Trade unions oppose new cuts in unemployment protection

Printer-friendly version

A few months after measures to protect unemployed people and promote employment (Employment Initiative 2010) came into force, the Socialist government has reduced unemployment benefits and government support. This trend is supported by the centre-right party PSD and both parties argue that austerity measures require cuts in public expenditure and the speedy return to work of unemployed persons. Trade unions, concerned about high unemployment and social crisis, oppose the cuts.

Temporary measures to improve unemployment benefits and government support

Employment policies for 2009 and 2010, included in the Investment and Employment Initiative 2009 (Iniciativa Investimento e Emprego 2009) and in the Employment Initiative 2010 (Iniciativa para o Emprego 2010), were described by the Socialist government as crisis management packages (PT0906029I;PT1001059I) to deal with rising unemployment (PT1002029I).

The aim of these initiatives was to limit the negative social impact of rising unemployment. Long-term unemployment in particular was a major concern and this prompted the government to introduce a series of exceptional temporary measures. As a result, in March 2009, Decree 68/2009 temporarily extended by six months the period during which claimants were entitled to receive the unemployment social allowance, after the expiry of their entitlement to unemployment benefit. In June 2009, Decree 150/2009 and in March 2010, Decree 15/2010 extended that period successively by six months. Another measure in December 2009, Decree 324/2009, reduced the number of days a claimant must have worked to be eligible for unemployment benefit from 450 to 365 days. This reduction was to last from 1 January to 31 December 2010. Other improvements to benefits and government support included:

  • improved social protection during unemployment, through vocational training and the support of families and children(PT0906029I);
  • job protection through support for small and micro companies and the promotion of vocational training. (PT1001059I).

Trade union confederations generally welcomed these initiatives, although they had been campaigning for more generous social protection measures and employment protection schemes (PT0906049I).

Unemployment provisions reduced in line with austerity measures

At the Standing Commission for Social Concertation (CPCS) on 28 April 2010, the Socialist government presented a proposal to change the unemployment benefit regulations, seeking to reach agreement with the social partners. The government proposal addressed three main issues.

  • It was proposed to change the basis on which unemployment benefit is calculated, limiting it to no more than 75% of the net amount earned during the claimant’s previous job, instead of the previous maximum of 65% of gross earnings. According to the trade union confederations, Minister of Labour Helena André stated that this change would save the state about €40 million in 2010, less than 2% of the unemployment benefit budget for 2010.
  • Unemployed workers had been able to turn down a job without losing benefit if the wage offered was not at least 25% higher than their unemployment benefit. The government proposed lowering this threshold to 10%.
  • Changes to the benefit system were proposed to make it possible for part-time and self-employed workers to accumulate partial unemployment benefits.

The first two of these proposals were met with firm opposition from the two trade union confederations, the General Confederation of Portuguese Workers (CGTP) and the General Workers’ Union (UGT). On the employer side, the Confederation of Portuguese Industry (CIP) publicly expressed its agreement with the direction of the government’s proposals. After two meetings without reaching agreement with the social partners, the government decided to take unilateral action. On 6 May 2010, the Council of Ministers issued a resolution which was the basis for Decree 72/2010, published on 18 June. These new measures were justified by the government because of the pressing need to contain public expenditure in line with a new package of austerity measures agreed between Prime Minister José Sócrates and Pedro Passos Coelho, leader of the centre-right Social Democratic Party (PSD) (PT1005019I), and presented on 13 April 2010.

Decree 72/2010 amends unemployment provisions as outlined in the government’s proposal to the CPCS. Unemployed people now have to accept jobs with a gross salary 10% or more above the value of their benefit during the first year of unemployment or, after 12 months out of work, accept a gross salary equal to their benefit. If they reject such a job offer, they lose their entitlement to unemployment benefit. Previously Decree 220/2006 had made it possible for claimants to reject any job paying less than 25% above their benefit rate during the first six months of unemployment, and 10% or less after that. The new decree also limits unemployment benefit to a maximum of 75% of the claimant’s previous wages and to no more than three times the value of the social support index (IAS), which in 2010 is set at €419.22 a month. Finally, this decree sets up a more flexible unemployment benefit regime by allowing part-time workers and, in some circumstances, self-employed workers generating low levels of income, to accumulate partial benefit rights.

Withdrawal of improved temporary provisions

On 26 May 2010, the Council of Ministers announced the early withdrawal, before their intended expiry date of 31 December 2010, of eight of the temporary measures brought into effect by Employment Initiatives 2009 and 2010. The measures withdrawn were:

  • the extension of unemployment social allowance for an additional six months;
  • the possibility of receiving unemployment benefit after 365 days of contributions instead of 450 days;
  • the increase of unemployment benefit by 10% for unemployed families with children;
  • the extension of ‘family additional allowance’ for children’s education expenditure to all families, instead of only to those with the lowest income;
  • a reduction of 3% in social security contributions payable by micro and small business employers for workers older than 45;
  • the Qualification-Employment Programme, created to minimise redundancies in the automotive sector but extended in 2009 to all companies with too few orders to keep their workforces employed – under the programme, the government paid 90% of the salary of any worker taking training courses during usual working hours, their employer paying the remaining 10%;
  • a retraining programme for 5,000 young graduates whose qualifications limited their employability;
  • the government’s strengthening of the credit-line subsidy intended to support business start-ups.

The withdrawal of these measures is intended to support the austerity measures outlined in the Stability and Growth Plan (PEC) 2010–2013, and the government says this will save about €151 million of public expenditure this year. The government’s argument is that temporary measures, which were justified at the height of the global economic crisis, are not now compatible with the next phase of financial recovery. The current phase demands the restoration of the regulations that were in effect before the economic crisis as part of a set of measures to reduce public spending, and to bring Portugal into line with Europe-wide efforts to strengthen confidence in the region’s economies and protect the eurozone.

Decree 77/2010, withdrawing all eight measures was published on 24 June 2010. Throughout the process, CGTP and UGT demanded the continuation of Employment Initiative 2010’s temporary measures and the government’s crisis-management package, and have expressed deep concern about the social impact of the government’s decision.

Maria da Paz Campos Lima, Dinâmia

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment

Click to share this page to Facebook securely

Click to share this page to Twitter securely

Click to share this page to Google+ securely

Click to share this page to LinkedIn securely