1997 Annual Review for Portugal

This record reviews 1997's main developments in industrial relations in Portugal.

Introduction

The year 1997 saw: an increase in GDP of 3.5% (according to Eurostat figures); an inflation rate of 1.9%, which was lower than the previous year; and a low government deficit of 0.8% of GDP (according to national figures). The unemployment rate for the year was 6.7% (down from 7.3% in 1996). Low skill levels and inadequate management strategies have been identified as being among the key causes of high unemployment.

During 1997, the Socialist Party (Partido Socialista) was in government, supported by the Portuguese Communist Party (Partido Communista Português).

Key trends in collective bargaining and industrial action

In 1997, according to figures from the Ministry of Labour and Solidarity, 409 collective agreement s were negotiated, of which 68% were sector-level agreements, 26.4% company-level agreement s, and 5.6% were "adoption agreements" (whereby social partners in one area adopted agreements already negotiated elsewhere). The number of agreements essentially remained at the same level as in previous years, though there was a slight drop in relation to 1996 (PT9802164F). The content of the agreements negotiated was very limited, and in 84.2% of agreements no new topics were introduced. Previous clauses were simply updated in accordance with new labour laws, while the greater part of the changes dealt with wage increases. In only 10.2% of cases were the entire contents of agreements renegotiated.

1997 saw some signs of collective bargaining expanding into areas where employment conditions have traditionally been regulated by administrative instruments. On the other hand, there has been a tendency noted in recent years toward a certain stagnation in collective bargaining, principally as it relates to matters of content, and it is hoped that 1998 will see the adoption of some measures designed to promote bargaining. These measures, under the provisions of the current 1996-9 tripartite economic and social agreement, the Strategic Concertation Pact (Acordo de Concertação Estratégica), should lead to greater uniformity in company-level bargaining, although the difficulties of governmental intervention in this area may mean that adoption of the measures will be postponed beyond 1998.

There were 313 strikes in 1997, of which 77% were strikes called in individual companies and 9.2% were strikes involving an entire sector (PT9802164F). Strike numbers have remained relatively stable, though some reduction in other indicators of strike mobilisation - workers involved and days lost - is noticeable.

Industrial relations, employment creation and new forms of work organisation

Employment creation is regarded as a crucial issue by the social partners, and it receives high priority in the current Strategic Concertation Pact. This point was highlighted in 1997 by the approval of a joint declaration on the part of the Government, the trade unions and employers' federations - a rare occurrence in Portugal - which was presented to the European Council Employment Summit in November (PT9711152N). Also with respect to Community action in this area, it should also be noted that three regional networks have been developed aimed at promoting job creation initiatives, which are incorporated into the EU's Territorial Employment Pacts initiative.

The debate over new forms of work organisation has concentrated on part-time work, and the Government discussed draft legislation on the matter with the social partners during the year (PT9704112F). This draft legislation has yet to be approved, though it is possible that it will be in 1998. Part-time work, which affects mostly women, comprises only 7.1% of all employment, but is certain to become more widespread as a result of fiscal and financial incentives for employers. At the same time, the unions will be working to ensure that the increase in part-time work is not accompanied by deteriorating working conditions. This presupposes observing the principle of pro rata equality of part-time work with full-time work.

Working time issues were among the central themes in 1997, especially as legislation reducing the working week to 40 hours came into force (PT9712154F) - though is important to note that the 40-hour week is seen more as a form of social progress and improvement in the quality of life and work than as a means of reducing unemployment. Although a reduction in the working week has been linked to the introduction of more flexible forms of work organisation and working time management, the social partners have so far not taken advantage of opportunities for putting new solutions into practice through collective bargaining (PT9802165F).

Still on the issue of working time, by the end of 1997, the EU Directive on the subject (93/104/EC) - which had an implementation deadline of November 1996 - had not been transposed into Portuguese law, although the Government did discuss draft legislation with the social partners (PT9712156N). Conclusion of the transposition process is expected in 1998. It should be noted, however, that a great number of the measures outlined in the Directive are already set out in Portuguese law.

Beyond changes in the organisation of working time, increased flexibility in the labour market has resulted in a growth in less stable forms of employment - self-employment, either legal or illegal, and subcontracting (PT9702107F). The Government prepared a number of measures to combat the phenomenon of fraud camouflaging the true nature of employment relations. However, these measures generated a strong negative reaction on the part of employers and were not put into effect. Instead, attempts have been made to increase the effectiveness of labour inspection through better articulation of the inspection services (PT9710143N)

Developments in representation and the role of the social partners

The issue of the representativeness of trade union organisation s remains unresolved in the Portuguese system of industrial relations, and in 1997 debate centred around representation in national social concertation structures (PT9712155F).

Another item related to this issue was the publication of a Ministry study on unionisation, which, though it looks only at the 1974-95 period, confirmed that there has been a significant drop in union membership among Portuguese workers (PT9711153N). The latest statistics also reveal a decrease in the number of employers' associations - a development which may be the result of reorganisation of the boundaries of branches of economic activity.

In the area of trade union organisation, 1997 marked the opening of a debate around the question of the financing of unions and of aid granted them by the state. The debate will certainly continue on into 1998. 1997 also saw some events which point to union organisation spreading to the police forces (PT9705118F.)

The debate on transposing the EU Directive on European Works Councils (EWCs) (94/45/EC) - something which should have occurred by September 1996 - has proceeded and is at an advanced stage. A number of reports have been written and the social partners have initiated formal negotiations on the subject. A draft document for transposition was drawn up in 1996 but a number of issues regarding procedure arose. The Confederation of Portuguese Industry (Confederação da Indústria Portuguesa, CIP), the Confederation of Portuguese Commerce (Confederação do Comércio e Serviços de Portugal, CCP) and the General Worker's Union (União Geral de Trabalhadores, UGT) backed transposition through direct negotiations, as part of the development of the Strategic Concertation Pact. Difficulties arose, however, because the other union confederation - the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP) - was not party to the Pact.

Debates have also taken place on how to organise the EWC representation of workers at company level, with differing points of view being expressed on how to choose representatives. Some parties, such as the CIP and CGTP, have stated that, even though the transposition of Directives does allow for a certain degree of flexibility, the EWC Directive will have to be adapted to specific conditions in Portugal.

Even without transposition, however, a growing number of employee representatives have taken part in EWCs. According to the two union confederations, there has probably been Portuguese participation in more than 50 companies. Participation is highest in the hotel sector, metalworking (notably automobiles) and the agro-food, electrical products and textiles industries.

There was also discussion in Portugal in 1997 on the EU-level initiative to revive the proposed European Company Statute (EU9705128N). A great deal of material has already been gathered, but the debate on the features of this type of company and, above all, models of employee participation, has not been concluded. The proposals developed by the "Davignon group" and subsequently the Luxembourg EU Presidency called for employee participation in decision-making bodies (ie, supervisory/administrative boards or boards of directors) within the European Company. It has become evident from recent experience that this type of participation- which is provided for by law- never came about in Portugal, even in the case of public enterprises during the period of nationalisation, owing to a lack of consensus. Both the CIP employers' organisation, and the CGTP union confederation have rejected the model of board-level participation. CGTP has stated that the information and consultation model is an acceptable one for worker involvement.

Industrial relations and the impact of EMU

The social partners have taken some common positions in the debate on EMU in Portugal. First, the position accepted by most of the parties involved is that Portugal will benefit from being part of the first wave of membership. Second, all parties agree that there must be a close relationship between new European macroeconomic policies and strengthening economic and social cohesion throughout Europe. There is some difference of opinion regarding how much of an influence the single currency will exert on the process of industrial relations.

The CCP employers' organisation has stated that it is essential for EMU to heed the challenges of the imbalances between sectors in terms of the effects of market deregulation and the elimination of obstacles to free movement. Resources will have to be provided to regions undergoing modernisation to compensate for the smaller budget capacity of certain Member States.

For the CGTP and the UGT, the greatest impact of EMU has been on the process of constructing the European Union itself. The process has demanded no small amount of sacrifice in order to meet convergence criteria, which were achieved through pay reductions and privatisation (according to the CGTP). Now the biggest question marks are the impact on the future of employees of the admission of Central and Eastern European countries, and the problems Portugal faces with regard to education and vocational training and job reclassification.

With regard to the changes in industrial relations brought about by EMU, the parties have differing views. The UGT supports the strengthening of bargaining structures, a development which, in less affluent countries, will have to be achieved by: greater articulation of negotiating levels, mainly in small and medium-sized companies; bargaining on the adaptability of companies; increased union representativeness and organisation; and the introduction of new demands in bargaining, including the issue of "improved working conditions in order to come closer to the European average".

In the estimation of the employers, the social situation under EMU will follow the economic situation that is created. Pay increases directly related to the single currency are not envisaged and fears of "wage dumping" are seen as groundless in Portugal since, due to a lack of flexibility, its competitive advantages will not have increased.

The Government has proposed the negotiation of a new tripartite central agreement - the "Europact" - as a joint strategy for EMU that "increases overall competitiveness and social cohesion" (PT9803171N). Some social partners have expressed reservations about participating before certain essential commitments of the existing 1996-9 Strategic Concertation Pact have been carried out. These include flexibility of working hours (cited by CIP), or a reduction in precarious work and the creation of a wage guarantee fund (UGT). The CGTP has expressed willingness to participate in the discussions on the Europact.

Conclusions and outlook

According to the CIP and CCP employers' organisations, the development of industrial relations in Portugal is closely linked to developments in the implementation of the legislation on the 40-hour working week, labour flexibility and the results of discussions on economic cohesion. For the UGT, an important factor will be the implementation of the measures set out in the 1996-9 Strategic Concertation Pact - a new wage guarantee fund, penalties for breaches of labour law (PT9802168N), and so on. As mentioned above, other issues likely to be on the agenda include possible legislation on part-time work and the transposition of the EU Directives on working time and EWCs.

(Maria Luisa Cristovam and Pedro Furtado Martins, UAL)