Portugal: Latest working life developments – Q4 2017

Social security arrangements for independent workers, an increase in the minimum wage without tripartite agreement, and continuing conflict at the Volkswagen Autoeuropa car assembly plant, are the main topics of interest in this article. This country update reports on the latest developments in working life in Portugal in the fourth quarter of 2017.

New social security regime for independent workers

On 12 December 2017, the government and the Left Bloc party reached agreement on a new social security regime for independent workers. This was approved by the Council of Ministers and published as Decree-Law No. 2/2018. Under the new rules, the discount rate for independent workers’ social security payments drops from 29.6% to 21.4%, being applied to 70% of their average income over the previous three months. They will also have to make a minimum monthly contribution of €20 to guarantee the stability of their contributions towards their pensions and other social benefits (such as unemployment benefit and sickness benefit).

The new scheme stipulates that sick pay is to be awarded from the 11th day rather than the current threshold of the 31st day, and that the unemployment allowance will require only 360 days of discounts instead of the current 720. The contracting entities will increase their discounts to 10% in situations in which economic dependence exceeds 80% or 7% when it is below.

Minimum wage increases without tripartite agreement

This year the decision on increasing the minimum wage increase went ahead without tripartite agreement. The Socialist Party government proposed increasing the minimum wage to the social partners at the Standing Committee for Social Concertation (CPCS). The proposal for a 4.1% increase from €557 to €580 is in line with its plans for the minimum wage to reach €600 in 2019 and its agreements with the left-wing parties in parliament. The proposal has also taken into account quarterly reports on the impact of an increase in the minimum wage, presented and discussed at the CPCS. These showed that the increase did not have a negative impact in terms of employment and economic growth, but had a positive impact combating inequality and in-work poverty.

The General Confederation of the Portuguese Workers (CGTP) asked for a minimum wage of €600, although the General Union of Workers (UGT) was prepared to accept €580 while stressing that certain conditions would allow for €585. The four employer confederations represented at the CPCS did not disagree with the government proposal, but they demanded specific conditions in order to sign a tripartite agreement:

  • the commitment of the government not to introduce any changes on labour legislation
  • the introduction of amendments to corporate income tax in order to eliminate the special advance tax payment (Pagamento Especial por Conta)
  • the reduction of their contributions to the Workers’ Compensation Fund, a fund created to support workers in case of redundancies
  • an increase in financial support for vocational training

However, the government rejected these demands and the employer confederations refused to sign the agreement. Nevertheless, on 21 December 2017, the Council of Ministers approved the increase of the minimum wage to €580 for 2018, and it was implemented on 1 January 2018 – Decree-Law No. 156/2017 of 28 December (PDF).

New strike announced at Autoeuropa

On 30 August 2017, workers at Autoeuropa, the Volkswagen car assembly plant in Palmela, staged a one-day strike over company plans to introduce a mandatory working Saturday with three shifts, and no rights to normal overtime rates. The strike vote was backed by 74% of the workers, rejecting the ‘pre-agreement’ between the management and the works council to fulfil company plans. Following the strike, the works council resigned.

A new works council, elected on 3 October, made a second pre-agreement with the management, pressed by the fact that the company wants the new working arrangements in place in February so that it can achieve its goal of making 240,000 cars in 2018. This aim is expected to involve recruiting an additional 2,000 workers. However, on 29 November, 3,145 workers (a majority of 63%) rejected the second pre-agreement.

On 12 December the company responded by saying it would go ahead anyway with a transitional production timetable for the first half of 2018, while continuing talks with the works council. The transitional timetable comprises 17 weekly shifts with compulsory work on Saturdays to be paid at 100%, with a bonus of 25% dependent on achieving quarterly production goals. On 21 December the workers approved a proposal to stage a new two-day strike on 2 and 3 February 2018. Nevertheless, despite the conflict, the works council and the trade unions will continue negotiations with the management to find a common solution.

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