and government were delicate during the Sanguinetti administration. The framework for relations was established before the civilian government took office, during the 1984-85 period of multiparty consultations, officially called the National Conciliatory Program (Concertación Nacional Programática--Conapro). A working group recommended that the incoming government adopt a three-part policy toward labor: repeal of the legislation that restricted union activity and collective bargaining; reinstatement of all public-sector employees who had been dismissed by the military regime for their union activity; and restoration of workers' purchasing power through periodic wage increases, but in a manner consistent with bringing down inflation. The new government quickly complied with the first two recommendations, but the third became a contentious issue.

Government Policy

The Sanguinetti administration attempted to balance the clear need to increase wages with the equally pressing requirement to control inflation. Thus, the government immediately declared a wage increase in March 1985 but took action designed to control future wage increases. The tripartite wage councils were reestablished to negotiate wages every four months for nonagricultural private-sector employees. The councils at first adopted wage increases that were slightly higher than inflation, so that real wages at the end of 1985 were an average of 15 percent higher than the year before. Nevertheless, there was a great deal of labor unrest: over 900 strikes occurred between March 1985 and September 1986. Workers were apparently frustrated by the slow increases in real wages and anxious to express their displeasure after a decade of repression.

After 1986 the number of labor disputes decreased, partly because of the government's bargaining strategy. The government tried to control wage increases by persuading all private-sector unions to sign twenty- to twenty-four-month contracts under which wages would be adjusted according to conditions within individual companies. This action helped lower the level of conflict between labor and government, but it may have made the task of restraining wage increases more difficult. In exchange for accepting longer wage contracts, unions demanded that workers be protected against inflation through "indexation," or automatic wage increases, to compensate for inflation. In 1986 about onethird of all workers were covered by indexed contracts; by the end of 1988, over half were. When Sanguinetti proposed in mid1988 that wage increases be held to 90 percent of inflation, instead of the 100 percent or greater that unions had become accustomed to, most of the nation's work force joined a one-day work stoppage in protest. The position of workers was understandable: their average real wage (purchasing power) remained below its 1968 level. The wage issue, particularly the question of whether indexation was compatible with an anti-inflationary policy, was still unresolved when Lacalle took office in 1990.

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Source: U.S. Library of Congress