Portugal: Developments in working life – Q1 2016

Concern about the increasing use of short-term contracts and precarious employment, the reversal of some austerity measures by the new socialist government, and tripartite agreement on an increase in the minimum wage are the main topics of interest in this article. This country update reports on the latest developments in working life in the Portugal in the first quarter of 2016.

Employment trends show worrying signs

Following a slight fall, the unemployment rate rose from 11.9% to 12.2% (Q4 2015 to Q1 2016), particularly affecting the long-term unemployed and young people. While at the same time, more than 22,900 people were underemployed during the first quarter of 2016.

Temporary employment – fostered by temporary employment agencies – continues to rise and has contributed to an increase in the number of agencies (up from 205 in 2014 to 231 in 2015) and to an increase of more than 20% in their turnover in the last two years.

The share of workers earning the minimum wage increased by 73.6% between April 2014 and April 2015, mostly affecting women. Currently, 21.4% of all workers (26.9% of female workers and 16.9% of male workers) are paid the minimum wage.

Precarious work was high on the policy agenda of the Portuguese Parliament, particularly regarding the increasing use of fixed-term contracts and the growth of the temporary agency sector, the abuse of service provision contracts, and job precariousness in public administration.

Socialist government reverses measures introduced by previous government

Several laws on social protection and employment relations introduced by the socialist government and supported by other left-wing parliamentary parties came into force. The legislation covers the following areas:

  • retirement pensions;
  • a ‘solidarity supplement’ for the elderly;
  • Social Integration Income (Rendimento Social de Inserção, RSI);
  • family allowance (Abono de Familia);
  • public sector nominal wages.

New laws came into force that re-establish the four public holidays, (two civil and two religious) abolished by the previous centre-right government. The removal of these holidays was just one of a number of radical measures imposed beyond the demands of the 2011 Memorandum of Understanding by the previous government.

The parliament also approved, in general terms, draft bills presented by the left-wing parties which propose a return to a 35-hour working week in the public sector (increased by the previous government to 40 hours in 2013).

Tripartite agreement on implementing minimum wage increase

On 22 January 2016, the government and social partners signed a tripartite agreement on implementing the increase in the minimum wage to €530 (PDF). However, the agreement also provided for a reduction in employers’ social security contributions by 0.75 percentage points for workers whose wages, on 31 December 2015, were equal to or below €530. The General Confederation of the Portuguese Workers (CGTP), the largest trade union confederation, opposed this last condition and did not sign the agreement. The increase in the minimum wage was set by Decree-Law no. 254-A/2015 and the agreement includes an undertaking by the government and social partners to quarterly monitoring of the implementation of the agreement.

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