EPAL 35-hour week deal causes controversy

Download article in original language : PT0104145FPT.DOC

In April 2001, an informal agreement was reached between management and trade unions at EPAL, the public water company in Lisbon, the Portuguese capital. The innovative provisions of the deal include the introduction of a 35-hour working week by 2004 and additional holiday entitlement, which have been criticised by the AEP business association, fearing a "knock-on" effect in the private sector.

The Lisbon Public Water Company (Empresa Pública das Águas Livres de Lisboa, EPAL) is the public enterprise responsible for running water services in Lisbon. The company and the trade unions representing its workers recently renegotiated the company's formal collective agreement, last updated in 1988, and the new text was published in February 2001. The main changes concern:

• providing for pay increases on an annual basis;

• changes to the occupational structure, creating new wider occupational areas;

• a new career structure;

• reduction in the current 37-hour working week from 2001;

• restructuring of pension funds; and

• improvements in the company's free supplementary healthcare system.

Informal deal

Since the conclusion of the new formal company agreement, EPAL and the unions - including the Federation of Office, Commercial and Service workers (Federação dos Empregados de Escritório Comércio e Serviços, FETESE) affiliated to the General Workers' Union (União Geral de Trabalhadores, UGT) - have been negotiating once more over employment conditions, resulting in an informal agreement in April 2001. The informal accord provides for:

• a 4% pay increase;

• a 9% increase in food and transport subsidies;

• a gradual reduction in the working week to 35 hours by 2004; and

• an increase in the annual leave entitlement from 22 to 23 days

Within the context of the company's restructuring programme, other issues were also negotiated, relating to employment and vocational training, resulting in agreement on:

• the training of 96 employees on "management by objectives" courses (for higher-level staff only); and

• the conclusion of 94 individual employment contracts, while at the same time introducing a company career plan (again for higher-level staff only).

Against this same background, individual negotiations between employees and management are underway over: early retirement agreements for 90 staff; and mutual termination of employment contracts for a further 90 employees. Given that EPAL has some 1,000 employees, this represents a very substantial number of departures.

Business criticism

The Portuguese Business Association (Associação Empresarial de Portugal, AEP), which is not a social partner involved in bargaining, has publicly criticised the agreement at APEL and especially the introduction of the 35-hour week and the increase in holiday entitlement.

AEP states that EPAL is a public company, where it is easier for trade unions to make new claims in these areas than it is elsewhere. AEP's fear is that in the short term a "knock-on" effect may occur, with the reduction in the working week to 35 hours becoming a general claim by the unions. This is especially the case for industry, where the legal working week is currently 40 hours (PT9712154F) (while average agreed weekly hours throughout the Portuguese economy are around 39 - TN0103203U). AEP also highlights what it sees as a contradiction between the need to increase competitiveness and productivity and a reduction in the length of the working week.

Commentary

The developments at EPAL outlined above are of particular interest because they suggest (even if only in one publicly-owned company): a new combination of topics, actors and negotiation procedures; a significant trend towards pay moderation and the reduction of working time as a means to protect competitiveness; and a broadening of the bargaining agenda, although some "employability" issues such as progressive retirement and mutual termination of employment still seem to be subject to individual and direct agreement between employees and management. (Maria Luisa Cristovam, UAL)