1999 Annual Review for PORTUGAL

This record reviews 1999's main developments in industrial relations in PORTUGAL

Economic developments

The Portuguese economy continued to grow, though at a slightly slower rate, in 1999. GDP grew by 3.1% in 1999 (Ministry of Finance estimate), compared with 3.9% in 1998 (which had been the peak of a rising trend since 1993, when a negative figure of -1.2% was recorded). The public spending deficit stood at 1.8% of GDP in 1999, down from 2.3% in 1998 and 2.5% in 1997 (and continuing a downward trend from 7.0% in 1993). Public debt stood at 56.8% of GDP in 1999 (Ministry of Finance estimate), compared with 57.0% in 1998 and 61.4% in 1997 (continuing the decline since the 69.6% recorded in 1994). The 1999 inflation rate was 2.3%, compared with 2.8% in 1998 and 2.2% in 1997 - inflation figures have been much lower in the past three years than they were in the early 1990s (when the figure reached 13.4% in 1990).

The unemployment rate continues to fall, standing at 4.2%, or 212,900 people, in the third quarter of 1999, compared with 5.0% (247,900) in 1998, 6.7% (323,100) in 1997 and 7.2% (343,900) in 1996 (the high-point of the 1990s).

The Bank of Portugal's Annual Report for 1998 notes that between 1986 and 1998, Portugal made up 19.2 percentage points towards the European average for per capita income - a significant step toward real convergence.

Political developments

Elections were held for both the Portuguese National Assembly and the European Parliament in 1999. The outcomes of the two elections were similar in terms of the relative rank of the various parties and the percentage of votes each received. In both elections, the Socialist Party (Partido Socialista, PS) finished in first place, with between 43% and 44% of the vote, followed by the Social Democratic Party (Partido Social Democrata, PSD) with between 31% and 32%, the Unitarian Democratic Coalition (Coligaçã o Democrática Unitária) - comprising the Communist Party (Partido Comunista, PCP) and the Greens (Os Verdes) - with between 9% and 10%, and the People's Party (Partido Popular, PP) with around 8%. The Left Bloc (Bloco de Esquerda) had two deputies elected to the National Assembly for the first time.

Following the general election, the Socialist Party, while remaining in government, did not quite achieve an absolute majority of representatives in the National Assembly. The party took 115 seats, with the remaining 115 seats split among the four other parties. This is the first time that this has happened, and analysts warn that it may lead to some difficulties during voting on legislation.

A Ministry of Equality was created in the legislature which ended in 1999. The new ministry was well received by the social partners, which see this development as raising the profile of equality issues and increasing the efficacy of any measures that are taken, maintaining that consolidation of equality issues is a positive development as it will mean less fragmentation.

Collective bargaining

1999 was a year of relative stability in terms of collective bargaining, at least with respect to the number of collective agreements negotiated in comparison with previous years (PT9901123F). As shown in table 1 below, the number of company-level and multi-employer agreements concluded, as a percentage of the total number of accords, rose from 26.4% in 1998 to 30.9% in 1999, while the proportion of sectoral agreements fell back from 67.25% to 65.8%. This continued a trend already observed in previous years. Adoption agreements - whereby social partners in one area adopt agreements already negotiated elsewhere - comprised about 3.3% of the total in 1999, down from 5.6% in 1998.

Table 1. Collective agreements concluded, 1997-9
. 1997 1998 1999
All collective agreements 409 393 398
Sectoral agreements 68% 67.25% 65.8%
Multi-employer and company-level agreements 26.4% 27.2% 30.9%
Adoption agreements 5.5% 5.6% 3.3%
Administrative orders 155 132 181

Source: Direcção Geral das Condições de Trabalho (quarterly reports).

An analysis of the first three quarters of 1999 shows that there was a reversal of the trend toward national agreements. Only 49.8% of the agreements were concluded at national level - 1998 this figure was 67%. For the most part, negotiations took place in order to make changes to agreements which were already in existence — 93.1% of the total in the case of sectoral agreements, and 81.4% in the case of other agreements (see table 2 below). The average effective duration of the agreements was 13.2 months for pay, meaning that negotiations tend to be more or less annual.

Table 2. Nature of collective agreements concluded in 1999
New sectoral agreements 18
Changes to existing sectoral agreements 244
New company-level and multi-employer agreements 32
Changes to company-level and multi-employer agreements 91
Adoption agreements 13
Total 398

Source: Direcção Geral das Condições de Trabalho (quarterly reports).

A significant amount of administrative intervention on the part of the state was apparent in 1999. There were 181 administrative orders to extend previously-negotiated agreements to include workers who were not originally covered by these agreements, compared with 132 in 1998 and 155 in 1997.

Following a trend already observed in 1998 (PT9901123F), there continues to be some innovation, albeit limited, in the content of negotiations - especially in agreements involving state-run enterprises. However, in many cases, new topics were introduced merely to update the content of the agreement to bring it into line with recent labour legislation. In some other cases, new subjects were introduced but involve simply declarations of principles that have not as yet been translated into practical applications. Furthermore, many of the innovations were relatively minor.

Collective bargaining mechanisms in the public administration gained new impetus in 1999 (PT9904141N) although the organisations representing certain occupational groups linked to the armed forces and the police are still not very strong (PT9901124N).

Pay

Average collectively-agreed basic pay increases in the period from January to November 1999 stood at 3.6% (according to figures from the Gabinete Estudos de Rendimentos do Trabalho-DGCT ), compared with 3.3% in 1998 and 3.6% in 1997.

Although forecast inflation for the year was 2%, actual inflation was 2.3% in 1999. This difference in the two rates was disadvantageous to workers, as they were not offered any financial compensation. The General Worker's Union ( União Geral de Trabalhadores , UGT ), claims that compensation should be made for this difference between forecast and actual inflation rates.

The statutory national minimum wage rose by 4.1% in 1999, which represented a real increase of 1.6%.

There continued to be a significant number of clauses relating to pay matters other than basic rates in collective agreements negotiated in 1999. Frequently mentioned items included meal subsidies, shift differentials and sick pay, with increases in these payments of between 3.5% and 5% in 1999.

Working time

An analysis of the content of agreements from the first three quarters of 1999, carried out by the Ministry of Labour shows that working time was on a par with skills and qualifications as the subject most often negotiated. Working time figured in 40% of the agreements analysed in the study. The majority of clauses introduced a 40-hour working week. In some sectors, such as radio broadcasting, working time is set as low as 35 hours per week, especially for those engaged in shiftwork. Other working time-related contents of agreements included the annualisation of working time (in metalworking) and a four-day working week (in winemaking).

There has also been a trend toward reducing the length of lunch breaks (as at the Petrogal oil-refining company and in the tobacco industry), and introducing Saturday work. The number of annual days of holiday has been increased in some cases by one or two days up to a total of 25 days, contingent on compliance with certain conditions, such as taking holidays during the off-season. In some cases, workers are allowed to take holiday during their first year of employment.

Equal opportunities

As in previous years, some agreements signed in 1999 contained "affirmative action" clauses on women's employment, from a perspective of positive discrimination - as promoted by the government's equality plan ( PT9908154F ). An agreement covering the private hospital administration sector, concluded in 1999, contains a clause stating the general principle that, for the purpose of the agreement, no worker, male or female, may suffer prejudice or given preferential treatment in employment, recruitment, access to employment, career promotion or progression, or pay. It also guarantees efforts on the part of employers to establish parity between men and women in terms of career development and qualifications. This is the first clause of this kind to appear in Portugal.

Job security

There are no references to clauses relating to job security in the Ministry of Labour study of agreements in the first three quarters of 1999.

Training and skills development

A total of 203 clauses dealing with this subject were found in Ministry of Labour's study of bargaining in the first three quarters of 1999. This total included two company-level agreements (in the banking sector), where a commitment was made under which employers would be responsible for providing vocational training during regular working hours. Clauses relating to the development of skills and qualifications appeared in some 40% of the agreements, but for the most part these were of relatively minor importance, covering the skills required for new ancillary occupations (such as industrial cooks in the ceramics industry), or eliminating references to the skills required for out-dated occupations (such as typists).

Provisions designed to protect the position of young workers appeared relatively often in agreements, mostly with regard to people on work placements and apprentices, or linked to the introduction of new occupations.

In some agreements, promotions are tied to evaluations of employees' skills and qualifications (as in the transport sector).

Other issues

Geographic mobility was an issue covered relatively frequently by agreements in 1999. Part-time work appeared as a new item in four agreements examined in the Ministry of Labour study, relating to: the maximum acceptable level of part-timers (restaurants and hotels); areas where part-time workers can be used (toll booths); the maximum number of allowable hours; and a complete regulatory scheme. Provisions relating to social security appeared in only one of the agreements examined.

Legislative developments

1999 saw a wide range of changes in labour legislation, some quite significant (although the essential underlying features of Portuguese labour law remain unaltered). The objectives of the changes were to eliminate provisions that no longer corresponded to current social and labour realities, and to make the law more effective. This was among the commitments made under the 1996-9 tripartite Strategic Concertation Pact (PT9808190F). The most noteworthy changes were as follows.

  • Changes in the Code of Labour Procedure, enacted in the autumn of 1999 (PT9909160F), altered the legal jurisdiction of the Portuguese courts in international matters, provided for representation and assistance to workers by the Public Prosecutor's office, granted trade unions the authority to represent workers in court, and introduced mechanisms for speeding up the legal process for suspending dismissals and for taking preventative measures when hygiene, safety and health are at risk. It also provided for substantial penalties in criminal cases.
  • A new law, published at the beginning of September 1999 (PT9909161F), broadens the potential use of temporary agency workers beyond their use in activities that are seasonal in nature or have irregular annual production cycles. In addition, a number of changes were made to contractual conditions. For example, a worker's status may be changed from temporary worker to that of permanent worker. In order to do this, there must be a specific provision to this effect in a written contract between the employee and the temporary work agency. It is expressly forbidden to use temporary agency workers for jobs that are particularly hazardous. Occupational training must be provided and the amount is to be based on a percentage of the agency's total business volume. Fines for violations were increased, and regulations covering workers posted abroad were put in place.
  • A set of laws, published in August 1999 (PT9909162N), constitute a far-reaching reform of the system of sanctions for violation of labour regulations. The new system divides violations into categories according to their seriousness, and fines vary depending on whether there is gross negligence or intent, and on the size of the enterprise. Violations considered to be the most serious are those committed by large companies with deliberate intent to cause harm, and in matters relating to safety, hygiene and health in the workplace, the rights of workers' associations and representative bodies and their members, or the right to strike. Special emphasis is placed on suppressing the use of child labour. In addition to a strict regime of penalties for child labour violations, certain violations will now be considered criminal offences. The General Labour Inspectorate (Inspecção-Geral do Trabalho, IGT) is charged with conducting the legal proceedings in cases of labour violations, and will be responsible for officially reporting violations, serving notice and issuing warnings.
  • Law no 40/99 of 9 June 1999 transposes (belatedly) the EU European Works Councils (EWC s) Directive into Portuguese law (PT9912176F and PT9901125N). Commentators, albeit cautiously, have identified advances in Portuguese labour law engendered by this new legislation.
  • Legislation was adopted in 1999 to improve existing provisions for family leave and protection in cases of high-risk pregnancy. The legislation, which partly transposes the EU Directive on parental leave, also creates a special regime for time off for grandparents and increases parental leave for adoptive parents (PT9905147F).
  • Under legislation adopted in March 1999 (Decree-Law 96/99 of 23 March), night work is defined in accordance with the EU working time Directive and International Labour Organisation Convention no. 171 on night work. The new Portuguese legislation states that night work is to be established and regulated through collective bargaining (PT9904142N).
  • Legislation transposing the EU Directive on young workers came into effect in 1999 in Portugal. The legislation takes into account the normal physical, psychological and social development of minors, defines concepts such as "light work" and regulates night work for these workers (PT9807185F).
  • Law 32/99 of 18 May completed transposition of the EU Directives on collective redundancies. An important feature of this legislation is that a worker who receives compensation or severance pay at the time of redundancy is no longer prevented from legally contesting the redundancy at a later time. Another feature of the law is that it allows experts to be called in to be present during the collective redundancy negotiation process (PT9907151N).
  • Decree-Law no. 119/99 of 14 April 1999, which came into effect on 1 July 1999 (PT9906150F), increases the length of time during which a claimant may receive unemployment benefits. It improves the legal regime covering collective redundancies when companies modernise their facilities and coordinates unemployment benefits with retirement pensions.
  • Following intense debate during 1998 (PT9806181F), legislation on part-time work was approved in 1999. The most important points in the law cover: definition of the concept of part-time employment; applicable regulations; changes in form of employment; the employee's right to return to full-time employment; incentives for encouraging part-time employment; creation of part-time unemployment benefit; and elimination of collectively-agreed restrictions.
  • Decree-Law no 51/99 of 20 February established a "job-rotation" scheme to allow workers to participate in training initiatives, especially in small and medium-sized companies (SMEs). The measure will also make it easier for young and long-term unemployed people to enter the labour market by providing them with experience, as they substitute for workers undergoing training. Provisions are also made for technical and financial assistance to the companies concerned (PT9904143N).
  • Decree-Law no. 159/99 of 11 May 1999 requires self-employed workers to carry insurance in order to guarantee these workers and their families the same compensation to which other workers are entitled in the event of a work-related accident or illness (PT9909158F). These changes came into force from January 2000.
  • A new law created a Wage Guarantee Fund (Fundo de garantia salarial) providing protection for employees when companies become insolvent, and outlined conditions governing access to the Fund and how it will be financed (PT9810102N).
  • Regulation of the legal framework governing work-related accidents, as provided for in Law 100/97, was adopted in 1999. A legal foundation for compensation for work-related accidents and occupational illnesses is provided by Decree-Law no. 143/99 of 30 April, and the regulations regarding occupational illnesses were completely reformulated in Decree-Law no 248/99 of 2 July.

In addition to this vast raft of new legislation, a number of further legislative reforms were under debate at the end of 1999, most notably statutes designed to foster worker participation in matters of health and safety in the workplace (PT9810100F), particularly by means of information and consultation mechanisms.

The organisation and role of the social partners

The Confederation of Portuguese Industry (Confederação da Indústria Portuguesa, CIP) employers' organisation marked its 25th anniversary in 1999 by outlining strategic orientations for future years at its congress (PT9905146F). The General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP) held its ninth congress in 1999, and agreed significant changes in its organisation (PT9912173N).

The trend toward mergers of unions continued in 1999 (PT9903136N), notably with mergers among unions in the railways and banking sectors.

Portuguese unions continued in 1999 to participate in meetings of European trade union organisations, such as seminars and conferences. Difficulties arise at times due to the existence in Portugal of multiple unions, which means that in some instances they must rotate representation to outside organisations. Regarding forms of organisation at the European level, Portuguese unions believe that it is important to have more centralised representatives who will be better able to hold a dialogue with EU bodies.

Throughout the year, the social partners participated intensely in the legislative process, playing an important and positive role in the Economic and Social Council (Conselho Económico e Social). The trade unions mobilised workers and organised a day of protest against the government's package of labour law amendments (see above under "Legislative developments") (PT9903134N).

Industrial action

Preliminary statistics point to a slight increase in the number of strikes and working days lost due to industrial action in Portugal in 1999 (see table 3 below). The highest level of strikes occurred in the textiles and transport sectors, and there were also several strikes in the public administration sector.

An analysis of strikers' demands shows an accentuation of a long-running trend. In the 1980s, industrial action was primarily defensive in nature, focusing on issues such as overdue payment of wages, which accounted for a very large proportion of all demands. Now, payment of wages accounts for less than 50% of all strike demands, while demands relating to the length of working time and health and safety conditions have increased.

Table 3. Industrial action, 1997-9
. 1997 1998 1999
Total number of working days lost 80,077 94,755 56,918*
Number of workers involved 45,882 44,246 28,495*
Number of disputes 265 227 232**
Number of disputes (including overtime bans, go-slows and action by civil servants) 313 296 300**

* First half of the year; ** First three quarters.

Sources: DETEFP, MTS, IDICT.

National Action Plan (NAP) for employment

The Portuguese National Action Plans (NAP s) for employment for 1998 and 1999 have so far been considered successful for a number of reasons (PT9904137F). The government estimates that 30% of all unemployed workers have benefited from the measures outlined in the NAPs. The number of young people seeking employment and the number of long-term jobless young people has dropped more sharply (by 20% over one year) than the national unemployment average. This fact has been attributed to the personalised counselling given to young job-seekers, and to the NAP's goal of finding a job or organising special training for this group within six months (an objective with which there has been a 95% compliance rate). The new "work-training rotation" programme (see above under "Legislative developments") also allows workers in training to be replaced by unemployed workers without cost to the companies involved.

However, results relating to long-term unemployed people have not lived up to expectations and the matter will be dealt with by increasing the number of regional employment networks (PT9907152F). The problem of unemployed young people with low levels of qualifications is another point which is due to receive attention.

Despite these reported outcomes, the trade unions have expressed doubt about the official statistics and stress the type of employment that they claim has been created by the NAP measures - precarious or temporary work. The unions also claim that the job-creation support that has been given to companies is excessive and largely beneficial to employers rather than employees.

The impact of EMU on collective bargaining and industrial relations

Portugal's participation in EMU has led the trade unions to intensify their efforts with regard to changes in fiscal policy and real convergence of wages and working conditions (PT9911170N). The two main union confederations have taken some joint stands on European issues and the need for strengthening "social Europe" (PT9912174F), and union education has been provided on these issues.

On the employer side, the debate continues to centre around the need for structural reforms, such as an overhaul of the social security and tax systems. Employers also believe that labour market flexibility and higher worker skill levels are needed in order to strengthen the competitiveness of Portuguese enterprises.

Employee representation

Debate over employee representation in 1999 focused mainly on the development of EWCs and the improvement of information and consultation mechanisms on health and safety at work (see above under "Legislative developments"). By contrast, a low level of enthusiasm was seen in Portugal regarding discussions on the European Company Statute

The involvement of the Portuguese social partners in new fields such as regional employment networks (PT9907152F) indicate new developments concerning the role of the partners in the future.

New forms of work

This is a subject which has been high on the trade union agenda for number of years. Statistics point to the following trends in Portugal:

  • a steady decline in the number of workers with "standard" employment contracts, which in 1997 represented 83.8% of non-self-employed workers, dropping to 80.5% in 1999;
  • the persistence of fixed-term contracts, which represented 16.3% of all employment contracts in the second quarter of 1999, up from 15.4% in 1997;
  • "other types" of employment relationships increased from 0.8% of employment in 1997 to 3.2% in 1999;
  • the number of part-time workers has remained stable. Part-time status in Portugal is voluntary and reversible. An estimated 4% of workers work part time, typically in activities that by their very nature tend to be part time, such as cleaning services;
  • temporary agency work continues to be relatively little-used. In 1997, this accounted for an estimated 0.6% of total employment;
  • the incidence of teleworking is increasing. The Portuguese Association for the Development of Teleworking, (Associação Portuguesa para o Desenvolvimento do Teletrabalho, APDT) states that there were approximately 100,000 teleworkers in Portugal in 1998/9, representing 2.2% of the workforce; and
  • there is frequent use of forms of independent work known as "false self-employment". Self-employed workers account for around 24.8% of the workforce. Self-employed workers acting as employers ("micro-enterprises") account for 6.1%.

There were a number of legislative developments relating to "atypical" forms of work in 1999, covering matters such as part-time work, temporary agency work and self-employment (see above under "Legislative developments").

In keeping with the European Commission's 1997 Green Paper on new forms of work organisation (EU9805105F), some governmental organisations, such as the Institute for Development and Inspection of Working Conditions (Instituto para o desenvolvimento e Inspecção das Condicões de Trabalho, IDICT), have tried to develop a new role for the state, with the involvement of the social partners, through a new way of evaluating the organisation of work. This consists of working to coordinate economic development with social development in companies. This effort has led to the following outcomes:

  • in 1998/9 a "partnership for a new organisation of work" was established among five EU Member States, including Portugal. A study of 25 companies looked at the fundamental points that guided measures to increase flexibility in the management models of the various companies, from the standpoint of the principles outlined in the Green Paper;
  • in March 1999, IDICT joined the European Work Organisation Network (EU9904167N);
  • implementation of the first experimental programme to develop action on organisational innovation in SMEs was begun in 1999. The programme was developed by IDICT and the Institute for Innovation and Training (Instituto para a Inovação na Formação, INOFOR) under the European Social Fund's INOVAR programme. The programme monitors good practices in participation and social dialogue in 14 companies;
  • a risk-prevention programme in the textiles sector that began in May 1999 has a component geared toward improving organisation of work; and
  • a conference on the impact of new technologies on organisation of the company and work was held in October 1999 with the support of the European Foundation for the Improvement of Living and Working Conditions.

For the trade unions, the work organisation debate has focused primarily on progressively eliminating forms of work that do not fit into the traditional wage relationship.

Outlook

Tripartite social dialogue in Portugal was relaunched in January 2000, after a year-long hiatus, in the Standing Commission for Social Concertation (Comissão de Concertação Social), a committee of the Economic and Social Council. There is to be no new overall pact to follow the 1996-9 Strategic Concertation Pact, but agreements will be sought on specific topics. Issues tied to incomes policy have deliberately been left out and agreements are to be more circumscribed than in the past, both in time and content (PT0001179F).

An important issue in 2000 is likely to be the mechanisms of dispute resolution and collective bargaining, which have been under careful scrutiny for some time, but are now being brought up with increasing urgency. Disputes involving pilots at the TAP airline and train drivers at Portuguese Railways (CP) (PT9902132N), and others primarily involving state-owned enterprises, have suggest to some the need for compulsory arbitration.

Another major industrial relations event in 2000 will be the congress of the UGT union confederation in the spring.

The fight against job insecurity and for better quality of employment will continue in 2000. Wage increases above the European average and tax reforms that guarantee greater fairness and equity and reduce the tax burden are among trade union goals. Making labour laws more flexible, through discussion of the concept of remuneration and holiday legislation, for example, continues to be a goal of employers.

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