Home / National Industrial Relations / Countries / Portugal / Collective Bargaining

Collective Bargaining

Negotiations at industry level, between employers associations and the unions, have in the past been the most important element in Portugal’s collective bargaining arrangements. Company level agreements cover many fewer employers. Portugal has traditionally had a high level of collective bargaining coverage – partially through the extension of agreements by the government. However, this high level is under threat because of changes to the system under the pressure of the economic crisis.

 

 

The framework

 

 

Portuguese legislation provides for industry level agreements (CCTs) which can be signed at national, regional or local level, company agreements (AEs) for a single company and agreements covering several companies (ACTs).1 Traditionally industry level agreements were more important, covering large numbers of workers and explaining the country’s relatively high level of collective bargaining coverage.

 

 

There were, however, differences in the negotiating structure between different industries. As the 2006 green paper on Portuguese labour relations noted, while industry agreements covered more than half of all employees in 10 out of 15 industries, agreements with individual companies were dominant in transport and communications and fishing, and agreements covering several companies were key in the financial sector and utilities. There were also gaps in collective bargaining coverage in personal and other services, and in public administration as most public servants were not covered by collective agreements.2

However, this position is changing, in part because of the measures adopted under the economic adjustment programme following the financial bailout in 2011, and in part because of earlier changes to the labour code.

 

 

Figures from the ministry of labour show that the number of industry agreements signed and number of workers covered by them has fallen sharply in recent years. While in 2010 a total of 141 industry level agreements covering 1,309,300 employees were signed, this fell to 93 industry agreements covering 1,160,100 employees in 2011 and to just 36 agreements covering 291,100 employees in 2012. (The 2012 figures only cover the Portuguese mainland, but this does not affect the overall trend.)3

This fall in industry level bargaining has not been offset by a growth of company level bargaining. Indeed these numbers have also fallen. In 2010 there were 64 company agreements covering 33,300 employees. This fell to 55 agreements covering 24,100 in 2011 and 40 agreement covering 9,900 employees in 2012. The same trend can be seen for those agreements that cover several companies but not a whole industry. These have fallen from 25 covering 64,500 employees in 2010 to 22 covering 52,700 in 2011 and nine covering 26,600 in 2012.

 

 

This process has been accentuated by a change of government policy towards the extension of collective agreements – making them binding not just on the members of the employers’ association who signed them but on the whole industry.

 

 

In the past this extension was almost automatic. However, as part of the agreements reached in relation to Portugal’s financial bailout, the government first agreed to establish new criteria for the extension of agreements (in May 2011) and then to use its discretion not to extend agreements until clear criteria had been defined.

 

 

The result is that the number of agreements extended in this way has fallen dramatically. In 2010 a total of 116 industry level agreements, covering 78,900 people, were extended by government to cover all employees in the industry concerned. However, in 2011 this fell to 17 and in 2012 to 12 – there are no figures on the numbers of employees affected.

 

 

The new arrangements, which were published at the end of October 2012, state that agreements can only be extended beyond the signatory parties if at least one union and one employers’ organisation request this, and that the signatory employers’ organisations must employ more than half of all the employees in the industry concerned.4

This is not the only change in the system of collective bargaining in Portugal, which has been introduced, or is planned. Two changes allowing greater decentralisation have already been incorporated into the labour code, coming into effect in August 2012.

 

 

One change allows unions to delegate collective bargaining to company level bodies in smaller companies than in the past. Until August 2012 these bodies, who can be works councils or company level union bodies, only had the possibility of bargaining in companies with at least 500 employees. This has now been cut to 150.

 

 

The other change is that in future industry level agreements will be able to contain clauses permitting company level agreements to diverge from the industry level agreement in areas such as pay, working time and flexibility.

 

 

The government is also looking at other issues, including giving greater powers to works councils to negotiate collective agreements and changing the continuing validity of agreements that are not renewed when they expire.

 

 

New rules in this area were introduced as changes in the labour code in 2009, and they provoked concern that agreements would expire, even when the agreements themselves state that they continue in effect until a new agreement has been signed. Although the changes are not as dramatic as those introduced by the new Labour Code in 2003, which did not become operational following a change of government, the new arrangements provide for collective agreements to expire if they are not renewed. The rules may in part explain the sharp drop in the number of industry level agreements as employers can now wait until they expire.

 

 

In detail, collective agreements now expire five years after they have last been agreed or five years after one of the parties has indicated that it wishes the terms to be renegotiated. However, the terms of the collective agreement continue to apply for at least 18 months after this, to allow negotiations to take place. In addition, either of the parties have a period of 12 months, during which they can ask the minister to appoint an arbitrator to draw up new terms and conditions. The government appears to want to alter these arrangements and make it easier for agreements to lose their validity.

 

 

All these changes suggest that collective bargaining coverage must have fallen sharply in the last few years. Figures from the national survey, Quadros de Pessoal are available for 2010 and the show that, in that year, 92% of employees in the private sector (2.4 out of 2.6 million) were covered by collective bargaining – either directly or through agreement extensions.5 However, with the total number of employees covered by new collective agreements falling from 1,486,000 in 2010 to 404,800 in 2012, coverage could certainly have halved.

 

 

The national level of bargaining in the past played an important role in setting nation-wide pay increases in the 1990s. But this seems now to have ended – the last major pact of this sort was in 1996.

 

 

There have continued to be agreements on framework issues, such as training or health and safety, and there is a social dialogue between the unions (CGTP-IN and UGT), employers and the government in a tripartite body, the CPCS. For example, an agreement was reached between the employers and unions on occupational training in February 2006 and on an above-inflation increase in the minimum wage in December 2006. However, agreements on further changes to occupational training in March 2007 and on changes to industrial relations, employment and social policy in June 2008 were signed by the employers and the government, and the UGT on the union side, but not the CGTP-IN.

 

 

The same also applied to the agreement on competitiveness and employment, which was signed by the government, employers and the UGT, but not the CGTP-IN in March 2011. A further agreement in January 2012 on tackling the crisis, which included a wide range of changes such as greater flexibility, fewer public holidays, reduced redundancy compensation and lower but more extensive unemployment benefit, was also signed only by the UGT on the union side.6

Who negotiates and when

 

 

By law, the negotiating parties in Portugal are the unions and the employers, either individually or in employers' federations. In some companies works councils are involved in informal discussions – this is the case at the Volkswagen plant AUTOEUROPA for example – but this has been rare. However, revisions to the labour code from 2009 onwards have allowed company-based employee representatives – in other words the works council or the company union organisation – to negotiate with the employers where the union has agreed. From 2009 to 2012, this was only possible in companies with at least 500 employees; the new threshold is 150.

 

 

Figures from the green paper on labour relations show that the majority of agreements are signed by unions linked to the two main confederations, CGPT-IN and the UGT. An analysis of 65 agreements found only 9 involved other unions, three of which involved the CGTP-IN and UGT as well. These were all at the level of companies or groups of companies. No industry agreements were signed by unions outside the two big confederations.

 

 

Negotiations on pay traditionally took place every year and lasted for 12 months. However, now many last longer, and the average length of agreements in 2012 was 19.9 months.7

The subject of the negotiations

 

 

Agreements concentrate on pay rates and increases, but they also cover other issues. According to the green paper, those most frequently covered are working time, night work, health and safety, overtime (although under the economic adjustment programme overtime payments are now subject to strict limits), temporary transfers, geographical mobility, occupational training, shift rates, exemption from fixed working hours (normally for more senior staff), arrangements for ending or revising agreements, flexibility and additional social benefits. Other issues covered less frequently include non-discrimination and equality, part-time work, making adjustments in working time and the occasional loaning of labour to other employers.

 

 

Portugal has a national minimum wage, which is normally increased each year in January. In the past it generally went up in line with expected inflation, but under an agreement in the tripartite CPCS in 2006, it was agreed that it would go up more rapidly in the period 2007 to 2011. In January 2011, however, in the light of Portugal’s financial crisis, it was only increased by 2.1%, as compared to increases of 5.6% or 5.7% in the three previous years and in 2012 it was not increased at all.

L. Fulton (2013) Worker representation in Europe. Labour Research Department and ETUI. Produced with the assistance of the SEEurope Network, online publication available at http://www.worker-participation.eu/National-Industrial-Relations.