1998 Annual Review for Portugal

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This record reviews 1998's main developments in industrial relations in Portugal

Introduction

In 1998, the Portuguese economy continued to grow at a rate of 3%. However, the inflation rate of 2.8% (in November) was higher than expected and represented an increase of almost one percentage point in comparison with the previous year. The unemployment rate for the third quarter of the year was 4.5%, the lowest since the beginning of the 1990s, and significantly lower than the same period in 1997 (6.7%). Long-term unemployment was still a persistent problem, as it affected 46% of unemployed people: 62.1% had been unemployed for more than two years, of which 20.5% was made up of young people.

The level of employment increased by 2.6% between the third quarter of 1997 and the same period in 1998. This growth in employment can mainly be attributed to employment creation in the construction and services sectors. However, unemployment was still increasing in the industrial sectors.

The Socialist Party (Partido Socialista, PS) was in government, while the President was also a PS representative, a situation which in principle should ensure institutional stability. For the first time in Portuguese history, referenda were held in 1998, on the liberalisation of abortion laws and on the question of regionalisation. The results were not very encouraging, in the sense that the abstention rate was very high in comparison with parliamentary elections. The voters rejected liberalisation of the abortion laws by a slim margin and voted overwhelmingly against regionalisation. 1999 is sure to see intense political activity, because of parliamentary elections scheduled for October.

Key trends in collective bargaining and industrial action

In 1998, 393 collective agreements were negotiated, according to Ministry of Labour and Solidarity figures, slightly fewer than reported in 1997 (409). There were no significant changes in terms of the relative importance of company-level and sectoral agreements, with sectoral agreements remaining predominant, at 67.2% of all agreements (68% in 1997). Company-level agreements accounted for 27.2% (26.4% in 1997), while adoption agreement s - whereby social partners in one area adopt agreements already negotiated elsewhere - comprised about 5.5% of the total.

An analysis of many of the 1998 collective agreements (PT9901123F) reveals:

• a centralisation of bargaining, with about 67% of agreements negotiated at national level. If "multi-district" agreements are included, the percentage rises to 87%;

• a high concentration of agreements in industry, which represents 50.1% of the total, compared with 18.3% in commerce and hotels and 7.0% in transport;

• a high level of company-level agreements in transport, accounting for 82.6% of agreements in that sector. The proportion of company-level agreements drops to around a quarter in industry and to only 18.3% in commerce and hotels; and

• the influence of the two main trade union confederations in bargaining is fairly evenly balanced, with around 45% of agreements negotiated by the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP), 40.6% by the General Workers' Union (União Geral de Trabalhadores, UGT) and 15% by the two working in conjunction. Only 3% of agreements were negotiated by independent unions.

There was some innovation in the contents of agreements negotiated in 1998, with 36.3% covering non-pecuniary matters (15.8% in 1997), with working time the most common issue covered (see below). However, a closer look reveals that the degree of innovation in content is generally very limited, with agreements often repeating provisions already laid down by law.

Ministry statistics show that collectively agreed pay increases negotiated in averaged 3.3% overall, about 0.5 points above the rate of inflation. According to the trade unions, the pay situation did not improve, with 7.8% of workers receiving only the minimum wage in 1998. Moreover, only 41% of registered unemployed people qualified for unemployment benefit.

With regard to industrial action, 1998 was marked by a number of strikes in the public sector and among related groups. Strikes by port pilots (PT9808191F), lorry drivers (PT9807189N), and workers at the TAP-Air Portugal national airline (PT9804174F) had a major effect because of their impact on the public and their media visibility. The types of strike held and government reactions to them were also significant: the action with the greatest impact was the "self-service" strike conducted by a doctors' trade union (PT9812118N), because of the innovative and illegal form it took.

Industrial relations, employment creation and work organisation

Collective bargaining orientated towards job creation continues to be rare in Portugal. With regard to the development of public policies, the institutions responsible were particularly active in putting into practice the National Action Plan (NAP) for employment, in response to the EU Employment Guidelines (PT9805177F). An assessment made in October by the social partners of the impact of the NAP showed positive results. Attention overall was concentrated on the issues of "employability" and "adaptability".

A national agency is being set up with the aim of educating adults, and improving and strengthening the ties between education/training and business. The agency is the result of a collaborative effort on the part of the Ministry of Labour and Solidarity and the Ministry of Education. Disadvantaged groups have been integrated into the project to increase their employment skills and thus improve their employability.

There was also a move towards a more personalised focus at employment centres, with the guiding principle that no young person should have to wait more than six months without a response to a request for employment. Nine regional employment networks were set up to provide a more flexible and responsive service.

Many problems have been cited with implementing the NAP, such as: a lack of sustainability in an economic structure based on SMEs; a lack of restructuring; the recruitment of poorly-qualified personnel and the paucity of training opportunities; and the prevalence of a fragile structure of education and skills with a predominance of jobs in sectors that are labour intensive and offer low average pay.

A broad debate on the NAP took place among the social partners during the first few months of 1998, and the government incorporated some of the partners' 127 recommendations. The biggest criticisms of the plan were that it was not articulated with areas such as collective bargaining, macroeconomics and public investment. The social partners put out a joint statement in which they made known their intent to follow the implementation and assessment of the Plan and to step up structural changes, especially in work organisation and labour costs.

In terms of public policy-making, 1998 saw considerable change in the area of work and working time organisation:

• the Institute for Development and Inspection of Working Conditions (Instituto do Desenvolvimento e Inspecção das Condições de Trabalho, IDICT) continued its active participation in the European debate on work organisation in the context of the 1997 European Commission Green Paper on Partnership for a new organisation of work;

• new legislation (Law 73/98 of 10 November) was passed, designed to regulate some aspects of the transposition of the EU Directive on certain aspects of the organisation of working time (93/104/EC) (PT9812117N). The new law introduces some changes with regard to Law 21/96 (the law introducing the 40-hour week), notably by increasing to one year the reference period over which working time may be varied around an average, provided this is based on a collective agreement, and introducing a new understanding of the "interruptions of work"; and

• the public administration, through Decree Law 259/98, brought some flexibility to working time by making it possible for public services to remain open on normal closing days, by permitting part-time work, by increasing the degree of freedom that managers have to define work organisation and by creating mechanisms for informing and consulting trade unions on the issue (PT9808194N).

As mentioned above, collective agreements continue to bring some innovation to the organisation of working time. The Ministry's analysis of collective agreements showed that 23.7% of 323 texts examined included some innovation in the organisation of working time. For example, the textiles sectoral agreement envisaged changes such as the creation of special weekend shifts, an increase in the maximum period of continuous work (from five to six hours), an increase in the reference period over which working time may vary around an average (from four to six months) and the concept (known as "hetero-availability") of being available for emergency work during break periods (PT9804173F). Elsewhere, Oporto retail businesses negotiated an agreement allowing Saturday afternoon opening, affecting new employees from 1999, in exchange for various compensations (PT9807187N). New forms of work organisation were also provided for in the agreement for TAP-Air Portugal pilots.

The topic of flexibility, in terms of both new forms of work and work organisation, remained one of the hottest issues of debate among the social partners in Portugal. The debate centred mostly on draft legislation under discussion (part of a large package of employment-related legislative proposals) on issues such as:

• regulation of bogus self-employment. In the EU, Portugal is second only to Greece in the percentage of workers who are self-employed (26.9% of the economically active population, against a European average of 14.9%). The objective of the government's 1998 legislative proposal is to regularise situations of bogus self-employment by converting them to fixed-term contracts, and subsequently into open-ended contracts (PT9810101F). This was the second bill to be proposed to address this issue and the debate has been going on since 1996;

• new regulations on fixed-term contracts. The number of fixed-term contracts continues to rise, with 19.5% of workers employed under this type of contract in 1998. Proposed new legislation would permit negotiation of up to three successive fixed-term contracts with an employee;

• new regulations on part-time work. Portugal has a relatively low percentage of part-time workers and collective bargaining on the issue is limited (PT9803170F). The most controversial aspects of proposed new legislation on this topic (PT9806181F) include the definition of "part time" in terms of the number of hours worked, with the unions of the view that the level proposed is too high. The unions also stated that part-timers are treated less favourably than full-time workers in some areas. Other issues under debate included a right to return to full-time work for employees who switch to part-time work, the introduction of part-time unemployment benefit, and the provision of incentives to employers to use part-time work (strongly rejected by the unions); and

• controversy over working time legislation. There was conflict over the interpretation of Law 73/98 implementing the working time Directive (see above), as had previously occurred over Law 21/96 on the 40-hour week.

Young workers, and especially child labour, were the target of continuing action on the part of IDICT through the labour inspectorate and other agencies (PT9807185F).

Equal opportunity between the sexes is provided for by law and equal pay has been a focus of collective bargaining, but these issues remain social policy concerns. In collective bargaining, positive action to improve equality has been infrequent, but does occur. For example, a number of measures were negotiated in the footwear sector with regard to skill and qualifications structures, given the large number of occupations that are considered "female" in this industry (PT9801159F).

Developments in representation and role of the social partners

In 1998, the representation debate centred on national structures, as well as protection of workers' rights across national borders. Notable developments included the following:

• a CGTP conference on union organisation reflected the unions' strategy to make intermediate union structures more efficient, especially at the federation level, by integrating them and reducing their number;

• there was some cross-border joint union action, notably the Europe-wide day of action on the railways, in protest against privatisation and liberalisation, which included strike action in Portugal (PT9811111N). The strikers expressed concern over threats to public services and job security; and

• Spanish and Portuguese unions and governments joined forces at the transnational level to protect cross-border workers, particularly migrant farm workers, who are subject to very precarious working conditions (PT9802167N and PT9810103N).

During the year there was some debate on preparing for transposition of the Directive on European Works Councils, with a new legislative proposal issued in December (PT9901125N). The social partners took up positions on the draft European Company Statute (TN9809201S).

There was discussion, which was due to continue into 1999, on regulating the election of workplace health and safety representatives. The degree and manner of participation in occupational safety and health are limited in Portugal, though worker representatives or, in their absence, the workers themselves have the right to consultation (PT9810100F).

At the national level, tripartite social concertation cooled off somewhat in the later months of 1998, though a large number of measures had been taken and a widespread debate on labour legislation had occurred, as provided for in the 1996-9 tripartite Strategic Concertation Pact (Acordo de Concertaéão Estratégica, ACE) (PT9810199F). In July, the government and the social partners conducted an assessment of the Pact, noting that there had been a significant delay in implementing measures, especially in the areas of social security, education, and labour legislation (PT9808190F).

Industrial relations and the impact of EMU

A number of the debates in which the social partners were involved in 1998 were related more or less directly to the structural reforms required for the introduction of the euro. This was the case with tax reform (PT9810110F), reform of the social security system (PT9805178F), and clarification of incomes policies.

With budgetary policy very much conditioned by Community restrictions, and with the original policy objectives and structure of the taxation system becoming distorted, the social partners took the opportunity of the 1999 state Budget proposal to call attention once again to the perceived need for changes in the current system. This system is seen in some quarters as unfairly burdening employed workers with heavy taxes, while benefiting other groups.

Reform of the social security system, particularly with regard to objectives and funding, was under debate. In particular, the reduction of labour costs by changing the definition of what constitutes remuneration was discussed in parliament.

There was also heightened sensitivity to the issue of internationalisation of the economy (PT9812114F). After several transnational companies simultaneously announced they were pulling out of Portugal, unions exhorted the government to intervene more effectively to preserve and attract investment. The electronics industry was particularly hard hit (PT9810104N). The social partners in the textile sector came out strongly against the EU decision not to create international trade barriers to protect the industry (PT9810109N). Bank workers also expressed their concern about future changes due to conversion to the euro (PT9810108N).

Conclusions and outlook

The principal debates in 1998, which are sure to continue into 1999, were the discussions on changes in collective bargaining procedures and especially in labour law, particularly in the context of the ACE (PT9807186F).

Many specialists believe that the set of approximately three dozen legislative proposals presented by the government constituted just another piecemeal modification of the labour laws, serving only to make an already tangled web of regulations even more complicated. The proposals on part-time work, which would make profound changes in the regulation of this type of employment relationship, are set to be the subject of keen debate in 1999. Other proposed legislative measures expected to be significant include those relating to: the definition of remuneration; the system of sanctions for breaches of employment law (PT9802168N); the status of paid holidays (PT9810107N); the election of health and safety representatives; and the wage guarantee fund (PT9810102N). (Maria Luisa Cristovam, UAL)