Social partners discuss national minimum wage

Download article in original language : PT9801160NPT.DOC

In January 1998, the Portuguese Government presented the social partners with the results of a study on the increase in the national minimum wage for 1998. Neither trade unions nor employers agree with the Government's proposals.

On 13 January 1998, the Government presented the social partners with the results of its study on the increase in the national guaranteed minimum wage (Salário Mínimo Nacional) for 1998. The rate for 1997 had been set by Decree-Law 38/97 (PT9702102F) at PTE 56,700 per month for the general working population (domestic workers receive less).

Taking into account the macroeconomic picture - which projects for 1998 a growth rate of 3.8% in Gross Domestic Product, an increase in employment of 1.1%, a productivity growth rate of 2.7% and an inflation rate of 2% - three scenarios and corresponding figures have been proposed by the Government as a basis for debate amongst the social partners. The main issue centres on the proportion of gains in labour productivity to be handed on in increases in 1998. The monthly minimum wage rate under these three scenarios are:

• PTE 58,344, if the increase absorbs a third of the gains in national labour productivity;

• PTE 58,628, if half of those gains are absorbed; or

• PTE 59,422, if all productivity gains are absorbed.

These figures are lower than those demanded by the trade union confederations, whose positions themselves vary.

For the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP), the minimum wage issue should be dealt with in the larger context of pay trends and the distribution of wealth. It believes that that the amount should be set in line with the criterion recommended by the International Labour Organisation, so that it corresponds to 60% of the national average wage. In the opinion of CGTP, it is the absolute figures and not the percentage rate of increase that warrant discussion. For this reason, the CGTP has proposed an increase to PTE 61,000 per month.

The General Workers' Union (União Geral de Trabalhadores, UGT) proposes a figure based on the need to meet social objectives by reflecting projected macroeconomic trends. It has therefore suggested an increase of 4.9%, setting the monthly minimum wage at PTE 59,200. UGT has called for a higher percentage increase for domestic workers, with a view to harmonising the rates applied to all workers.

The Government's proposal is also not in line with the 2.5% increase proposed on average by employers' confederations -the Confederation of Portuguese Farmers (Confederação dos Agricultores de Portugal (CAP), the Confederation of Portuguese Industry (Confederação da Indústria Portuguesa, CIP) and the Confederation of Portuguese Commerce and Services (Confederação do Comércio e Serviços de Portugal, CCP).

Worthy of note is the position adopted by CIP which, in line with restating its basic objection to the setting of a national minimum wage at all regardless of the amount, stated that the increase needed to be in line with a policy of wage moderation. CIP also objects to the factoring of productivity gains, since the minimum wage is earned only by lesser-qualified workers who do not demonstrate significant increases in productivity. The same confederation also highlights the knock-on effects that an increase in the minimum wage can have on other areas. In CIP's estimation, not only will it have a "pull-up" effect on all other salaries, but it will also serve as a yardstick for many other types of payments - from subsidies granted to political parties to all kinds of disbursements made by social security - thus increasing the negative effects that it believes can ultimately be associated with an increase in the minimum wage.