EMCC European Monitoring Centre on Change

Portugal: Young people and temporary employment in Europe

  • Observatory: EMCC
  • Topic:
  • Published on: 08 December 2013



About
Country:
Portugal
Author:
Heloísa Perista, Janine Nunes and Paula Carrilho
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

Young people are most affected by the negative effects of labour market flexibility manifested in rising unemployment, precarious integration in the labour market and difficulty in achieving a stable job. This situation has been deteriorating in recent years due to the impact of the crisis.The regulations on the use of fixed-term contracts are changing and making their use more flexible. Incentives exist to encourage employers to conclude permanent contracts with unemployed or to take on young people who have completed an internship on permanent contracts but the share of young temporary employees has been constant and fast increasing.

Questionnaire

1. Importance of temporary employment for young people

1.1. Do the figures shown in the attached tables (on the number of temporary employed as a % of total employees based on Eurostat LFS data) give a reliable indication of the scale of temporary employment among the young in your country and the way that it has changed over recent years? Are there young people employed in temporary jobs who do not show up in the Eurostat figures? Are there national statistics which show a different picture from the Eurostat data? If so, please indicate what they show and give the source of the data.

Young people in Portugal are very often employed in temporary jobs. Both the European Labour Force Survey and the national data from Statistics Portugal (Instituto Nacional de Estatística - INE) show a similar picture.

Tables 1 and 2 indicate that the incidence of temporary employment is particularly high among the younger employees: in 2011, 57.2% of the employees aged 15-24 years were temporary, compared with 38.6% (39.2% according to Eurostat data) of the employees aged 25-29 years. The share of temporary employees has also increased more significantly among the young people aged less than 25: this share rose 4.6 p.p. compared with 2.8 p.p. (2.6 p.p. cf. Eurostat data) among those aged 25-29, during the period 2007-2011.

Table 1 - Temporary employees as a share of total employees aged 15-24 and 25-29, 2004-2011

15-24 years

 

% total employees

% point change

 

2004

2007

2009

2011

2004-2007

2007-2009

2009-2011

2007-2011

European Labour Force Survey (Eurostat)

47.4

52.6

53.5

57.2

5.2

0.9

3.7

4.6

Labour Force Survey (INE)

46.5

52.6

53.5

57.21

6.1

0.9

3.7

4.6

25-29 years

 

% total employees

% point change

 

2004

2007

2009

2011

2004-2007

2007-2009

2009-2011

2007-2011

European Labour Force Survey (Eurostat)

30.3

36.6

38.6

39.2

6.3

2.0

0.6

2.6

Labour Force Survey (INE)

30.4

35.8

38.0

38.6

5.4

2.2

0.6

2.8

Note: 1 in 2011, there was a break in the series in the Labour Force Survey of INE which may limit direct comparability of data.

Source: Labour Force Survey of Statistics Portugal - INE [Inquérito ao Emprego – Instituto Nacional de Estatística - INE], unpublished data

European Labour Force Survey, Eurostat.

Statistical data are often described as not showing the true extent of temporary employment namely among the young people in Portugal. The ‘bogus’ self-employment is a special matter of concern at this level. An example of this may be found in the numerous criticisms and complaints made to the Portuguese Ombudsman regarding the national survey for the Census 2011. According to these a response option should have been included in the questionnaire, in order to make it possible the measurement of the real extent of the ‘bogus’ self-employment in Portugal, namely among young people.

1.2. Is there any evidence that other forms of employment are used as a substitute for temporary contracts, such as bogus self-employment where young people are contracted to provide services to a single work provider in a continuous manner so acting de facto as employees? If so, please give the source of the evidence and indicate the scale of the phenomenon in terms of the number of people concerned.

As mentioned above, there is no specific statistical evidence on ‘bogus’ self-employment. However, according to the INE if an individual has a service provision contract and is subject to the authority and direction of company which hired his/her services, this individual is considered an employee. The table below presents the number of employees aged 15-24 and 25-29 working through a service provision contract, which may be a proxy to the extent of bogus self-employment in Portugal.

These data show that the number of employees working through a service provision contract rose significantly in the last seven years, especially among the employees aged 25-29 years. In 2011, 20,2 thousand employees aged 15-24 and 27,3 thousand employees aged 25-29 were covered by this type of contract.

Table 3 - Number of employees aged 15-24 and 25-29 working through a service provision contract, 2004-2011 (thousands)
 

15-24 years

25-29 years

2004

9,2

14,7

2007

12,1

18,5

2009

11,6

18,7

20111

20,2

27,3

Note: in 2011, there was a break in the series in the Labour Force Survey of INE which may limit direct comparability of data.

Source: Labour Force Survey of Statistics Portugal - INE [Inquérito ao Emprego – Instituto Nacional de Estatística - INE], unpublished data.

1.3. Please list (and give summary details, i.e. purpose and duration of the contract) the most common contract types or contractual arrangements under which young people are employed on a temporary basis (such as for traineeships, apprenticeships, probationary periods, replacement of workers on leave or projects of a fixed duration). What is the relative importance of each type of contract or arrangement in terms of the number of young people employed under them?

Data from the Labour Force Survey of INE indicate that the most common contractual arrangement under which young people are employed on a temporary basis is fixed-term contract.

The share of young employees with a fixed-term contract rose significantly in the last seven years. In 2011, the employees aged 15-24 with a fixed-term contract, 147,6 thousand, represented 50.3% of total employees, and the corresponding figure to the employees aged 25-29 (163,7 thousand) was 33.1%.

Contrary, the share of young employees with other type of contract shows a general trend to decrease over the period. In 2011, the employees aged 15-24 with other type of contract, 20,2 thousand, represented 6.9% of total employees, and the corresponding figure to the employees aged 25-29 (27,3 thousand) was 5.5%. However, it must be noted that there was a break in the statistical series in 2011: until then, seasonal work without formal contract, occasional work and service provision were included in this statistical category, while since 2011 this category includes only service provision.

Table 4 - Temporary employees as a share of total employees aged 15-24 and 25-29, 2004-2011

15-24 years

 

Number employees (thousands)

% employees

 

2004

2007

2009

20114

2004

2007

2009

20114

Fixed-term contract

175,9

180,9

166,4

147,62

38.5

44.7

47.1

50.32

Other1

36,3

31,6

22,8

20,23

8.0

7.8

6.4

6.93

25-29 years

 

Number employees (thousands)

% employees

 

2004

2007

2009

20114

2004

2007

2009

20114

Fixed-term contract

152,4

167,3

176,6

163,72

25.1

30.1

33.2

33.12

Other1

32,1

32,0

25,4

27,33

5.3

5.8

4.8

5.53

Notes:

1This category includes seasonal work without formal contract; occasional work and service provision.

2Since 2011 this category includes seasonal work without formal contract and occasional work.

3Since 2011 this category includes only service provision.

4in 2011, there was a break in the series in the Labour Force Survey of INE which may limit direct comparability of data.

Source: Labour Force Survey of Statistics Portugal - INE [Inquérito ao Emprego – Instituto Nacional de Estatística - INE, unpublished data.

According to INE there is no available data on further specification on the purpose and duration of the contractual arrangements under which young people are employed on a temporary basis.

1.4. Please indicate the main reasons for the emergence and development of the different types of temporary contract which you have listed in response to question 1.3. To what extent are they linked to particular conditions in the labour market or employment protection legislation/regulation in your country? What is the main attraction of such contracts to employers? What effect has the crisis had on the use of such contracts?

Temporary contracts are prevalent among young employees in Portugal and among those aged 15-24 in particular. Following the Memorandum of Understanding on Specific Economic Policy Conditionality, signed by the Portuguese Government, the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB), the Portuguese legislation has been changing in direction to an increased flexibility of the labour market and lower employment protection. This has been parallel to a growing proportion of temporary contracts, namely among young employees, and thus to increased job precariousness. It is common knowledge that hiring temporary employees is a practice linked to precarious forms of employment. In most cases these temporary contracts are not associated to traineeships, apprenticeships, probationary periods, replacement of workers on leave or projects of a fixed duration, but to a practice which intends to avoid permanent contracts.

Temporary contracts allow employers to practice lower wages and to minimize costs and avoid bureaucracy in case of dismissal. These strategies become increasingly visible in times of crisis and uncertainty about future economic prospects.

1.5. To what extent are temporary contracts a ‘stepping stone’ to ‘permanent’ jobs (or those with standard contracts of employment of undefined duration)? Are apprentices and trainees typically taken on by the companies or other organisations concerned on standard permanent contracts once they complete their training? Has the situation changed over the crisis period? Please summarise any relevant studies which have been carried out in your country or other evidence at the national level which exists and give the reference to them.

Young people are most affected by negative effects of labour market flexibility manifested in rising unemployment, precarious integration in the labour market and difficulty in achieving a stable job. The impact of crisis has been deteriorating this situation but it was not yet assessed in the available studies.

A 2012 congress paper on ‘Employment paths of young people in the new service sectors’ (Percursos laborais dos jovens nos novos sectores de serviços) (in Portuguese, 588Kb PDF) was based on semi-directive interviews to three groups of young people (immigrants, descendants of immigrants and national), aged between 16 and 31 years old, who work in: call centers, new forms of commerce (shopping centers) and restaurants (fast food). Most of these young have a fixed-term contract mainly with 6 months duration. In the call centres, all contracts are signed with temporary work agencies and, in many cases, are being renewed monthly, which indicates a very precarious situation. The interviews show that the performance of young people is important to get a permanent contract. However, becoming permanent workers does not guarantee a sustainable integration or a stable situation in the labour market, in the context of the economic crisis. The results show that switching between precarious jobs, unemployment and fear of losing their current job is transversal to the three categories of young. This study also concludes for pathways marked by mobility between low-skilled jobs and lack of prospects for upward mobility.

Some masters' thesis have been focusing on temporary agency work.

A 2009 thesis entitled ‘Temporary agency work - Expectations and motivations of young people - A case study on the Civil Servants Pension Fund (CGA)’ (Trabalho temporário – Expectativas e motivações dos jovens – Um estudo de caso na Caixa Geral de Aposentações (CGA)) (in Portuguese, 633Kb PDF) highlights that the number of temporary agency workers will continue to grow while unemployment rates do not decrease and the economic and financial market is unstable. Most young people covered by this study are highly educated and only resort to temporary agency work as a path to enter the labour market and to achieve their aim to have a stable job. The CGA uses a great number of temporary agency workers who perform the same functions for years.

This conclusion is reiterated by a 2012 masters' thesis entitled ‘Temporary agency work as a flexibility strategy: a case study’ (O trabalho temporário como estratégia de flexibilização: um estudo de caso) (in Portuguese1.04Mb PDF). This study concludes that a large majority (71%) of the temporary agency workers in a telecommunications company accept this kind of work due to lack of alternatives in the labour market. Regarding future perspectives, only 2 respondents (14%) expect to be able to get a direct contractual relationship with the company where they work.

An evaluation of the professional internships measure was published in 2012: ‘Evaluation Study of Active Employment Policies’ (Estudo de Avaliação das Políticas Ativas de Emprego - Relatório Final). This evaluation, covering the period 2004-2008, shows that three months after the internship: 72.5% of the beneficiaries were employed; 50% of the beneficiaries had a fixed term contract; and 16% of the beneficiaries were self-employed, in most cases without employees. The employment rate of the beneficiaries three months after the internship ranged from 68.9% in 2006 to 79.5% in 2008. More than 70% of the participants surveyed felt that the internship increased significantly their chances of getting a job. After the internship, most workers reported to perform functions similar to those carried out during the internship.

2. Access to social benefits

2.1. Does entitlement of young people to (contributory) unemployment insurance benefits and (non-contributory) unemployment assistance (i.e. benefits, usually means-tested, which provide a minimum level of income) differ if they are employed on temporary contracts as opposed to permanent ones? If so, please indicate briefly the differences in eligibility conditions and any differences between types of temporary contract (including those working as self-employed for a single employer). Have there been any changes over the period of the crisis?

In legislation there is no direct reference to unemployment benefits to young or/and employed on temporary contracts as opposed to permanent ones. There is though reference to differences in terms of age and contribution record.

In Portugal according to Decree-Law 64/2012 of 15 March all economically dependent workers are covered by unemployment insurance benefits. Self-employed are also covered by unemployment benefits when at least 80% of their annual income comes from a single organisation (Decree-Law 65/2012 of 15 March).

Claimants of unemployment insurance benefits must be in a situation of involuntary unemployment, have to be capable and available for employment and be registered at the employment office. The condition for unemployment insurance benefits eligibility is 360 days of contributions (employment) record in the last 24 months before unemployment. Therefore, young people in temporary jobs may have difficulties in complying with the need to have a continuous record of social contributions.

Unemployment insurance benefits duration increases with age and contribution record after the last subsidized unemployment, from a minimum of 150 days (for individuals aged less than 30 years old with shorter careers) to a maximum of 540 days (for individuals over 50 years old with longer careers). Extensions of this period are also related to age and contributions.

During the crisis the Portuguese Government has largely implemented the stipulations of the Memorandum of Understanding on labour market policies. This includes changes in the unemployment insurance rules (Decree-Law 64/2012 of 15 March), some of these with direct impact on the entitlement of young people in temporary contracts, e.g.:

  • the maximum duration of unemployment insurance benefits was reduced from three years to 18 months;
  • the reduction of the qualifying period for unemployment benefits, from 450 to 360 days;
  • the extension of protection to the self-employed whose services are mainly provided to a single contracting entity.

Another relevant change to be mentioned is a 6% cut on the unemployment benefits and the temporary increase of 10% of the unemployment benefit amount in situations where both members of the couple receive unemployment benefits and they have dependent children. This measure also covers single parent families (Decree-Law 64/2012 of 15 March).

2.2. Does entitlement of young people to sickness benefits and maternity benefits differ if they are employed on temporary contracts as opposed to permanent ones? If so, please indicate briefly the differences in eligibility conditions and any differences between types of temporary contract (including those working as self-employed for a single employer). Have there been any changes over the period of the crisis?

The law states that employees or self-employed are compulsory covered by sickness benefits. However, sickness benefits are available to people who have 6 months insurance period (continuous or cumulative). In addition, salaried workers (as opposed to the self-employed) must also have an employment history of at least 12 days in the 4 months preceding the illness. (Decree-Law 28/2004 of 4 February). This may exclude people with contracts of very short duration or young people in their first job..

The same applies to maternity benefits. As a condition of eligibility, the female workers should have worked for at least six calendar months with records of pay (Decree-Law 91/2009 of 9 April).

During the crisis the Portuguese Government has implemented some new measures on sickness and maternity benefits:

• Cuts in sickness benefits: those on sickness benefit will contribute 5% towards social security (Law 66-B/2012 of 31 December);

• The calculation basis of maternity benefits no longer includes Christmas and holiday allowances (Decree-Law 133/2012).

2.3. Are there any differences in the entitlement of young people to old-age pensions between those employed in temporary jobs as opposed to permanent ones? If so, please indicate what these are. Have conditions of eligibility to pensions changed over the period of the crisis (including through pension reforms introduced as part of a long-term strategy to improve the financial sustainability of the system)?

Any employed or self-employed person who reaches the retirement age and meets other conditions may qualify for an old-age pension. The same conditions apply for those who are insured on a voluntary basis. The old-age pension may be accessed at any time after the age of 65, as long as the person has accumulated at least 15 years of paid or credited contributions. It is also necessary to prove the completion of 120 days with earnings registration for each calendar year.

Early retirement is possible between the ages of 55 and 65, provided that an insured person completed a qualifying period and a contribution period of 30 calendar years. Unemployed persons may claim the old-age pension at the age of 62, if they were aged 57 at the beginning of their unemployment and have completed the qualifying period (of at least 15 years). Those who have contributed for 22 calendar years and are aged 52 or more when they become unemployed may also claim the old-age pension at the age of 57. If an insured person performs activities in certain recognised professions where heavy or health-damaging work is performed, she/he may as a rule retire at the age of 55. The same retirement age of 55 years is set in the case of specific measures to protect economic activities or companies.

2.4. Are there any differences in entitlement of young people to health care between those employed in temporary jobs as opposed to permanent ones? If so, please indicate what these are. Have conditions of eligibility to health care changed over the period of the crisis?

There are no differences for those, young or not, employed in temporary jobs as opposed to permanent ones. The National Health Service (Serviço Nacional de Saúde - SNS) has the mission to ensure that all citizens have access to public health care.

There has been a large public debate about the SNS and its sustainability. In 2012 there was a large increase in the SNS user fees.

3. Regulation of temporary contracts and policies to support transitions into permanent contracts

3.1. Please describe briefly the regulations applying to the main types of temporary contract in your country. Do restrictions exist on the maximum duration of the different types of temporary contract for young workers or the number of times they can be renewed? Do these regulations differ by age (i.e. between young people and older workers) and/or by type of temporary contract (as mentioned in question 1.3), by occupation, or by sector of activity? Do special regulations exist for those completing apprenticeships or traineeships? Have the regulations changed over the period of the crisis – i.e. has there been a tendency for them to have been tightened or relaxed?

A new Labour Code [Código de Trabalho] came into force in August 2012, including some important changes with implications on temporary contracts. Amendments regarding the regime and the method of calculation of the compensation due in case of non-renewal of fixed-term contracts were included.

The Labour Code defines that fixed-term contracts may be renewed up to three times.

The Law 3/2012 of 10 January established a regime of extraordinary renewal of the fixed-term contracts concluded after 17 February 2009 and that reach the maximum limit of its duration until 30 June 2013. These contracts may be:

  • Object of two extraordinary renewals;
  • The duration of each extraordinary renewal cannot be lower than one-sixth of the maximum duration of the fixed-term contract or its actual duration, depending on which is lower;
  • The total duration of the renewals cannot exceed 18 months;
  • The validity limit of the fixed-term contract subject of extraordinary renewal is 31 of December of 2014.

The Law 23/2012 of 25 June modifies the rules applicable to very short fixed-term contract. The maximum period of each contract rises from one week to fifteen days. The total duration of this type of contract with the same employer cannot exceed 70 working days in the calendar year, more 10 days than before. The seasonal fixed-term contracts in the agricultural sector or for the performance of a tourism event are not subject to written form.

According to the article 366º of the Labour Code, in case of dismissal the compensation due corresponds to 20 days of basic wage and seniority payments for each full year of work. Recently, the Government submitted to the Parliament a proposal of law, which introduces a new amendment to the Labour Code. This proposal of law intends to reduce the compensation due in case of dismissal to 12 days of wage for each year of seniority which is highly controversial among the social partners.

These regulations do not differ by age.

3.2. Do incentives exists in your country to encourage employers to opt for standard rather than temporary contracts of employment, to convert temporary contracts into permanent ones or to make it easier for employees to move from temporary to permanent contracts? If so, please briefly describe the form that these incentives take. Do they apply equally to young people as well as to older workers? Are any incentives in place to encourage employers to take on young people who have completed an apprenticeship or traineeship on permanent contracts? Have there been any changes to incentives over the period of the crisis? Are any such changes being proposed or being actively discussed at present in your country?

During 2012, the Government implemented a set of active employment measures, particularly aimed at promoting the employment and vocational training of unemployed people and improving employability. However, several criticisms have been raised by trade unions and some civil society movements (of young unemployed people) regarding these new measures. The major concerns regard the fact that these type of measures are promoting “precariousness, low wages and unemployment”, “making it easier for employers” to hire highly qualified young people at very low wages and with the financial support of the Government (CGTP’s press release). At the same time, short-term internships are seen as a temporary measure – existing for a long time – that will continue to have little effect on the rise of youth unemployment.

In 2012 the measure 'Stimulus 2012' (Estímulo 2012) and the Programme 'Young Impulse' (Impulso Jovem) were approved:

  • The measure 'Stimulus 2012' grants financial support to the conclusion of an employment contract with unemployed people registered at the local employment centres for at least 6 months, with the obligation to provide vocational training. This support corresponds to 50% of the monthly wage of the employee. This value cannot exceed the amount indexed to social support per month (value in 2012 - €419.22), for a maximum period of six months. If the employer concludes a permanent contract, the financial support under the measure 'Stimulus 2012' will be increased by 10%, i.e. the financial support will correspond to 60% of the monthly wage of the employee.
  • The Programme ‘Young Impulse’ was launched as a strategic programme to address the increasing youth unemployment. The programme is targeted at young people aged between 18 and 35 years and is structured around three main types of measures: a) professional apprenticeships; b) support to hiring and entrepreneurship; c) support to investment.
    • The professional internships – named Employment Passport [Passaporte Emprego], which covers the whole national territory and applies to all sectors of activity – give a renovated continuity to the existing programme of professional internships. These short term six months internships include compulsory vocational training. An integration prize, corresponding to six times the value of the internship grant, is awarded in case a permanent contract follows the end of the internship period. These professional internships are targeted for young unemployed with age ranging between 18-35 years, depending of the activity area (industry: 18-25; agriculture: 18-35; innovation: 23-34; public administration: up to 30 years; social economy: 18-30; internationalization: age group 18-30).
    • The support hiring provides the full or partial refund of the mandatory amount paid by the employer to the social security: 100% if a permanent contract is concluded, and 75% if a fixed-term contract (lasting for 18 months at least) is concluded at a full-time basis with a young unemployed aged 18-30 and registered at an employment centre for at least 12 consecutive months. This amount can never be bigger than €175 per month. This support may be given to the employer for a maximum of 18 months.

3.3. Is the employment of young people on temporary contracts an important issue of concern for the social partners? Are there strong differences in attitudes and policies between employers and trade unions towards the use of temporary contracts? Have any initiatives been taken by the social partners, either jointly or separately, to encourage the use of permanent rather than temporary contracts? Have any specific initiatives been taken in respect of young people completing apprenticeships or traineeships over the types of job they are offered when their temporary position comes to an end?

The employment of young people on temporary contracts and, more generally, their job precariousness has been an issue of concern for the social partners.

Both trade union confederations, the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses – CGTP) and the General Union of Workers (União Geral de Trabalhadores – UGT), identify young people as one of the most vulnerable groups on the labour market, namely in relation to precarious work relations and difficulties in accessing jobs. Recent developments in labour legislation are seen by trade union confederations as drivers to increased labour precariousness, namely for young people.

An example of the divergent views expressed by employers refers to the on-going debate among the social partners on the facilitation of redundancies on the initiative of the employer and the reduction of compensation on termination of employment. In the current situation of crisis employers seem mainly concerned with the competitive position and the financial survival of the companies.  

No specific initiatives have been taken by the social partners, either jointly or separately, to encourage the use of permanent rather than temporary contracts. However, young people’s job precariousness was a matter of concern in the general strikes and several demonstrations which took place in Portugal over the last year.

Heloísa Perista, Janine Nunes and Paula Carrilho - CESIS

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