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Collective agreements and the number of workers covered by them declined dramatically in Portugal in 2012. The figures fell to levels unprecedented in the history of democratic Portugal. The dramatic shift has been caused largely by the austerity measures required by the Troika’s Memorandum of Understanding, but also by the Portuguese Government’s revision of the labour code. It also suspended and then changed the rules governing the extension of collective agreements.
The critical economic situation in Portugal in 2012 led to a decline in GDP of 3.2%, according to Eurostat figures. This was a major obstacle for collective bargaining, and particularly for wage increases, limiting employers’ margin for negotiation.
The policies of the Portuguese Government, a centre-right coalition of the Social Democratic Party (PSD) and the Democratic and Social Centre – People’s Party (CDS-PP) in power since June 2011, have also had an impact. The government has introduced wage-setting measures, and revised the labour code and procedures for the extension of collective agreements.
Wage-setting measures were required in both the public and the private sectors by the Memorandum of Understanding signed in May 2011. The Memorandum set out the conditions under which the European Union (EU), European Central Bank (ECB) and the International Monetary Fund (IMF) – commonly referred to as the Troika – would help Portugal reduce its budget deficit. Its conditions imposed an enormous pressure on wages in the public sector and restricted increases to the minimum wage while the Memorandum programme was in force. Any rise would have to be justified by economic and labour market developments and agreed in the framework of the programme review.
The government froze and, in some cases, cut wages in the public sector, and froze the minimum wage. It also suspended Portugal’s traditional 13th month and 14th month bonus salary payments for three years from 2012. These are Christmas and holiday allowances for civil servants who earn more than €1,000 a month. Although Portugal’s Constitutional Court ruled that these cuts were unconstitutional and that payment of bonuses should be resumed in 2013 and beyond, these cuts were implemented in 2012.
These measures gave a clear message to the private sector that wage increases had to be contained.
In addition, a controversial new labour code was introduced during 2012 (PT1205019I). This certainly influenced the behaviour of social partners, not only after it came into force in August 2012, but also during the process of revision. The measures announced were intended to have a significant impact on labour regulations.
Among the changes which had an impact on hourly wages and collective bargaining were:
These measures were made mandatory until 2014, which meant that collective agreements could not set more favourable conditions during this period.
Significant changes to the procedures for the extension of collective agreements also took place in 2012. The Memorandum required the definition of criteria for such extensions, including the representativeness of the negotiating organisations – to be assessed by ‘both quantitative and qualitative’ indicators – and an evaluation of how any extension would affect the competitive position of non-affiliated firms.
The revision of the procedures on the extension of collective agreements was set by Portugal’s Council of Ministers in Resolution No. 90/2012 (in Portuguese, 200Kb PDF), published in October 2012, in line with the Memorandum requirements. However, while the Memorandum envisaged a process of dialogue with the social partners on this delicate and critical issue, the government took a unilateral decision.
The Resolution defined stricter criteria for extending collective agreements to non-unionised workers and to companies not affiliated to employers’ associations. These included rules on the level of representativeness of the employer association signing the agreement. Only collective agreements signed by an association representing 50% or more of the employees in the respective branch could be extended.
Earlier, during 2011 and 2012, the government had made a commitment to the Troika not to allow the extension of any collective agreements until the criteria had been redefined. This had a major impact on collective bargaining in 2012, even before the Resolution restricting the extension of collective agreements was drawn up.
A number of factors came together to make 2012 one of the darkest periods in the history of collective bargaining in democratic Portugal. The number of collective agreements signed and the number of workers covered by agreements dropped dramatically.
There has been a marked decline in the number of collective agreements over the past four years, but in 2012 the number of agreements reached halved compared with 2011. The most radical decline was in the number of sectoral and multi-employer collective agreements. The number of company agreements also declined significantly.
| Number of agreements | 2008 | 2009 | 2010 | 2011 | 2012 |
|---|---|---|---|---|---|
| Sector and multi-employer agreements | 200 | 164 | 166 | 115 | 46 |
| Company agreements | 95 | 87 | 64 | 55 | 39 |
| Total Collective Agreements | 295 | 251 | 230 | 170 | 85 |
| Number of extension ordinances | 137 | 102 | 116 | 17 | 12 |
| Number of workers covered | 1,894,788 | 1,397,225 | 1,407,066 | 1,236,919 | 327,662 |
Source: DGERT, Relatório sobre a Regulamentação Colectiva de Trabalho publicada no ano 2012 (in Portuguese, 192Kb PDF); UGT, Relatório Anual da Negociação Colectiva de 2012 (in Portuguese, 414Kb PDF).
Figure: Number of collective agreements 2008–2012
The number of workers covered by collective agreements in 2012 was only 327,662 – 26.5% of the number of workers covered in 2011. This was the result not only of the decrease in collective agreements, but also of the government’s suspension of agreement extensions in 2012.
This dramatic decline in 2012 reflected the employers’ reticence to negotiate, particularly at sector level. The economic crisis, which certainly contributed to the employers’ behaviour by limiting their margin for wage increases, is not the only explanation. The government’s austerity policy also shaped the employers’ behaviour.
The reform of the labour code may also have had a negative impact. Existing collective agreements set out more favourable regulations for workers than those envisaged by the new labour code. It may be that the refusal of employer associations to conclude agreements signals the imminent replacement of existing collective agreements with new ones that are more in line with the new labour code.
This explanation has to be considered because collective agreements expire, after a transition period, if one of the signatories refuses to renew them. It is possible that a considerable number of employers’ associations may have a strong interest in seeing some existing agreements expire.
The suspension of collective agreement extension 2011 and in 2012 played a key role in the refusal of employer associations to sign agreements. Employer associations at the branch level may have feared that the non-extension of agreements would create more favourable business conditions for employers not bound by any collective agreement, and so increase competition in the respective sectors.
In Portugal, the extension of collective agreements has played a major role in giving a majority of workers the benefit of collective agreement regulations. In 2012, only 12 extension ordinances were published, compared to 2008 when 137 were adopted.
All the trade union and employer confederations reacted against the government’s decision to suspend the extension of collective agreements. Further protests greeted the government’s resolution changing the criteria for extending collective agreements.
Among the critics was the Confederation of Portuguese Industry (CIP). Deputy Director-General Gregório Rocha Novo, protesting at the suspension of extensions, told the press in March 2012 that:
...extension ordinances create the conditions for equality regarding competition...without this instrument, companies will tend to disaffiliate themselves from associations subscribing to collective agreements that set conditions less favourable to the employer than those resulting from the Labour Code.
Novo added that the elimination of extension procedures could ‘lead to the disappearance of collective bargaining’, highlighting the fact that there were already associations which refused to open negotiation rounds.
These concerns and the need to prevent unfair competition have been shared by Portuguese Trade and Services Confederation (CCP), the Portuguese Confederation of Farmers (CAP) and the Portuguese Confederation of Tourism (CTP). They all also criticised Resolution No. 90/2012.
In a declaration issued in November 2012, CIP stated that:
...such a solution, which derails, in practice, the issuance of ordinances of extension of collective agreements, favours disloyal competition, discourages and disrupts association, fosters informal economic activity and badly damages collective bargaining.
Trade union confederations the General Confederation of Portuguese Workers ( CGTP) and the General Workers’ Union (UGT) also protested at government policy on extension procedures.
On 2 February 2013, the CGTP announced it would formally protest against the violation of the right to collective bargaining at the national level to Portugal’s Ombudsman and, at international level, to the International Labour Organization (ILO).
Maria da Paz Campos Lima, Dinâmia