Unions present wages policy proposals for 1999

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Over autumn 1998, Portuguese trade unions have been drawing up their pay policies and bargaining platforms for 1999, at the same time as the 1999 government Budget has been under discussion. The unions want workers to share in recent increases in productivity and are also demanding compensation for the wage moderation policies of recent years and for loses resulting from inflation above the predicted level for 1998. An approximation of Portuguese pay to European averages has also been raised as an issue.

Discussions over the 1999 bargaining platforms of the Portuguese trade union confederations began after the 1998 summer holidays. At at the same time as the 1999 government Budget was being discussed (PT9810110F) the unions presented their proposals for increases in pay and pensions

The General Workers' Union (União Geral de Trabalhadores, UGT proposes:

  • 4% as the base figure for the pay increase in collective bargaining, which would correspond to the anticipated inflation rate plus part of the increase in labour productivity. UGT points out that inflation has increased more than had been predicted for 1998 - it will be 2.4% rather that 2%;
  • a 5.2% increase in the national statutory minimum wage from PTE 58,900 per month to PTE 62,000. For domestic service workers, whose minimum wage is lower, UGT proposes a 9.1% increase to help bring it closer to the general minimum;
  • an 8% increase, to PTE 33,800, in the minimum monthly pension under the general social security scheme. It would also like to see corrections made to pensions that are out of date (those that are at less than 80% of the minimum wage and those that have not seen an increase in the past few years); and
  • income tax relief of at least 5% for low- and middle-income taxpayers. UGT would like to have losses suffered by workers because of the unexpected rise in inflation in 1998 compensated

The General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP) proposes:

  • a national minimum wage of PTE 62,000 - a 6.11% increase;
  • wage increases averaging 6%. However, CGTP feels that discussion of wages should not be based on the inflation rate, but rather that it should be based on the outcomes of collective bargaining at sector level;
  • pensioners under the general social security regime with a complete contributions record should receive the equivalent of the national minimum wage; and
  • a tax reduction for low- and middle-income taxpayers.

The unions believe that pay policy in 1999 must lead to a real increase in pay and pensions in Portugal. A gradual increase in pay towards European Union averages is a goal that cannot be put off any longer because of the upcoming euro single currency, according to UGT. CGTP agrees, and points out that the situation in Portugal has actually worsened lately. In the United Nations Human Development Report 1998, Portugal fell from 31st place to 33rd (out of 174 countries) in the "human development index", which ranks countries on their performance on various economic and social indicators. The EU country closest to Portugal is Greece, which lies in 20th place (with a lower GDP than Portugal, but higher human development indicators). It seems clear that Portuguese people have not benefited from national increases in GDP and productivity.

A turning point in Portuguese pay policy

1999 will be a difficult year for negotiating an agreement on incomes policy, given that the employers' and the union confederations' positions are far apart, according to UGT. UGT believes that compensation for losses has to be made because one of the commitments made in the 1996-9 tripartite Strategic Concertation Pact (Acordo de Concertação Estratégica, ACE) (PT9808190F) was to guarantee that divergence from predicted inflation figures in one year would be taken into account the following year. Fiscal adjustments to individual income taxes should also be considered.

With its bargaining platform, UGT has presented a set of proposals for the 1999 national Budget, involving reduction in the tax burden and other measures to restructure the tax system, and budgetary measures to take serious account of the National Employment Plan (PT9805177F) and education and heath policies. UGT states that the Budget cannot pursue the public deficit as the main priority, but should instead focus on policies to promote economic growth, job creation, and structural reform. It hopes that the government will present a proposal to broaden unemployment benefit coverage, given that the current system covers only a third of unemployed workers. UGT also believes that benefit should take into account the number of years the citizen has contributed to the system and not just age.

CGTP has presented a document outlining its platform, divided into six chapters that address: labour legislation: jobs and training; collective bargaining policy; incomes policy; health and safety in the workplace; and social policy. It continues to reject what it sees as unacceptable measures in the current package of draft legislation to amend labour laws (PT9807186F), as it believes that these would increase the power of employers. CGTP believes that collective bargaining is the best place for making changes to regulations. It also demands a macroeconomic policy that is more favourable to jobs and vocational training, and that decreases job insecurity.

There has not been much attention given to the employers' position on these issues. The Confederation of Portuguese Commerce (Confederação do Comércio e Serviços de Portugal, CCP) considers the unions' national minimum wage proposals unacceptable because they are three times the inflation rate. Commerce employers believe that the minimum wage should not be set by the administration, but rather by the laws of the marketplace. It should take into account supply and demand and productivity, as well as income tax adjustments, since net increases in wages should happen only when the tax burden is reduced. Otherwise companies are put at a disadvantage.


The discussion on pay increases and the union confederations' programmes for 1999 reflect concern over European integration and the continuing debate over major structural changes in the field of employment in Portugal.

It is difficult to reconcile the policy of continuing to hold wages at a moderate level with the idea of trying to bring them up to European levels. Portugal is a country with very low pay and unfavourable incomes policies. Its industrial sectors have had strong divergences from those of other EU Member States. All this means that there is some risk of clashes.

On the other hand, there are some indications that the role performed by social concertation and dialogue, which has had a strong moderating effect on pay, especially in the last 10 years, may be becoming a little less influential in this area, rasing the possibility of not having an incomes policy or agreement for 1999. A certain distancing in this discussion on the employers' part can be observed. At present, we seem to be in a stage of hesitation between choosing one of two directions in setting pay: taking into mainly macroeconomic arguments; or a more differentiated approach, more directly based on power relations and the direct defence of the interests of workers at sector or occupational level. (Maria Luisa Cristovam, UAL)

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