Unions present pay proposals for 2004

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In September 2003, Portugal's two main trade union confederations, CGTP and UGT, presented their demands for 2004, following a year of falling real pay, rising unemployment and tightening public expenditure. The unions are focusing on pay rises in 2004 that will improve workers’ purchasing power, especially at the lowest levels, and call for similar increases in pensions. They also make a number of proposals to improve Portugal's current low levels of productivity and competitiveness.

In September 2003 (before the 2004 state budget was debated in parliament), the General Confederation of Portuguese Workers (Confederação Geral de Trabalhadores Portugueses, CGTP) and the General Workers’ Union (União Geral de Trabalhadores, UGT) presented their proposals for incomes and pay policy in 2004. The demands are based on an analysis of the Portuguese social and macroeconomic situation in 2003, which the trade union confederations describe as follows:

• the government has opted for a macroeconomic policy (PT0206101N) whose fundamental objective is to comply with the Stability and Growth Pact accompanying EU Economic and Monetary Union by means of a sharp reduction in public expenditure, at a time when the international economic situation is not very bright, internal investment is falling and companies are relocating to other countries. This policy does not help the effort to increase exports;

• there has been a very marked rise in the unemployment rate (from 4.1% in 2001 to 6.2% in 2003) with weaknesses in the labour market persisting, which have not been addressed by structural and economic measures (PT0304101N). These include a high level of non-permanent employment contracts, difficulties for young people (especially the most highly qualified) in entering the labour market, and a low qualification level among the working population; and

• there has been only a slow improvement in national levels of productivity and competitiveness.

According to Bank of Portugal (Banco de Portugal) projections, 2003 will be a year of zero, if not negative, economic growth. In 2004, the Bank states that Portugal will register a slightly higher inflation rate than the average predicted for the EU, with 2.7% as the top limit for Portugal (against an EU estimate of 2.3%), and GDP growth of between 0% and 2.0% (compared with an estimated 2.3% for the EU). It also forecasts a rise in unemployment for 2004, though it will not be as sharp as in 2003.

According to CGTP and UGT, pay rises in recent years have remained below the inflation rate and in 2003 wages are set to rise at a lower rate than the combined total of inflation and productivity increases, which in real terms means a cut in pay. According to data from the Directorate General for Employment and Labour Relations ( Direcção Geral do Emprego e Relações de Trabalho, DGERT), the average collectively agreed pay increase in the first six months of 2003 was 3%. This compares with an estimated inflation rate of 3.8% for the last 12 months. Most public administration workers have not received a pay rise in 2003. An analysis of the period from 1995 to 2002 indicates that real pay rises amounted to 0.79% per year, whereas the average rise in productivity was 1.43% per year.

According to UGT, an increase in productivity and competitiveness would be a way of guaranteeing a greater rise in pay. It considers the government's proposed 'Social contract for competitiveness and employment' (Contrato Social para a Competitividade e Emprego) (PT0307101N), at present being discussed by the Standing Committee for Social Concertation (Comissão Permanente de Concertação Social, CPCS), as a fundamental component of such a strategy. For CGTP, trade union activity at the workplace is seen as a 'decisive factor in raising productivity levels'.

In its proposals for 2004, UGT calls for: a pay increase of 4.5% as a reference rate, though this could vary from sector to sector as a result of collective bargaining; a national minimum wage rise of 6.6%; an increase of 7.5% in the minimum pension under the general regime (increasing it to EUR 200 per month); and an increase of 10.3% in the 'social' pension (to EUR 146 per month). In its proposals, CGTP calls for: a pay increase of 5%, with an across-the-board minimum monthly rise of EUR 25; and an across-the-board minimum monthly rise of EUR 25 in the national minimum wage.

The trade union confederations also state that an effort needs to be made to: improve workers’ skills and the quality of employment; improve control of the tax system and social security contributions; and boost the productive sector and innovation, especially among small and medium-sized enterprises. They also call for a social cohesion policy that combats inequalities and for an increase in the quality of education. Finally, they want: compliance with health and safety agreements to be reinforced; occupational training to be extended; and collective bargaining to be intensified.