Unions oppose unemployment benefit reform proposals

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In November 2003, the Portuguese Ministry of Social Security and Labour is preparing a reform of the unemployment benefit system. Notably, it plans to take into account in the payment of benefits the recipients' age, number of years of social security contributions and number of dependents. Trade unions and opposition political parties have criticised the proposals.

Portuguese state expenditure on unemployment and unemployment benefits doubled between 1993 (EUR 562 million) and 2003 (EUR 1.1 billion in 2002 and a forecast EUR 1.2 billion in 2003). Presently, the only factor taken into consideration in determining for how long unemployment benefits are provided is age - benefits are paid for 12 months for unemployed people aged under 30, 18 months for those aged between 30 and 40, 24 months for those aged between 40 and 45, and 30 for those aged over 45.

In November 2003, the Ministry of Social Security and Labour is preparing the introduction of amendments to the unemployment benefit scheme, some of which will come into force as early as 2004. The aim is to create a regime which takes into consideration in calculating the duration of benefits: age, the number of years during which social security contributions have bene paid; and the unemployed person's number of dependents. Furthermore, under the proposed changes:

• the value of unemployment benefit, which is currently equal to 65% of the wage received during the 12 months prior to unemployment, will be maintained. An unemployed person may, at the least, receive the equivalent of the national minimum wage (EUR 356.60 per month) and, at the most, receive the equivalent of three times the national minimum wage;

• presently, unemployed people may refuse offers of work made by a Job Centre (Centro de Emprego) three times - which often occurs because the wages on offer are less than the amount received in unemployment benefit - before losing benefit. The government wants to allow only one refusal in relation to the offer of a 'suitable' job - ie a job that is orientated to the same level of qualifications and the same type of occupation as that previously held and which does not prejudice the unemployed person’s interests and those of their family;

• it is planned to lower the amount of partial unemployment benefit paid, which is stipulated in legislation (PT9906150F), and tie it in to part-time employment, in order to promote the seeking of part-time work by unemployed people;

• where workers leave their job though mutually agreed resignation, part of the compensation received by them will be deducted from their unemployment benefit; and

• overall, a key objective is to prevent fraud in the provision of benefits, for example to people who receive self-employed income or refuse suitable employment.

The reform planned by the coalition government of the centre-right Social Democrat Party (Partido Social Democrata, PPD/PSD) and the right-wing People's Party (Partido Popular, CDS/PP) has met with united criticism from the opposition Socialist Party (Partido Socialista, PS) and Left-Wing Bloc (Bloco de Esquerda, BE) and from the two main trade union confederations, the General Confederation of Portuguese Workers (Confederação Geral de Trabalhadores Portugueses, CGTP) and the General Workers’ Union (União Geral de Trabalhadores, UGT). CGTP states that unemployment benefit has to be closely linked with pay and considers the reform as a further attempt by the government to reduce workers’ rights. UGT accuses the government of calling into question the rights of workers, without prior dialogue with unions and employers' organisations. CGTP and UGT agree that unemployment benefit should be awarded on the basis of age and the number of years of social security contributions, but they consider the proposed linking of unemployment benefit to the number of dependents to be misplaced. The PS believes that the new rules will penalise unemployed people, while for BE, the government is creating an 'assistance-based' benefit, and should alter its economic policy to favour productive investment, employment and combating economic and fiscal crime.