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Uruguay 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
(see Blue-Collar Workers
, ch. 2).
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.
Data as of December 1990
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