Public sector workers strike over government imposition of 2.1% pay rise

At the end of November 2007, all of the trade unions in the Portuguese public sector held a national strike against a government decision to impose a 2.1% pay increase for the sector’s employees. The trade unions were protesting at what they saw as government intransigence in negotiations and at the continuous decline in the purchasing power of public sector employees, which, according to the unions, has decreased by between 7% and 10% in the last seven years.

On 30 November 2007, the public sector trade union organisations launched a nationwide one-day strike against the government’s perceived intransigence in wage negotiations, the imposition of a wage increase of 2.1% and a limited rise in pensions for former public sector workers. The organisations involved included the Common Front of Public Administration Unions (Frente Comum dos Sindicatos da Administração Pública, FC), affiliated to the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP), as well as the Trade Union Front of Public Administration (Frente Sindical da Administração Pública, FESAP) and the Technical Civil Servants’ Union (Sindicato dos Quadros Técnicos do Estado, STE), both of which are affiliated to the General Workers’ Union (União Geral de Trabalhadores, UGT).

Government maintains position

On 7 November 2007, the Minister of Finance and Public Administration, Teixeira dos Santos, in the context of the presentation of the draft budget for 2008 to parliament, emphasised:

the public deficit has been reduced beyond the already ambitious goals defined. After the reduction of the deficit to 3.9% of the gross domestic product (GDP), we will reach in 2007 a deficit of 3% of the GDP corresponding to the exigencies of the Stability and Growth Pact. (....) We want a public administration that controls its expenses and manages its resources, in particular its human resources, putting an end to the unsustainable dynamics of growth of the number of civil servants and of other staff.

This statement summarises the background to the government’s position in public sector wage negotiations. Throughout the talks, the government consistently offered a 2.1% pay rise for public sector workers. According to the government, the offer was in line with the expected inflation rate for 2008 – which is actually below the 2.3% estimation of the Portuguese Central Bank (Banco de Portugal). In the end, the government took a unilateral decision and imposed the wage increase of 2.1% in the public sector.

Trade union demands

For their part, the public sector trade unions proposed wage increases of between 3.5% and 5.8%: STE proposed a rise of 3.5%, FESAP a rise of 3.8% and FC a rise of 5.8%.

The STE and FESAP proposals were in line with UGT’s general position in favour of an average pay rise of 3.5% for both the public and the private sector. This proposal takes into account an expected inflation rate of 2.3% and productivity gains of 1.2%.

The FC proposal corresponded with CGTP’s general position that the national minimum wage (salario minimo nacional, SMN) should increase by 5.8%. This is aimed at ensuring that the SMN will reach a gross monthly amount of €500 in 2011 – a commitment of the current socialist government (PT0612029I).

The trade unions rejected the government wage increase ‘offer’ of 2.1%, which was clearly below their demands, arguing that this was an insufficient amount to tackle the decline of public employees’ purchasing power.

According to a study carried out by STE, public employees’ purchasing power may have declined by 10.3% between 2000 and 2007 for those who were affected by a wage freeze in 2003–2004. The wage freeze concerned all public employees with monthly wages above €1,000. For other staff in the sector, purchasing power may have fallen by 7%.

The study also finds that, in 2007, the majority of retired public sector staff saw a decrease of their purchasing power, of between 1% and 2.5%. This is due to the fact that public sector pensions were increased by between 1.5% and 2.5% in the same year, while private sector retirees received a pension increase of between 2.4% and 3.1%.

On 8 November 2007, the three public sector trade unions held a joint press conference to call a general strike in the sector on the last day of the month. On the same day, the Secretary General of UGT, João Proença, warned that: ‘the government has not really been negotiating, imposed a wage increase of 2.1% in the beginning and did not change the position until the end of negotiations, which was a simulacrum of negotiation ... this behaviour is, on no account, acceptable for a government, which is obliged to engage in collective bargaining.’

Controversy over strike participation

In the wake of the strike on 30 November 2007, controversy has arisen between the government and the trade unions concerning the level of participation in the strike action and its impact. The trade unions claim that 80% of employees took part, while the government maintains that the level of participation was only 21%.

However, the government estimation is based only on the participation of public employees working in the central administration, and does not include the local administration. The assessment results from the information submitted by each public service organisation about the number of workers on strike (PT0706039I). Nevertheless, even according to government sources, participation in the 30 November national strike was higher than that in a public sector strike held one year previously (estimated at 12%) (PT0706069I). In the education sector, about 1,300 schools were closed due to the strike – 460 more schools than in the 2006 strike. Moreover, according to the same source in the education sector, around 30,432 people joined the 2007 strike, with 19,075 workers in the health sector taking part.

It was considered significant that all of the trade unions in the public sector were united in supporting the November strike action. The three public sector trade unions held another joint press conference to express their own estimate of the level of participation, which was 80%. Many trade unions published information about participation in the strike. For instance, the teachers’ trade unions stated that participation was among the highest ever, as did the Local Administration Trade Union (Sindicato Nacional dos Trabalhadores da Administração Local, STAL), affiliated to CGTP. Among public employees at the local level performing cleaning and maintenance jobs, participation reached 100% in more than 10 municipalities, according to STAL.

Government refuses further negotiations over additional pay rises

On the day of the strike, the Secretary of State for Public Administration, João Figueiredo, stated that, despite trade union proposals, no additional pay rise would occur in 2008 even if inflation exceeds forecasts. He highlighted: ‘The government presented a proposal of a pay rise of 2.1% because it is convinced that inflation will not exceed this value. If that is not the case, the situation will be revised in the next wage negotiations.’ A few days before this statement, Minister dos Santos had emphasised in parliament: ‘if, in the meantime, a deviation of inflation occurs, one year from now, the issue will come back to the negotiation round.’

After the strike, STE took the initiative to ask for further wage negotiations with the government, which according to the Labour Code can be demanded by trade unions five days after the conclusion of negotiations.

A new round of negotiations took place on 5 December 2007, during which the government met STE, FC and FESAP separately. However, the government did not change its position in relation to the wage increase of 2.1%. The Secretary of State for Budget, Emanuel Santos, reiterated that the government does not envisage any additional wage negotiations during 2008. Even if a change occurs in the inflation rate, the question will only be discussed in the wage bargaining round for 2009. After the meeting, the trade unions expressed their discontent with the outcome and accused the government of being authoritarian.

Commentary

The government’s ambitious goals of reducing public expenditure by 2009, in line with the EU Stability and Growth Pact, are the basis of the argument for the 2.1% wage increase. But the impact of such a low wage increase in the public sector might be dramatic, cutting even further the workers’ purchasing power, and might also negatively influence wage developments in the private sector, as has been the case in recent years.

As a result of the strike action on 30 November, the price in terms of social conflict is clear. The strike represented the third time in two years that the socialist government headed by Prime Minister José Sócrates has faced a national strike organised by the three public sector trade union organisations – FC, FESAP and STE. In July 2006, the trade unions jointly called a national strike against the introduction of a transferability scheme for civil servants whose positions become superfluous in the course of restructuring (PT0607039I). On 9 and 10 November 2006, the unions together called a national two-day strike against the budget and government plans for the public sector, including cuts in wages and pensions and a freeze on promotions and bonuses.

Some commentators argue that social dialogue and social responsibility do not seem to be at the centre of the government’s approach to negotiations in the public sector, which might increase workers’ and trade unions’ discontent.

Maria da Paz Campos Lima, Dinâmia

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