2002 Annual Review for Portugal

This record reviews 2002's main developments in industrial relations in Portugal.

Political developments

A general election was held on 17 March 2002, following the resignation of Prime Minister António Guterres after poor local election results in December 2001. The governing Socialist Party (Partido Socialista, PS) was defeated - winning 38% of the vote - and replaced by a coalition of the centre-right Social Democrat Party (Partido Social Democrata, PPD/PSD) - with 40% of the vote - and the right-wing People's Party (Partido Popular, CDS/PP) (PT0205101N) - 9% of the vote.

The period after the election was dominated by debate surrounding the country's serious economic situation and measures to be taken to reduce the public deficit and comply with the EU Growth and Stability Pact. The year was also marked by a certain amount of political confrontation on the labour front, following the launch of a proposed Labour Code (see below under 'Legislative developments') .

There are no elections planned for 2003. A revision of the Portuguese Constitution has been mooted, but as 2003 will see structural change in other areas - such as education, health services and justice - this is probably unlikely.

Collective bargaining

The number of agreements negotiated or renegotiated in 2002 was approximately 4.5% lower than in 2001, according to provisional data available at the end of 2002 - see table 1 below - although trade union data from the General Workers Union (União Geral de Trabalhadores, UGT) indicate a fall of 8.4%.

Source: Directorate-General of Working Conditions (Direcção Geral das Condições de Trabalho, DGCT) (provisional data). * Multi-employer agreements are agreements covering more than one company, but not signed by an employers' association.

Pay

According to figures from the Ministry of Labour and Solidarity's Department of Labour, Employment and Vocational Training Statistics (Departamento de Estatística do Trabalho, Emprego e Formação Profissional, DETEFP), the average collectively agreed pay increase in 2002 was 3.84%. This compares with an estimated inflation rate of 3.6% for the year.

According to DGCT data, pay-related topics continue to take up most space on the collective bargaining agenda, representing 91.3% of all clauses in agreements negotiated between January and October 2002. In total, 21.3% of all clauses in agreements dealt with changes to pay scales, 18.8% with meal allowances, 11.6% with travel allowances and personal accident insurance for travel, 11.5% with cash-handling allowances, 9.4% with seniority payments, 6.1% with flexibility allowances and 4.1% with shift premia.

Working time

Working time featured in bargaining in 2002, though with far less prominence than pay. According to DGCT, 3.9% of all clauses in collective agreements negotiated over the first three quarters of 2002 related to the length of working time, 7.7% dealt with adaptability and flexibility issues in the context of working hours and 11.6% contained provisions relating to annual leave.

At company level, notably innovative working time provisions were agreed at the Banco Comercial Português (BCP) banking group in January 2002 (PT0201127N). The new agreement at BCP introduces a system of working time organisation with increased timetable flexibility. A seven-hour day and 35-hour week (already in effect for several years) may be varied around this average over a reference period of two months, though working time may not exceed 45 hours per week and nine hours per day. The working hours of establishments have been fixed between 08.00 and 20.00. These measures have resolved long-standing disagreements over the issue of overtime working.

Job security

Job security issues do not appear to have been very high on the bargaining agenda in 2002, with 4.5% of all clauses in collective agreements negotiated over the first three quarters of 2002 dealing with 'training and restructuring'.

Outside the immediate bargaining arena, the public sector faced up to increasing threats to job security during the year. In May 2002, the new government announced a number of measures to address the mounting public deficit, including restructuring, a freeze on public service recruitment, the non-renewal of fixed-term contracts and possible greater mobility for civil servants. Trade unions, which believed that 50,000 jobs could be under threat, sought negotiations, while organising protests and threatening legal action (PT0206101N). During the summer of 2002, it was the turn of the textiles and footwear industries to face up to employment insecurity. These sectors experienced a deepening crisis, with large numbers of company closures and relocations and many job losses. The sector's social partners, and especially trade unions, demanded local, regional and national solutions from the government (PT0207101N).

Equal opportunities and diversity issues

In terms of the number of clauses relating to equality-related matters in collective agreements concluded during the first three quarters of 2002 (according to DGCT), 3.9% of all clauses dealt with maternity and paternity and 2.6% with equal opportunities.

Although the issue is not prominent in bargaining, a number of initiatives have been developed in recent years to promote good practice in terms of equal opportunities. For example, in January 2002, the winners of the annual 'Equality is Quality' ('Igualdade é Qualidade') prize, awarded by the tripartite Commission for Equality in Work and Employment (Comissão para a Igualdade no Trabalho e no Emprego, CITE), were announced (PT0201193F). The prize is designed to reward good practices by employers in promoting equality of opportunity for women and men. In 2002, the winners were Opel Portugal and the Loures Town Hall Municipal Water and Sanitation Services. The employment of women in traditionally male-dominated professions, particularly in management positions, was a key criterion in awarding the prize.

Legislative developments

The main legislative development in 2002 was undoubtedly the presentation by the government in June of proposals for a Labour Code (Código do Trabalho) (PT0208101N). The new Code aims to bring together in one document a large number of aspects of labour law, while amending a number of them - Portugal currently has no such codified set of labour legislation. In terms of collective aspects of labour law, proposed changes cover areas such as employee representative structures, collective bargaining procedures and dispute-resolution mechanisms (PT0210102F). In terms of individual aspects of labour law, proposed changes relate to matters such as working hours and overtime, fixed-term contracts, absence from work, reinstatement of dismissed employees and parental leave (PT0211104F). The proposed Code could result in the most sweeping changes to Portuguese industrial relations, and especially collective bargaining, for nearly 30 years.

Debate over the Code intensified over the year. The first stage of the debate came to an end in November 2002, when a revised version of the draft was submitted to parliament after being debated by the Standing Committee for Social Concertation (Comissão Permanente de Concertação Social, CPCS). Some amendments were made to the preliminary version of the draft as a result of suggestions from the social partners. Trade unions were still opposed many of the proposed changes and the General Confederation of Portuguese Workers (Confederação Geral de Trabalhadores Portugueses, CGTP) organised a one-day general strike in protest in December (PT0212104F).

Other notable legislative developments during 2002 (in areas not covered specifically elsewhere in this review) included:

• Decree-law 29/2002 of 14 February 2002, which creates a programme for the adaptation of safety, health and hygiene services at work; and
• Decree-law 35/2002 of 19 December 2002, which defines new regulations for calculating retirement and invalidity pensions to be provided by the social security system according to a new basic law on social security and welfare (PT0207103N).

The organisation and role of the social partners

A number of changes took place to the organisation of both employer and employee representative bodies during the year. In the case of employers' organisations, a total of eight new bodies were created throughout the year (compared with seven during 2001). These comprised two in manufacturing, two in trade and distribution, three in services and one in the transport sector. One employers' organisation was wound up during the year.

In the case of trade unions, eight new unions were created - one in the transport sector, one in public administration and six in the police force. A total of four unions were wound up during the year. In late 2002, the process of creating a national federation of the three bank workers' unions affiliated to the UGT confederation was nearly complete (PT0212101N). The new federation will comprise regional banking unions from the north, centre and south of the country, and represents an attempt by the unions to strengthen their negotiating capacity in the light of the concentration of firms in the sector.

Industrial action

The first three quarters of 2002 saw an increase of 14% in the number of strikes compared with the same period in 2001, according to figures from the Institute for Development and Inspection of Working Conditions (Instituto para o desenvolvimento e Inspecção das Condicões de Trabalho, IDICT) - see table 2 below. There was a 25% increase in company strikes, an 80% increase in sectoral strikes and a 75% decrease in public administration strikes.

Source: IDICT.

A one-day general strike was organised on 10 December by the CGTP union confederation in protest against the proposed Labour Code (see above under 'Legislative developments'). The main aims were to apply pressure in negotiations over the government's proposal for the Code and to call for fairer social and wage policies (PT0212104F). In October 2002, civil servants took strike action in opposition to the government's highly restrictive state budget for 2003, which includes strict limits on civil service pay (PT0211101N). On 30 October, a large number of unions organised a 24-hour strike, to enable employees in both the public and private sectors to hold street demonstrations as part of a day of action against the government's proposed Labour Code and reform of the social security system (PT0207103N). Participation was especially strong in the civil service, including teachers (from pre-primary and primary education up to university lecturers), tax office employees and customs and immigration officers. The year also saw a wave of industrial action by doctors (PT0204101N).

Employee participation

No activity was reported on national transposition of the 2002 EU Directive (2002/14/EC) on informing and consulting employees (EU0204207F) or Directive (2001/86/EC) on employee involvement linked to the European Company Statute (ECS) (EU0206202F).

The proposed Labour Code (see above under 'Legislative developments') brings together in a single chapter provisions on employees’ collective representational structures previously contained in a number of laws - these include regulations on workers' commissions, European Works Councils (EWCs), trade union organisation and union activity within companies (PT0210102F). Furthermore, a number of substantive changes are proposed in this area. According to the preliminary draft of the Code:

• workers' commissions would be given powers to enter into 'general company agreements' (acordos gerais de empresa) - ie collective agreements with features not found in the current Portuguese collective bargaining system - in cases where trade unions do not exercise these powers; and
• the time off to which members of workers' commissions are entitled in order to carry out their duties should be reduced from 40 to 20 hours a month.

Otherwise, the issue of employee participation did not attract a great deal of attention in 2002. However the number of companies covered by EWCs continued to rise, given the growing internationalisation of Portuguese companies.

Telework

2002 saw no specific response in Portugal to the agreement on telework signed in July 2002 by the EU-level central social partners (EU0207204F), which is to be implemented by the national social partners in the Member States (by July 2005). There were also no other major collective bargaining developments in relation to teleworking. However, telework was discussed within the debate on the proposed new Labour Code. The proposal for the Code contains the following provisions:

• a teleworker is a legally subordinate worker whose work schedule is determined by the employer;
• by written contract, any worker in a company may become a teleworker for at least two years and may then return to office-based working;
• the working tools of teleworkers are presumed to belong to the employer, which is responsible for installing and maintaining them; and
• a teleworker has the right to participate actively in trade union affairs, by means of information technology.

Vocational training

There was no specific response in 2002 by the Portuguese social partners to the 'joint framework of actions for the lifelong development of competencies and qualifications ' agreed by the EU-level social partners in March 2002 (EU0204210F). However, there was a degree of collective bargaining on vocational training issues in 2002: as mentioned above, 4.5% of all clauses in collective agreements negotiated over the first three quarters of 2002 dealing with 'training and restructuring' (according to DGCT figures).

The two governments which were in office during 2002 undertook various measures to improve vocational training and lifelong learning, which included the following:

• Decree-law 58/2002 and Executory Decision 16/2002, both published on 15 March 2002, aim to regulate the recruitment of minors aged 16 years or above who have not completed compulsory schooling or have no vocational qualifications resulting from training, providing new flexibility in recruitment for companies but obliging them to provide training (PT0204103F). The legislation was drawn up in collaboration with the social partners represented on the monitoring committee for the implementation of the February 2001 intersectoral agreement on 'employment, the labour market, education and training' (PT0102134F), as it implements some of the training objectives of this agreement;
• the work of the Institute for Innovation in Training (Instituto para a Inovação em Formação, INOFOR) was intensified;
• the government announced a review of the basic law on vocational training; and
• in November 2002, a Directorate-General for Vocational Training (Direcção Geral para a Formação Profissional) was created within the Ministry of Education. This is the outcome of the transformation of the National Agency for Adult Training and Education (Agência Nacional para a Educação e Formação de Adultos, ANEFA). The new structure has responsibilities for designing certain aspects of the educational system, including the certification of qualifications, and will develop training policy under the direction of the Ministry of Education, in combination with other public administration services that are responsible for training policy development.

New forms of work

Fixed-term contracts were the 'new' form of work which received most attention in 2002. A new governmental order, 255/2002 of 12 March 2002, aimed to encourage open-ended employment by means of financial incentives for companies that convert a fixed-term contract, on expiry, into an open-ended contract (PT0205102F). The aim is to encourage an improvement in job quality, by converting the legal labour relationship of the workers concerned from a precarious to a permanent one. Furthermore, the issue of fixed-term contracts was one of the most controversial topics in the debate over the introduction of a Labour Code (see above under 'Legislative developments'). The government’s initial proposal foresaw a wide use by companies of fixed-term contracts. However, the government’s revised draft, issued in November 2002 after debate (PT0211104F), states only that fixed-term contracts will be permitted in activities with production peaks (such as the automotive industry) and will be renewable up to three times (rather than the current two), with a limit of three years.

There were no legislative or collective bargaining initiatives on temporary agency work in 2002. The most recent known data on the number of temporary agency workers refer to 1999 and found that they represent 2.2% of total employment in Portugal. However, temporary employment agencies often report that this is a form of employment that is increasing.

Outlook

2003 is set to be dominated by the issue of the new Labour Code. It is expected that, if a parliamentary majority is found, the Code will finally be approved in March 2003 and come into effect in January 2004

In terms of collective bargaining, the discussion on pay restraint that is accompanying the reduction of the public deficit in Portugal and the search for a balance between adhering to the EU Growth and Stability Pact and the need for investment and development is likely to dominate negotiations during the year. The social partners, and especially the trade unions, are expected to participate actively in the search for a new economic development model for the country which is not based on low pay and is founded on improved productivity and more highly-qualified employees and employers. (Maria Luisa Cristovam , UAL)