Public sector unions demonstrate against wage freeze and reduced pensions

In February 2010, thousands of public sector workers participated in a national trade union demonstration, protesting against the performance assessment system, wage freezes and changes in the retirement scheme, particularly regarding early retirement. The measures are included in the government’s proposals for the 2010 state budget, which are being discussed in parliament in February and are expected to be secured.

Background

Portugal’s socialist government, led by the Socialist Party (Partido Socialista, PS) which won an absolute majority in parliament in the 2005 elections, implemented a number of extensive reforms in the public administration sector during its mandate from 2005 to 2009. The major changes were initiated in 2006, with the Programme for restructuring central public administration (Programa de Reestruturação da Administração Central do Estado, PRACE) (PT0605019I) with the aim of radically restructuring central public administration. This was followed by a new mobility or transferability scheme of public servants (Regime de Mobilidade dos Funcionários da Administração Pública) (PT0607039I), which was considered a central tool for implementing the government’s ambitious restructuring plan. In 2006, a new retirement regime was introduced, in order to ensure greater convergence of public sector pensions with the regime underway in the private sector (PT0809049I).

In 2007, two major changes were approved regarding industrial relations in the public sector. The first change concerned the new system of employment relations, careers and wages for the public sector (PT0702059I). The new system defined a major reduction in the number of careers and set up the reward of merit, putting an end to the automatic system of promotion and limiting the status of civil servants – and their corresponding employment conditions – to workers in areas representing the core functions of the state (PT0706069I). The second change concerned a new system of performance appraisal (PT0708039I), which came into force in 2008. Eventually, in 2008, another reform was approved, coming into force in 2009 – namely, the new employment contract system in the public sector (Regime de Contrato de Trabalho em Funções Públicas, RCTFP) (PT0809039I).

The reforms generated mixed reactions from the trade unions. Strong opposition was mounted by the Common Front of Public Administration Unions (Frente Comum dos Sindicatos da Administração Pública, FC), affiliated to the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP), which is the most powerful trade union federation in the public sector.

Alongside these reforms, the socialist government promoted over the years the moderation of wages in the public sector – a trend that only changed in the year of the parliamentary elections in 2009, when public sector wages rose by 2.9%.

Parliamentary debate over 2010 budget

The socialist government that came into force on 26 October 2009, which secured 36.6% of the seats but failed to renew the absolute majority it won in 2005, has to be sure that the state budget for 2010 will be approved in parliament. The country’s Prime Minister, José Sócrates, invited all parties to negotiate beforehand, holding bilateral meetings to ensure that the final budget proposal would be passed in parliament. However, the parliamentary left – represented by the Communist Party (Partido Comunista Português, PCP) and the Left Block (Bloco de Esquerda) – expressed their clear opposition to the terms and conditions of the government’s proposals. The right-wing People’s Party (Partido Popular, CDS/PP), on the other hand, engaged in further negotiations with the government, promising to let the budget pass in general through their abstention. The centre- right wing Social Democratic Party (Partido Social Democrata, PSD) followed the same approach. The parliament will discuss during February 2009 the government’s final budget proposal. Nevertheless, the negotiations between the ruling socialist government and the centre-right wing parties, which together hold close to 40% of the seats, suggest that they have already ensured that the budget will be passed.

Budget challenges for public sector workers

The government’s budget proposals aim to bring the country’s spiralling budget deficit under control. The International Monetary Fund (IMF) and credit-rating agencies have been pressing the government to implement medium-term measures to reduce this deficit. The IMF also predicts that unemployment in Portugal will reach 11% in 2010, which is likely to increase social security expenditure. According to official government sources, the deficit had more than tripled in 2009, representing 9.3% of gross domestic product (GDP). The government aims to cut the budget deficit by 1% of GDP this year, bringing it down to about 8.3%. Among the measures to meet this goal is a freeze on real wage increases for the public sector, which will reach a maximum of 0.8% in 2010, according to inflation forecasts. Furthermore, the government proposal anticipates a number of measures to ensure greater convergence of the public sector retirement regime with that of the private sector. These measures would be implemented only in 2015 (PT0809049I). The measures include a proposal to tighten penalties for early retirement – that is, by reducing pensions from 4.5% up to 6% a year relative to the legal age of retirement.

Public sector workers stage mass demonstration

In early January 2010, FC issued an initial call to protest, before the government announced its 2010 budget proposals. At the time, three main issues were at stake which, according to FC, justified the call to protest, namely:

• the government’s refusal to meet the trade unions’ proposal for a wage increase, issued at the end of the last quarter of 2009, providing for an increase of 4.5% and a minimum rise of €50;

• the trade unions’ demand to suspend the system of performance appraisal (Sistema Integrado de Avaliação de Desempenho da Função Pública, SIADAP), in place since 2008 (PT0708039I);

• the fight against the rise in precarious work in the public sector.

The leader of FC, Ana Avoila, considered that the announcement of a wage freeze and tightening of penalties for early retirement included in the 2010 budget proposal further justified the need for protest action.

On 5 February 2010, some 50,000 public sector workers joined the national demonstration, which took place in the country’s capital city Lisbon, near the building of the Ministry of Finance and Public Administration (Ministério das Finanças e da Administração Pública). The leader of CGTP, Manuel Carvalho da Silva, joined the demonstration and declared his support for further protest action against the government proposals. Mr da Silva declared to the press that ‘the government must withdraw the proposal of a wage freeze because, in order to tackle the current crisis, we need more jobs and better wages, both in the public and private sector’. He added that ‘to achieve the balance of public budget, well targeted public investment and more selective expenditure will be necessary’.

The two trade unions affiliated to the General Workers’ Union (União Geral de Trabalhadores, UGT) – the Trade Union Front of Public Administration (Frente Sindical da Administração Pública, FESAP) and the Technical Civil Servants’ Union (Sindicato dos Quadros Técnicos do Estado, STE) did not participate in the demonstration, but made it clear that the wage freeze proposal was unacceptable and demanded a wage increase of 2.5%.

Four days after the demonstration, on 9 February, the Minister for Finance, Fernando Teixeira dos Santos, held a meeting with the trade unions, presenting a wage proposal without scope for real increases. The talks between the Finance Ministry and the trade unions in the public sector are expected to continue until 10 March – that is, two days before the parliament will issue its final vote on the 2010 budget.

Maria da Paz Campos Lima, Dinâmia