Employment pact fails as UGT leaves negotiations

Portugal’s pact for employment has failed because of deep divisions between the government and the General Workers’ Union (UGT). Union leaders accused ministers of reneging on commitments on pensions and income policy when the government announced austerity measures affecting these, to be included in the 2011 budget. UGT announced it would withdraw from the pact negotiations one week after it said it would join in the general strike planned for 24 November 2010.

Background

The government proposed its ‘Pact for employment’ in its programme for 2009–2013, introduced on 2 November 2009. The pact was to promote the preservation and creation of employment. Ministers said it would ensure a new social balance, strengthen the competitiveness of enterprises to promote decent work, improve participation and collective bargaining, and promote equality of opportunities between workers with different types of contracts and between young people and adults.

The government also said the pact should create ‘a structured framework for social dialogue to manage wage policies and serve as a basis for collective bargaining’. It was to set the guidelines for medium-term evolution of the national minimum wage and to develop coordination between the unemployment allowance and part-time work. The government said policies on the labour market, employment and income were essential in responding to the economic crisis. It called for structured and consistent social dialogue to identify solutions to preserve jobs and stimulate business confidence and internal demand.

UGT’s demands

In response, the General Workers’ Union (UGT) made several demands which it said were crucial for a tripartite agreement on employment. These included:

• combining the economic and social dimensions;

• aiming at a more competitive economy that would generate more and better jobs;

• the defence of the social dimension of the state, in particular in the areas of education, health and social security;

• a better functioning of public administration, especially in areas such as justice and removing excessive red tape in relationships with businesses and citizens;

• reinforcing conditions of adaptability of businesses, reconciling the interests of workers and employers through collective bargaining and reducing the excessive precariousness present in the labour market;

• fighting poverty, social exclusion and social inequality.

UGT also argued that the previous tripartite agreements, particularly in relation to the contributory social security code, the statutory minimum wage and the increase of pensions ought to be respected. The union, however, accepted that they could be revised through tripartite discussion, especially in regard to the current economic and social situation. However, it stipulated that any changes should be in the framework of a wider agreement on income policy integrating guidelines for collective bargaining in 2011 and 2012 and increases for the lowest pensions.

UGT withdraws from negotiations

However, on 14 October 2010, UGT broke off negotiations at the Standing Commission for Social Concertation (CPCS). In a document explaining its position, UGT said it has always believed that:

a tripartite agreement on employment could have an important role in the current economic and social situation, given reduced economic growth and high and increasing unemployment, by strengthening the confidence of citizens and businesses, which is essential for economic recovery and job creation.

However, it added that:

the measures recently proposed by the government, to reduce salaries in public administration and public companies and to freeze public pensions, as well as its calls for a wage freeze in the private sector, and opposition to the rise in statutory minimum wage makes clear that the conditions laid down by UGT for a possible agreement are rejected by the government.

UGT explained that by announcing those measures, the government deprived the negotiations of all meaning, showing deep disregard for social partners and social dialogue itself. Moreover, the confederation added, the government was expressing the intention not to comply with previous tripartite agreements, specifically those on minimum wage and social security reform, the latter setting a mechanism for automatic update of annual pensions. UGT says the government had already showed signs of indifference towards social dialogue with its unilateral decision to allow large hypermarkets to open on Sundays, in spite of the social partners’ calls for negotiations and warnings about the deep social and employment impacts of this measure.

UGT also said it had to struggle against the brutal attack on workers’ rights and conditions, ‘so we decided to convene a general strike’. In fact, UGT had already decided to organise the strike with the General Confederation of Portuguese Workers (CGTP) to protest against government measures one week before it officially broke off negotiations (PT1010019I).

Failure of pact for employment

It was clear all along that UGT’s role in the negotiations was crucial for the success of the pact. The Portuguese Trade and Services Confederation (CCP) and CGTP had already expressed their opposition and only the Confederation of Portuguese Industry (CIP), the Portuguese Confederation of Tourism (CTP) and UGT seemed interested in reaching an agreement.

The discussion of the pact for employment had already been marked by tension and conflict. CCP withdrew from negotiations twice in July and in September 2010, criticising first the measures taken by the government in relation to opening hypermarkets on Sundays without consulting social partners, and secondly criticising the lack of measures to protect small and medium enterprises. CGTP made its opposition clear in June, when it accused the government of wanting to discuss the proposals for employment while simultaneously promoting the Stability and Growth Plan, the PEC 2 (PT1005029I), which threatened to aggravate unemployment. Backed up by a large demonstration against that plan in May 2010 (PT1005019I), CGTP made it clear that an agreement over the pact for employment was only possible if the government withdrew the PEC2 measures.

UGT’s withdrawal now excluded any possibility of a pact. After the CPCS meeting, the General Secretary of UGT, João Proença, said: ‘The pact for employment died here today’, adding that ‘to be a tripartite agreement it must be concluded by at least one trade union confederation, an employers confederation and the government’.

From the employers’ side, only CIP regrets the interruption of the process. CIP’s President António Saraiva said: ‘Unfortunately the deal is halted here today. I would not like to say that this is the end because the country needs an agreement between the two sides. CIP will do everything to restart negotiations.’

Helena André, Minister of Labour, said: ‘We are unable to continue discussions of a deal for employment which was a structuring instrument, not only to respond to those urgent matters in economic and social terms but also to discuss a model for the future of our economy’.

Commentary

It seems clear that the austerity measures issued by the government in May 2010 (PEC2) and at the end of September 2010 (PEC 3) limited the chances of concluding a pact for employment. UGT’s space for manoeuvre was seriously reduced. Furthermore, the fact that those measures questioned previous tripartite agreements, signed by UGT, damaged confidence in the government’s commitment to comply with future agreements. The proposal for the state budget for 2011 (including most of the PEC 3 measures) makes it even more difficult to envisage an agreement in the short term. Nevertheless, it is important to keep in mind that UGT’s resolution of 14 October stressed that ‘notwithstanding the current constraints imposed by government’s behaviour, UGT will continue to defend and to require the enhancement of concertation as a fundamental instrument of social dialogue.’

Maria da Paz Campos Lima, Dinâmia