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Collective Bargaining

Negotiations at industry level, between employers’ associations and the unions, have in the past been the most important element in Portugal’s bargaining arrangements, providing a high level of collective bargaining coverage – partially through the extension of agreements by the government. However, the system has been under threat because of legal changes, which have only partially been reversed

The framework

 

Portuguese legislation provides for three main types of collective agreement. These are:

  • industry-level agreements (CCs), which can be signed at national, regional or local level;
  • agreements covering several companies (ACs); and
  • agreements at the level of a single company or a workplace (AEs).

 

In almost all areas industry-level agreements are more important than other sorts of agreements, in terms of number of workers covered. However, there are some industries where this is not the case. For example, in 2018, agreements signed jointly by several companies (ACs) covered more workers than industry-level agreements in financial services, information and communication and utilities. Individual company agreements are also important in transport and logistics, although they cover fewer workers than the industry-level agreements.[1]

 

 

Where there are competing agreements, single company agreements (AEs) take precedence over multi-company agreements (ACs) and industry-level agreements (CCs), and multi-company agreements take precedence over industry-level agreements. Legislation introduced in 2012 allowed for collective agreements to change this order of precedence.[2] However, this option seems have hardly been used – with, for example, just three cases in 2015.[3]

 

Figures from the Ministry of Labour and Social Solidarity (MTSS) show that 240 agreements of all types were signed in 2019, made up of 105 industry-level agreements (CCs), 105 company agreements (AEs) and 30 agreements signed by several companies acting together (ACs).[4] The 105 industry-level agreements had a much wider impact in terms of numbers, covering 712,989 workers, while the 105 company agreements covered just 37,676. The remaining 35 multi-company agreements covered 42,218 workers, producing a total of 792,883 workers covered by collective agreements.

 

These figures are well below the level of bargaining that existed before financial crisis and the economic adjustment programme of austerity measures that followed. Between 2008 and 2019, the total number agreements signed fell from 296 to 250, a 19% drop, and the number of workers covered fell from 1.9 million to 792,883, a 58% reduction. This is despite some recovery in bargaining activity after the election of a new government in 2015.[5]

 

Changing government policy towards the extension of collective agreements – making them binding not just on the members of the employers’ association which signed them but on the whole industry – has been a key reason for these developments. It largely explains both the initial fall in the coverage of industry-level agreements and their subsequent partial recovery

 

In the past, extension of industry-level agreements was often almost automatic. In 2008, there were 172 industry-wide agreements and 137 agreements were extended. However, under the terms of the financial bailout, the government agreed to limit the extension of agreements to those where that the signatory employers’ organisations employed more than half of all the employees in the industry concerned and to consider the impact of the extension on the competitiveness of that industry.[6] The result was that the number of agreements extended beyond the signatory parties fell dramatically, dropping from 137 in 2008 to 12 in 2012 and reaching a record low of just nine in 2013.[7]

 

However, the new extension rules led to problems in an economy dominated by small companies and in 2014, they were altered in new legislation to take into “account the representativeness of micro, small and medium-sized companies”.[8] It permitted the extension of agreements where the employers’ association signing them consisted to at least 30% of micro, small and medium-sized companies. These new rules resulted in the number of extensions more than doubling, from 13 in 2014 to 34 in 2015 and 35 in 2016.

 

However, this was not the end of the story. Following a elections in 2015 which produced a government of the Socialist Party, supported by left-wing parties, new legislation was introduced in 2017.  This abandoned the previous approach, based on meeting specific criteria, replacing it with a broader policy of “promoting better levels of social cohesion and equality”, particularly gender equality.[9] Under these new rules, the number of extensions increased to 84 in 2017, 75 in 2018 and 83 in 2019

 

However, policy on extending collective agreements was not the only area where changes were introduced during the period of the economic adjustment programme. Other examples included:

  • changes to the rules on who had the right to conduct collective bargaining at company level (see section below – Who negotiates and when?);  
  • allowing companies facing financial difficulties to suspend collective agreements, although only with the agreement of the unions;[10] and
  • altering the rules on the length of time that agreements could last and the continuing validity of the terms they contain after they expire.

 

Among this group of measures, the new rules on the length of agreements and what happens after they expire have  probably had the greatest impact. Legislation passed in August 2014, reduced the maximum length of collective agreements from five years to three, and rather than having 18 months after this to reach a new agreement, the parties now only have six. After this point, once one the parties has reported the failure to reach an agreement to the appropriate ministry, an agreement only remains in force for a further 45 days.[11]

 

As with the rules on extension, the change in government in 2015 has led to the rolling back of some of these provisions, although the situation has not returned to the position that existed pre-crisis. Unions and employers agreed at meeting of the tripartite Standing Committee for Social Concertation (CPCS) in December 2016 that they would not make use of the procedure leading to an agreement ceasing to be valid, initially for a period of 18 months.[12] And legislation passed in September 2019, guaranteed that even where an agreement as a whole ceased to be valid, the terms covering parental rights and health and safety would continue to apply, while the parties are now required to provide reasons for withdrawing from an agreement.[13]

 

The impact of these all these changes has been that the proportion of workers covered by collective agreements has fallen since before the crisis, although there was a very slight uptick in 2018 after some of the measures introduced during the economic adjustment programme were reversed. Figures from the Ministry of Labour and Social Solidarity, which cover most of the economy apart from public administration, show that in 2018 a total of 2,269,555 workers were covered by collective agreements that were still valid. Most were covered by industry-level agreements (2,073,822) but another 109,690 were covered by agreements for several companies and 86,043 by single company agreements.[14] This is 78.9% of all employees in the areas covered, slightly above the 78.3% recorded in 2017, but well down on the 2008 figure of 83.7%.[15]

 

However, as the 2019 ETUI study on collective bargaining emphasises, figures on the number covered by current collective agreements only provide part of the picture. Pay increases are normally negotiated annually – there is no tradition of multi-year deals – so unless there is an agreement every year, inflation means that real pay will fall. Figures on the proportion of workers covered by agreements negotiated in that year give a better indication of the dynamism of collective bargaining and here the differences between different periods in the past are clear. In each year between 2006 to 2010 more than half of all employees were covered by agreements signed that year. However, from 2011 this began to fall, dropping to a low of just 10% of employees in 2013 and 2014. Since then the proportion of employees covered by an agreement signed in that year has increased to around 30% (29.7% in 2017 and 31.3% in 2018) but is still well below the levels before the financial crisis.[16]

 

These figures do not include agreements in public administration, which has seen an increase in the number of agreements signed from 2014 onwards. In 2018, there were 177, primarily in local government.

 

As well as the collective bargaining structure, Portugal has a tripartite body, the Standing Committee for Social Concertation (CPCS), in which the government, the employers and the two main union confederations, CGTP and UGT, are represented.  

 

Many of the key developments in employment legislation and government measures affecting the labour market have been preceded by agreements reached in the CPCS. have led to government action and legislation affecting employment rights.   

 

These include the tripartite agreement on competitiveness and employment, signed in March 2011, the agreement on tackling the crisis in January 2012 and the agreement signed in 2014 on increasing the minimum wage, an area where the CPCS has specific competence. Further agreements have been signed following the election of a government led by Socialist Party in 2015: detailed provisions on the implementation of the minimum wage increase in 2016; the agreement in 2017, which included changes to the extension rules; and an agreement in 2018, which led to legislation in 2019.[17] However, although all these agreements were tripartite, in every case the sole union signatory was the UGT. None were signed by the CGTP.

 

Who negotiates and when?

 

In the Labour Code, the negotiating parties in Portugal are the unions and the employers, either individually or in employers' federations, and the union leadership signs the agreements. However, revisions to the labour code from 2009 onwards allow the union to delegate the power to negotiate company-level collective agreements to employee representatives in the company. These can be either works councils or company level union bodies. The original threshold in 2009 was 500 employees, but in 2012 this was cut to 150.[18] In general, this change seems to have had only a limited impact, as the union must agree to delegate its negotiating rights. However, there are some companies where collective bargaining is primarily conducted by the works council. The best-known example is Autoeuropa, Volkswagen’s plant in Portugal, which employs around 5,800 people.

 

The Labour Code does not include rules on the representativeness of unions, establishing which have a right to negotiate and sign agreements. All officially registered unions can negotiate and sign agreements, provided the employer is willing engage with them. In practice, figures from the 2016 green paper on labour relations show that the majority of agreements are signed by unions linked to the two main confederations, CGPT and the UGT. An analysis of a sample of  74 agreements found only 10 did not involve either the CGTP or the UGT, although there were a further 15 where either the CGTP or the UGT or both had signed the agreement together with another union.[19] The figures also make it clear that only five of these agreements were signed by both the CGTP and the UGT.

 

In many cases two or more unions will sign identical or very similar agreements with an employer. The existence of these so-called “parallel” agreements, distorts some of the statistics on the number agreements signed each year. It also has a real-world impact where the agreements differ in some of their terms, as employers can choose which to implement

 

Negotiations on pay traditionally took place every year and lasted for 12 months. However, many agreements are now not renewed after 12 months but remain in place for much longer. Between 2009 and 2015, the average length of time that pay rates remained in force without being updated increased from just over a year (13.7 months) to more than three-and-a-half years (43.6 months).[20] The average period before a pay increase has subsequently fallen back, dropping to just under two years (22.5 months) in 2018 and around a year-and-a-half (16.3 months) in 2019.[21] Negotiations take place throughout the year.

The subject of the negotiations

 

Agreements concentrate on pay rates and increases, although in industry-level agreements they generally set minimum rates rather than actual pay. However, as the annual report on collective bargaining in 2018 makes clear, they also cover many other issues. These include working time, including the possibility of banking hours, night work, overtime and shift work, as well as the associated premia, temporary transfers, geographical mobility, occupational training, arrangements for ending or revising agreements, flexibility and additional social benefits. Topics linked to equality and parental rights have become increasingly important in recent years, as have agreements on technology issues, such as remote working.[22]

 

Portugal has a national minimum wage (RMMG), which is normally increased each year in January. The formal position is that it is set by legislation after consultation with the tripartite CPCS.[23] In practices, in the past it generally went up in line with expected inflation, but more recently there have been above-inflation increases as a result of a series of an agreements in the tripartite CPCS.

[1] Table 22  Relatório Anual sobre a Evolução da Negociação Coletiva em 2018 Centro de Relações Laborais, 2019 http://cite.gov.pt/pt/destaques/complementosDestqs2/CRL_Relatorio_NC_2018.pdf (Accessed 01.07.2020)

 

[2] Labour Code Article 482, as amended by Lei n.º 23/2012

[3] Relatório Anual sobre a Evolução da Negociação Coletiva em 2015 Centro de Relações Laborais, 2016  https://www.crlaborais.pt/documents/10182/13326/CRL+-+Relat%C3%B3rio+Anual+NC+-+2015+%28vers%C3%A3o+atualizada+em+02.02.2017%29/17d6440b-3378-4f64-8d00-cc44ff75cedc (Accessed 01.07.2020)

[4] Instrumentos de regulamentação coletiva de trabalho publicados (continente), em 2019, DGERT https://www.dgert.gov.pt/wp-content/uploads/2020/03/IRCT-pub.-2019.12.pdf (Accessed 01.07.2020)

[5] For a detailed analysis of collective bargaining in Portugal see Portugal: reforms and the turn to neoliberal austerity by Maria da Paz Campos Lima in Collective bargaining in Europe: towards an endgame, edited by Torsten Müller, Kurt Vandaele and Jeremy Waddington, ETUI, 2019

[6] Resolução do Conselho de Ministros n.º 90/2012

[7]   Instrumentos de Regulamentação Coletiva de Trabalho Publicados Atualizado 25 Junho, 2020, DGERT  https://www.dgert.gov.pt/instrumentos-de-regulamentacao-coletiva-publicados (Accessed 01.07.2020)   

[8] Resolução do Conselho de Ministros n.º 43/2014

[9] Resolução do Conselho de Ministros n.º 82/2017

[10] Lei n.º 55/2014

[11] ibid

[12] Compromisso Tripartido para um Acordo de Concertação Social de Médio Prazo, CES January 2017

[13] Lei n.º 93/2019

[14] Calculated from Tables 14 and 15 Séries Cronológicas Quadros de Pessoal 2008 – 2018, Ministério do Trabalho, Solidariedade e Segurança Social June 2020. This calculation excludes 211,503 workers covered by Working Conditions Ordinances (Portarias de condições de trabalho – PCT previously PRT), which are government regulations setting pay and conditions for some groups of workers not covered by collective agreements. http://www.gep.mtsss.gov.pt/documents/10182/10928/seriesqp_2008_2018.pdf/cf513838-2724-4195-8763-4d58400df0b9 (Accessed 15.07.2020)

[15] Relatório Anual sobre a Evolução da Negociação Coletiva em 2018 Centro de Relações Laborais, 2019 http://cite.gov.pt/pt/destaques/complementosDestqs2/CRL_Relatorio_NC_2018.pdf (Accessed 01.07.2020)

[16] Relatório Anual sobre a Evolução da Negociação Coletiva em 2018 and Séries Cronológicas Quadros de Pessoal 2008 – 2018

[17] See CES website http://www.ces.pt/concertacao-social/acordos (Accessed 01.07.2020)

[18] Labour Code Article 491, as amended by Lei n.º 23/2012

[19] Livro Verde sobre as Relações Laborais, Ministério do Trabalho, Solidariedade e Segurança Social, December 2016

[20] Relatório Anual sobre a Evolução da Negociação Coletiva em 2018 Centro de Relações Laborais, 2019 http://cite.gov.pt/pt/destaques/complementosDestqs2/CRL_Relatorio_NC_2018.pdf  (Accessed 01.07.2020)

[21] Relatório sobre regulamentação coletiva de trabalho publicada no ano de 2019 DGERT, February 2020 https://www.dgert.gov.pt/wp-content/uploads/2020/05/Relat%C3%B3rio-anual-RCT-2019-DGERT.pdf (Accessed 01.07.2020)

[22] Relatório Anual sobre a Evolução da Negociação Coletiva em 2018 Centro de Relações Laborais, 2019

[23] Labour Code Article 273.

L. Fulton (2021) National Industrial Relations, an update (2019-2021). Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.