Pedro S. Martins. Queen Mary, University of London; CEG-IST; IZA
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1 National experiences of labour law reforms: The case of Portugal Pedro S. Martins Queen Mary, University of London; CEG-IST; IZA Conference on EU Labour Law Stream II: Fighting Segmentation Brussels, 21 October 2013 Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
2 Introduction Challenges facing PT labour market, Economic: Credit/deleveraging/austerity Competitiveness/economic restructuring (into tradadables) Confidence/consumption Labour law related: Segmentation (dualism/trialism) Downward nominal wage rigidity Social partners (representativeness) Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
3 Employment Policy Employment Policy - Three Pillars Flexicurity and ULC orientation: Labour law ALMPs Training Social security Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
4 Employment Policy Labour law reforms (mostly MoU) Objective individual dismissals widening (extinction of work position and unsuitability) Severance payments cuts (and compensation fund for new contracts) Minimum wage freeze Bank holidays and assiduity-related holiday premium cuts Overtime: lower payments and greater flexibility ( bank of hours ) Collective bargaining Decentralisation, repeal, extension freeze and criteria Extension of fixed-term contracts (x2) Port labour Widening of short working-time schemes Deregulation of jobs - professional bodies Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
5 Employment Policy ALMPs reforms Wage subsidy (ESF funded) Youth-specific measures: Traineeships, Social Security reimbursement PES reform programme 8 pillars, including focus on vacancies and placements, greater cooperation with stakeholders (eg TWA), restructured network of jobcentres, assessment, and IT systems Pilot projects: Targeted jobcentre call-ups UB partial payment upon acceptance of low-wage job offers Algarve-specific conversion/training programme Forest-specific workfare programme Management training for unemployed graduates Extended workfare for local councils Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
6 Employment Policy Training reforms Widened offer of LLL Refocus on short-term professional training courses (in detriment of literacy certification) Revamping apprenticeships 50% increase in entry cohort Focus on tradable sector qualifications Greater synchrony with school year Partnerships with leading firms (including large SOEs) and employer associations DDM studies based on matched PES-SS data Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
7 Employment Policy Social Security reforms Widened access to UB (including informal workers) No adjustment to reservation wages nor activation Lower UB cap Shorter maximum duration (but considerable grandfathering) Stricter income support Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
8 Conclusions Several positive results so far (despite many on-going challenges): Fall in UR (17.7 to 16.4) and youth UR in Q2 Developments very favourable compared to Spain (or Greece) Increase in international competitiveness (trade account surplus) Decentralisation of collective bargaining Evidence of labour shortages in tradables Large increases in PES vacancies, placements and training attendance OECD EPL indicator: PT no longer outlier Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
9 OECD EPL indicator Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
10 Published collective agreements (and workers affected) Type Sectoral Multi-firm Firm-specific Extensions agreements agreements agreements ,309,267 64,455 33, ,160,080 52,737 24, ,068 26,645 9,909 Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
11 On-going challenges Euro adjustment Greater convergence towards EU law benchmarks: Activation of long-term unemployment (PES, UB duration, mini-jobs?) Representativeness of social partners Bias amongst constitutional court judges towards insiders Scarcity of politically-actionable evidence to meet evidence-based policy needs Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
12 Extra slides Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
13 Timeline From early 2000: major macro imbalances prompted by euro membership, low productivity growth May 2011: approval of e78bn PT-Troika MoU, including structural reforms conditionality June: elections and new coalition government July: first law bill in parliament (lower severance pay for new contracts) Oct: extension of working time proposal Nov: general strike I Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
14 Timeline Jan: extension of FTC in force; tripartite agreement (with all four E r and one (smaller) E e confederations) Feb: new ALMP (targetted wage subsidy) Mar: main labour law reform in parliament (in force since Aug); PES reform plan; general strike II Apr: UB reforms in force July: youth unemployment programme rolled out Sept: proposal for employer payroll tax cut Nov: collective bargaining extension criteria in force; general strike III Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
15 Timeline Jan: framework law for regulated professions in force; port labour law in force Mar-: adjustments to ALMPs June: general strike IV Sept: constitutional court ruling on Aug 2012 labour law reform Oct: new wide ALMP in force (1% of salaries of all new contracts); second extension of FTC Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
16 Much scope for misunderstandings Pedro S. Martins (QMUL) Labour Reforms in Portugal 21 October / 16
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