New basic law on social security under debate

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In July 2002, the Portuguese government was due to submit a proposed new basic law on social security to parliament. Trade union were critical of the way in which discussions on the proposal were conducted and believe that it will have negative effects on the future solvency of the public social security system. The CGTP union confederation is particularly opposed to the government's reform plans.

One of the first issues on the agenda of Portugal's new coalition government of the centre-right Social Democrat Party (Partido Social Democrata PPD/PSD) and the right-wing People's Party (Partido Popular, CDS/PP), which came to office in March 2002, has been a new basic law on social security (lei de bases da segurança social). The proposal was scheduled for submission to parliament on 11 July, prior to which there was a certain amount of discussion with the social partners. One of the most positive aspects of the proposed new law, according to the government, is that it would increase the lowest pensions, benefiting about 1.5 million people.

Both the main trade union confederations - the General Confederation of Portuguese Workers (Confederação Geral de Trabalhadores Portugueses, CGTP) and General Workers' Union (União Geral de Trabalhadores, UGT) - have stated the wish that the issue should have been thrown open to a wider public debate. The trade unions also argue that the new law will jeopardise the existing basic law on social security adopted in 2000, law 17/2000 (PT0007100F), which achieved considerable consensus, and the subsequent tripartite agreement on social security reform signed in 2001 ( PT0112112N), thus bringing the debate back to square one.

CGTP claims that:

• the proposed new law will jeopardise the principle of solidarity and reduce the social security system's capacity for redistribution. It will open the system up to private operators, which will be on an equal footing with the public scheme. This is in contrast to the 2000 social security law, which enshrines a universal, solidarity-based public system;

• social security contributions will be regressive - in other words, the higher the income, the lower the contribution;

• the state's social security function will be reduced to protecting people in the situations of greatest need and providing only a minimum level of social protection. Social security will no longer be a workers' right;

• the amount of payments to the social security system will drop considerably, because contributions will cease to be levied on pay over a certain level, thus violating the principle of solidarity;

• new ceilings will mean that in some cases employers will no longer be obliged to pay their part of the contribution and workers will be the only ones paying;

• while new law will bring minimum pensions closer to the level of the national minimum wage, this will take four years and happen in an unclear way; and

• the new law will encourage women to stay at home, removing them from the labour market.

For UGT, the negative points of the proposed law are that:

• there are some problems in the approach to ceilings on earnings subject to social security contributions and the way of determining limits on contributions; and

• the solvency of the public social security system is not clearly guaranteed.

However, UGT considers that the law has a positive side, in that:

• there will be a family supplement to minimum pensions for people aged over 75;

• it will be possible to combine a partial pension with part-time work, provided that this does not encourage early retirement; and

• there will be benefit entitlement in the event of total, permanent disability for workers who have not paid the required level of contributions over their career.

The Confederation of Portuguese Industry (Confederação da Indústria Portuguesa, CIP), which did not sign the 2001 social security agreement, considers that the government's proposed law is in line with its positions.

The Portuguese Insurance Institute (Instituto de Seguros de Portugal) is of the opinion that this new law will encourage access to alternative types of social security, such as private pension funds, which should be regulated to ensure greater return on investment, confidence in the system and new forms of funding.

CGTP walked out of the last concertation meeting over the proposed social security law in the Standing Commission for Social Concertation (Conselho Permanente de Concertação Social, CPCS) and called a demonstration for the day that the bill is debated in parliament.