European Trade Union Institute, ETUI.

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Portugal

19 June 2017

Portugal: how to repair the damage of austerity measures?

The financial crisis has had a huge impact on the Portuguese industrial relations. The country’s creditors asked for structural reforms, notably in relation to wage policy and collective bargaining, which heavily influenced the interaction between firms and trade unions in the setting of pay and working conditions. Since the coalition government of leftist parties was installed, the trade unions have asked for the recovery of a decent system of industrial relations.

The four years in government of the PSD/CDS-PP coalition (between 2011 and 2015) were marked by a will to even ‘go beyond the troika’ (in the words of the former Prime-Minister, Pedro Passos Coelho), trying to do even more than the creditors required. The government adopted a policy that led to cuts in public service wages, pensions and benefits, tax increases, privatisation of public enterprises, deregulation of the labour market and decentralisation of collective bargaining. The economic and social situation of citizens and workers became dramatic: unemployment increased (up to 17.5% by the end of 2012), the coverage of collective agreements decreased dramatically as a consequence of the limitation of the extension mechanism and inequality and poverty grew. The socialist government that came into power in 2015, with the parliamentary support of the Left Bloc, the Communist Party and the Ecologist Party, was based on three agreements, which promised among others the recovery of public wages, an increase of the statutory minimum wage, repair of pension cuts and holiday rights and the reversal of privatisation.       

It is too early for a final assessment, but in the meantime several important initiatives have been discussed. At the beginning of the mandate, the minimum wage was improved (and again increased to 557 euro on 1 January 2017) and the 2016 budget included reservations for the recovery of public wages. The 35-hour week for public servants was reinstalled in the course of 2016. Moreover, the trade unions had an important say in the policy. For instance, the privatisation of the local public transport in Porto and Lisbon was stopped and in Lisbon, based on an advice of the local trade union representatives, it was municipalised after 41 years of state responsibility. One of the biggest challenges, however, is to turn the tide in the dramatic fall of the coverage of collective agreements and to rebuild trust with and between the social partners.

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