Portugal: EIRO Annual Review-2009

  • Observatory: EurWORK
  • Topic:
  • Published on: 10 Januar 2011


Two events may be considered as the most important for industrial relations in 2009. One was the revision of the Labour Code, which came into force in February 2009. The new law opens the way to major changes, particularly in collective bargaining, where it caused an important shift in power relations, favouring the employers. In this context the number of collective agreements decreased in 2009. The other one was the election of the parliament in September 2009. The Socialist Party lost its absolute majority and PM JosA© SA³crates formed a minority government. The new executive is designed to continue the reforms launched in the previous term, with some amendments, as for instance in education.

1. Political developments

During 2009 three elections took place in Portugal. At the European Parliament (EP) elections in June the governing Socialist Party (PS) suffered a heavy defeat. This was interpreted as a lesson voters wanted to give to PM JosA© SA³crates and his cabinet, punishing them for their tough way of governance. The PS, who had won an absolute majority at the general national elections in 2005, achieved only 26.5% at the EP elections, mostly because a considerable part of its electorate did not vote. The major winner of this change was the radical left. The orthodox Communist Party (PCP) and the Left Block (BE) received 21.3% of the votes. The liberal-conservative PSD did not achieve a good result (31.7%), but due to the enormous losses of the Socialists it was able to declare victory.

At the national elections in September the Socialists were able to recover part of their voters and won a relative majority (36.6%). The sum of the PSDaeuroTMs and CDSaeuroTM shares was close to 40%, and the radical left achieved 17.7%. The Left Block, a new political formation that had emerged in the 1990s, became the major force of the radical left.

A few weeks later elections for local authorities took place. At this level the large parties, PS and PSD, are naturally dominant. The Communist Party is usually able to contradict this general trend because it has some local strongholds in the Greater Lisbon Area and in the Southern region of the Alentejo.

Table 1. Elections in Portugal in 2009
(Votes in % und number of seats in parliament)
  European Parliament June 7th National ParliamentSeptember 27 Local authoritiesOctober 11th
PS (Sozialists) 26.5%7 36.6— — 37.7%(132)
PSD (Liberal-Conservatives) 31.7%8 29.1 41.8%(140)
CDS/PP (Conservatives) 8.4%2 10.4!
CDU (Communist Alliance) 10.6%2 7.9 9.8%(28)
BE (Left Block) 10.7%3 9.8 3.0%1
Poll 36.8% 59.7% 59.0%

Source: National Electoral Commission

In October 2009 the Socialist Party formed a minority government under PM JosA© SA³crates. The composition and the program of the new cabinet indicate continuity of the inner circle of the executive (Ministers of Finance, Foreign and Home Affairs) with some important changes. The former Minister of Labour, JosA© Vieira da Silva, moved to the Ministry of Economy. The new Minister of Labour is the former European Trade Union Confederation (ETUC) Deputy General Secretary Maria Helena AndrA©. The major challenge for the old and the new Minister of Labour is the solution of the severe crisis in employment.

A further important change was the appointment of Isabel AlA§ada as the new Minister of Education. Her mission is to re-establish cooperative relations with the teachersaeuroTM unions after the fierce conflicts between the Ministry and the teachers in 2007-9 (PT0804029I, PT1001039I).

In November the left and right opposition in Parliament voted a law that postpones the coming into force of the new code of contributions to the social security. This was a clear sign of the fragility of the new government. A further problem for the stability of JosA© SA³crates cabinet is the end of its cooperative relation with the President of the Republic, former PM Anibal Cavaco Silva (PSD). The cohabitation between the government and the head of state deteriorated during the long period of elections in 2009 and has not recovered, yet. Under these circumstances the present minority government is seen as a transitional solution until the next presidential elections in 2011.

2. Collective bargaining developments

In 2009 the number of published collective agreements reached 253. This indicates that the recovery of agreements in 2008 (almost 300) was exceptional and that there will be no return to the situation before the crisis in collective bargaining that occurred in 2004 (2000-3: average of approximately 350 agreements per year).

Table 2. Collective agreements, 2007-9
  2007 2008 2009
Branch Agreements 160 172 142
Multi-Company Agreements 27 27 22
Company Agreements 64 97 87
Subtotal: negotiated agreements 251 296 251
Adherence Agreements 15 8 8
Arbitrations 0 0 1
Subtotal: negotiated instruments of regulation 266 304 259
Regulations by decree (extension) 74 137 101
Regulations by decree (minimum standards) 1 0 1
Total: all instruments of regulation 341 441 362

Source: Ministry of Labour / DGERT and authorsaeuroTM own calculations.

This fall in the number of agreements was accompanied by a significant decrease of the coverage of updated collective bargaining. In 2009 the Ministry of Labour registered approx. 1.3 million of workers who were covered by renegotiated or new collective agreements, about one third less than in 2007 and 2008.

The reason for this new trend may be found in the revision of the Labour Code in 2009 that facilitated the possibility for employers to withdraw from collective agreements (see section 3. below). This motivated employersaeuroTM associations and companies to opt for a more offensive attitude in negotiations, a move that tended to delay or even rule out the conclusion of agreements.

Furthermore, a growing number of employers made use of the possibility to withdraw from existing agreements. In 2009 the number of agreements that were officially declared null and void by the Ministry of Labour quadrupled (in comparison with the average during the four previous years).

Table 3. Caducity of Collective Agreements, 2005-7
  2005 2006 2007 2008 2009 2005-9
CGTP 1 2 4 3 7 17
UGT 1 1 1 0 6 9
Others 0 0 0 0 2 2
 Total 2 3 5 3 15 28

Source: Ministry of Labour and authoraeuroTMs own calculations

The so-called aeurooecaducityaeuro of agreements affected almost exclusively manufacturing, with particular incidence in the metal industry and ceramics. The union organisations that suffered the most important losses of agreements were FIEQUIMETAL and FEVICOM, both affiliates at CGTP.

In this new context, with some employers associations withdrawing from the agreements with all unions in the respective sectors, it becomes very difficult to estimate the total number of workers who are effectively covered by valid collective agreements.

Before 2008 the relation between the number of agreements signed at the different levels (branch, multi-company and company) had been largely constant. In 2008 this changed, and in 2009 the new trend was confirmed. Company agreements represent now about one third of the total number of negotiated agreements (before 2008 it was a quarter). Nonetheless, the decrease of the branch agreementsaeuroTM share in worker coverage has only decreased by 1 %-points (from 94% before 2008 to 93% in 2009).

In 2009 collectively agreed nominal pay increases in the private sector lay at 2.9% that is slightly below those registered in 2008 - see table 4 below. The Labour Ministry calculates that the average real wages determined by all instruments for collective work regulation increased by 0.5% (as it had also happened in 2008).

In 2009 nominal wage increases for public servants which are determined by the government after negotiations with the unions were identical with those in the private sector (in 2008 they were 1%-point below) The unions criticized the wage raise as insufficient (PT0811029I).

Table 4. Pay rises, 2008-9
  2008 2009
Collective agreements Private Sector Average nominal wage increases (annualised, in %) 3.1% 2.9
Average real wage increases (annualised, in %) 0.5% 0.5
Nominal increase of statutory minimum wage (in %) 5.7(a,¬426) 5.6(450)
Nominal increase in public administration (basic rates, in %) 2.1 2.9

Sources: Ministry of Labour / DGERT; Ministry of Finance/DGAP

On the background of the tripartite agreement regarding the substantial growth of the monthly statutory minimum wage (RMMG) that had been signed in December 2006, the government increased the RMMG in 2009 by 5.6% from a,¬ 426 to a,¬ 450 (2008: 5.7%). This was a further step on the way to the target of a,¬ 500 that shall be reached in 2011 (PT0811039I).

In the context of the general stagnation of wages the above-average growth of the RMMG turns it an important instrument for increasing the employeesaeuroTM income in general, particularly for women.

3. Legislative developments

The major legislative initiative of the Socialist government in 2009 was the revision of the Labour Code (PT0811019I). In 2008 the majority of social partners had signed an agreement on this issue at the Standing Committee for Social Concertation (CPCS). The trade union confederation CGTP did not sign this agreement and opposed the new law (PT0811019I, PT0809019I). The revised Code maintains the principle changes introduced in 2003 by the first Labour Code passed by the conservative government under PM JosA© Manuel Barroso. Furthermore, it facilitates the so-called caducity of collective agreements, an aspect of strategic importance that changes the power relations between employers and trade unions in collective bargaining (see section 2. above).

As a result of the revision of the Labour Code or as a complement for those aspects that are not -regulated by it a series of other laws were passed in 2009 (PT0906019I), regarding

  • the regulation of home-work,
  • the social protection of workers who carry out public functions,
  • the promotion of health and safety at the workplace,
  • the process-related regime of regulatory offences in relation to labour and social security.

Furthermore, the government passed in 2009 two decree-laws regulating the protection of parental rights of employees who carry out public functions.

One of the legislative measures in response to growing unemployment was a decree that extends access to social benefit for unemployed people (PT0906029I).

Portugal was the first country that transposed the new Directive on European Works Councils to national law (Law 96/2009, September 3rd).

4. Organisation and role of the social partners

On 20-21 March 2009 UGT held its XI Congress putting the strengthening of its organisation at the top of its agenda. The confederationaeuroTMs action program for the period 2009-2013 defines a set of priorities in this area, namely winning new members, rationalising organisational structures, creating bodies for regional coordination, promoting the affiliation of union-federations, of associations of self-employed workers, and of immigrant workers.

In June 2009 a group of employer organisations in the construction and real estate sectors announced the creation of a new Confederation of Construction and Real Estate (ConfederaA§A£o da ConstruA§A£o e do ImobiliA¡rio, CCI). This move follows the departure of a large construction employer organisation from the Portuguese Confederation of Industry (CIP) at the end of 2007. CCI aims to be a new social partner, representing aeuro~the most important sector of the national economyaeuroTM (PT0906039I), but it is highly improbable that the present employersaeuroTM representatives at the Standing Committee for Social Concertation (CPCS) would accept CCIaeuroTMs entry into this body

During 2009 there were no other significant changes in the peak level organisation and role of the social partners. The same applies to the social dialogue structures.

5. Industrial action

The Labour Ministry is responsible for the publication of statistical data on strikes in the private sector. Due to unusual delays in this process there are still no numbers available with regard to 2008 and 2009. Therefore it is not possible to say whether the considerable decrease of strikes and working days lost registered in 2007 has continued or not.

In May 2007 the Minister of Finance and Public Administration decreed that a system for the collection and publication of strike data in the public administration of the central state should be created. Methodological problems of this instrument and the exclusion of local authorities from the survey raised doubts about its usefulness. The Ministry published data with regard to 7 general strikes in public administration during 2007 and 2008, but no figures were presented in relation to 2009.

Under these circumstances it is not possible to present any quantitative data or informed estimates about the overall strike activity in 2009. CGTPaeuroTMs agenda for protests and strikes (which is not complete) registered in 2009 approximately 40 strikes, about half of them in the public sector and in transports. The largest conflicts were those involving teachers (PT0902029I) and nurses (PT0902039I).

6. Restructuring

EurofoundaeuroTMs European Restructuring Monitor (ERM) registered in 2008 and 2009 a considerable number of business expansions in Portugal. The number of newly created jobs announced in these operations exceeded by far the number of planned job reductions. But the Portuguese Labour MinistryaeuroTMs data regarding collective dismissals for the same period indicate on the other hand that the absolute number of job losses is increasing at a rapid pace. Between 2007 and 2009 the number of companies involved has doubled and the numbers of jobs lost (or going to be lost) has grown from less than five thousand to almost nine thousand.

Table 5. Collective dismissals (concluded), 2006-9
  2006 2007 2008 2009*
Number of companies 116 155 231 314
Total Number of workers involved 10,570 17,526 15,312 20,858
Number of workers to be dismissed 2,377 2,687 3,743 4,497
Number of workers dismissed 1,931 2,289 3,538 4,213

* Data for 2009 only until November

Source: Ministry of Labour

7. Impact of economic downturn

The three waves of the present global crisis affected Portugal in different waves. The financial crisis had only minor effects on the country, but the following recession had a serious impact. In 2009 the national economy contracted. During the second half of the year this negative trend slowed down, but the unemployment rate increased steadily. In 2010 it is expected to reach 12%. This constitutes a particular threat to those regions that depend on export-oriented manufacturing, as for instance textiles and clothing and the shoe and automobile industries (particularly suppliers).

Employers and union confederations addressed the crisis in specific documents, each one demanding measures according to their agenda (PT0906049I), but they did not reach a common understanding or common proposals for the solution of the problem.

8. Other relevant developments

No other significant industrial relations developments took place in Portugal in 2009.

Reinhard Naumann, DINAMIA

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