Official report evaluates collective bargaining in Portugal

Download article in original language : PT9711147FPT.DOC

A report submitted to the social partners in autumn 1997 assesses the status of collective bargaining in Portugal. It analyses the structure and level of collective bargaining and critically examines the role of legislation in its operation. Overall the report suggests that the state should curtail its involvement to allow the social partners greater leeway, but also highlights problems caused by the lack of established criteria to define their representative status.

A report has recently been submitted to the social partners on collective bargaining within the context of Portugal's system of "strategic concertation" (the tripartite negotiation of social and employment policy). According to the Secretary of State for Labour it is the first step towards widening discussion of the status of collective bargaining in Portugal. The report was the work of a specially created committee and aims to assess the current structure of collective bargaining in the country. It focuses on five areas: employers, trade unions, collective agreements, the role of the Labour Administration and the role of the state. It also presents a synopsis of relevant issues and outlines points for consideration.

Organisational structure of the social partners

The report begins by outlining the structural framework of collective bargaining, which can be summarised as follows.

There are 423 employers' associations throughout the country, though their organisational characteristics differ. One third are found in the commerce sector of which a large proportion - 26.2% of the total - are in the regional retail business.

The report also focuses on rates of tarde union membership, where it highlights a decrease over the last 10 years (the current average density is about 30%). The biggest drop has taken place in manufacturing, with the service sector undergoing only a slight decline, accompanied by the creation of new trade unions in areas of employment where up until now representation has been poor.

Collective bargaining

With reference to collective bargaining, the report highlights the following factors.

  • The frequent use of legal instruments by the state to regulate labour in formal collective bargaining: 384 and 398 such instruments were issued in 1995 and 1996 respectively, which means that 55% of all salaried workers in 1995 were covered by labour regulations.
  • The centralised nature of negotiations. Collective agreements are negotiated largely at sectoral level - 90.67% of all agreements concluded in 1996 were at this level. Company-level agreements are found only in large or medium-sized enterprises, many of which were formerly public enterprises or are enterprises which do not belong to employers' associations.
  • The absence of representational criteria. In Portugal there are no criteria to determine the "representativeness" of negotiating partners. Overlapping (or "parallelism") in collective agreements exists. This means that within the same enterprise, two or more agreements may be applied according to the union membership(s) of the workers. The situation becomes even more complex if the enterprise is involved in more than one economic activity and therefore belongs to more than one employers' association across the various subsectors.
  • A lack of updating. It is pointed out that nearly 20% of all agreements in Portugal date from before 1992 and have not been revised since that date. The reason is that there may be employers' associations that have since ceased to exist or which are largely inactive. There is also difficulty in reaching agreement: whilst there are certain social partners who direct their efforts towards reaching agreement during negotiations, there are others do not have the same manner of operation. Where parallelism exists, the state, by means of its right to extend the scope of collective agreements (through "extension directives"), applies to all workers in the sector the agreement that was negotiated by one of the unions, to ensure uniform coverage of all employees. Thus, some agreements are not renegotiated for several years. Termination of agreements is not a mechanism that is easy to undertake, nor is it used by the social partners.
  • The near absence of mechanisms to resolve disputes in collective agreements. Recourse by the social partners to the dispute resolution mechanisms that do exist - such as mediation and arbitration - is virtually non-existent.
  • The state assumes a strong, directly regulatory role in working conditions and acts as a substitute for the social partners during negotiations every time an extension directive is issued: 43.7% of the 398 regulatory instruments issued in 1996 were extension directives mandating the extension of agreements negotiated entirely or partially for other workers.
  • Although there is usually an annual review of agreements, it generally pertains only to wages. Following the dominant trend prior to 1996, 95.9% of negotiations dealt only with updating pay or other payment-related issues, whilst other types of clauses were not negotiated. In other words, in only 4.1% of agreements were new issues - rather than amendments - dealt with. The report also points out that until the beginning of the 1990s several agreements (15.1% in 1990, 6.0% in 1996) contained pay rates that were below the national minimum wage though - since the minimum wage is mandatory - it was always enforced in practice. Other pay levels continued to remain low, which demonstrates the wage flexibility found in Portugal.

A further section of the report mentions the following as factors that explain the current status of collective bargaining:

  • the huge number of small and micro enterprises, which is on the rise. The sectors where these companies are located contain the largest number of employers' associations. Also cited are the rise of individualism and the decline in union membership;
  • the fact that agreements are too homogeneous in content and rarely if ever stray from labour conditions covered by the law. Furthermore, when new conditions are introduced, it is done in such a way that there will be no significant or qualitative change; and
  • the fact that the state exerts a strong regulatory and restrictive role which can potentially block collective bargaining, primarily through overly detailed legislation with regard to working conditions such as working time.

The message is that, even though protective state employment policies may have made sense before and immediately after 1974, today they are seen as limiting the freedom of the social partners. It will be possible to define a new model for social relations only when deep consideration is given to the issue by the social partners. The report believes that the state should curtail its legislative activity, redefine the limits of labour law and go back to its role as guide and guarantor of public social order, taking over only when there are gaps in collectively agreed regulations, to promote conciliation mechanisms and improve social dialogue.

The need that the social partners feel to define rules of representativeness is also underlined. Though parallelism in agreements and different statutes regarding working conditions for employees in the same job grade are issues that do not seem to concern the enterprises themselves, unions and employers' associations do demand mechanisms that will regulate this fragmentation.

Commentary

The need for innovation in collective bargaining is stressed in both the European Commission's April 1997 Green Paper on Partnership for a new form of organisation of work (EU9707134F) and Portugal's Strategic Social Pact of December 1996 - signed by the Government, Confederation of Portuguese Industry (Confederação da Indústria Portuguesa,CIP), Confederation of Portuguese Farmers (Confederação dos Agricultores de Portugal, CAP), Confederation of Portuguese Commerce (Confederação do Comércio e Serviços de Portugal, CCP) and the General Workers' Union (União Geral de Trabalhadores, UGT)

Even though collective bargaining has been a key element in the regulation of labour in Portugal, it has been operating as a closed system. In other words, it has developed in an overly prescriptive manner mechanisms for negotiating pay down to the last decimal point, using extension directives and more and more all-embracing legislation and institutional game-playing. Other mechanisms involve the negotiation of general or abstract contents in an attempt to cover all the workers in a sector based on a logic that in some cases has little to do with the specific circumstances of the sector, not to mention the recent Europeanisation of labour relations, economic globalisation, the use of new technology and new forms of human resource management. Under these conditions it is difficult to negotiate new issues and new processes for applying them. (Maria Luisa Cristóvam, UAL)

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