In December 2008, the wage bargaining round in the public sector came to an end without any agreement being reached between the government and trade unions. The government approved a 2.9% pay rise to be applied from 1 January 2009, on the basis that this improves employees’ situation at a time of low inflation. However, the trade unions consider that the wage increase is not sufficient to compensate for the decline in purchasing power of public sector employees.
On 14 October 2008, the Minister of State and Finance, Fernando Teixeira dos Santos, announced at a press conference that the pay increase for public employees for 2009 would be 2.9%. This figure represents a 0.4% gain in purchasing power, taking into account the average inflation forecast of 2.5%. Minister Teixeira dos Santos stated that ‘it was mere coincidence that the wage increase of 2.9% for 2009 – higher than the expected rate of inflation – occurs in a year when several elections are due to take place’.
The minister explained that the proposal took into consideration the progress made in reducing the budget deficit over the past years. In addition, Minister Teixeira dos Santos recalled that, since the current government took office, much has been demanded of public sector employees, and therefore ‘the government is now able to repay the effort they have made; this is what must be done next year with this wage increase’. The pay rise was proposed in a context of macroeconomic real growth of 0.8% in 2008 and a forecast growth rate of 0.6% in 2009.
Wage negotiations between the government and the trade unions started on 6 November 2008.
Trade union demands
Although they did not have a united platform, the public sector trade unions reacted to the ministerial proposal by demanding higher pay increases – starting at a minimum of 3.5% – arguing that public sector employees had lost about 11.2% of their purchasing power between 2000 and 2008. The Common Front of Public Administration Unions (Frente Comum dos Sindicatos da Administração Pública, FC), affiliated to the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP), demanded a pay rise of 5% for 2009, as well as an additional 0.9% to compensate for the decline in purchasing power observed in 2008. The average inflation forecast for 2008 was 2.1%; however, according to the Portuguese Central Bank (Banco de Portugal), the observed inflation in 2008 was estimated at 3%.
Meanwhile, the Technical Civil Servants’ Union (Sindicato dos Quadros Técnicos do Estado, STE), affiliated to the General Workers’ Union (União Geral de Trabalhadores, UGT), organised a common front with four independent trade unions: the National Graduate Teachers’ Union (Sindicato Nacional dos Professores Licenciados, SNPL), the Taxation Employees’ Union (Sindicato dos Trabalhadores dos Impostos, STI), the Nurses’ Union (Sindicato dos Enfermeiros, SEN) and the Police Professionals’ Union (Sindicato dos Profissionais de Polícia, SPP-PSP). Together, they demanded a 4% pay rise. For its part, the Trade Union Front of Public Administration (Frente Sindical da Administração Pública, FESAP), affiliated to UGT, requested an increase of 3.5% for 2009 – the lowest demand of the three recommendations – and warned that it would not accept the government proposal of 2.9%.
On 21 November 2008, the public sector employees answered the call of FC/CGTP and participated in a large demonstration against the proposed 2.9% pay rise and in favour of higher wage increases; the action was also in protest against general government policy in the public sector. According to trade union sources, about 50,000 persons joined the rally. However, the police estimated that the crowd amounted to around 25,000 people.
Government decision
Throughout the bargaining process, the government did not change the original proposal of 2.9%, and no agreement was reached with any trade union on that basis. The trade unions did not succeed in their demands during the negotiation rounds or as a result of the large demonstration on 21 November. Their recommendations were rejected even during the supplementary negotiations on 22 December. The government used the global economic crisis as a major argument against a higher pay rise, which became more relevant as awareness of its impact on Portugal increased. Nevertheless, all of the trade unions are unanimous in contending that an increase of 3.4% would have been possible and they criticised the government for its inflexibility.
On 31 December 2008, Prime Minister José Sócrates and Minister Teixeira dos Santos signed an ordinance approving the wage scale and the 2.9% pay increase for the public sector, which was due to come into force on 1 January 2009.
Maria da Paz Campos Lima, Dinâmia