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From Europe as a model to Europe as austerity : the impact of the crisis on

Portuguese trade unions1
Hermes Augusto Costa
Transfer: European Review of Labour and Research 2012 18: 397
DOI: 10.1177/1024258912458866
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From Europe as a model to

Europe as austerity: the
impact of the crisis on
Portuguese trade unions1

Transfer
18(4) 397410
The Author(s) 2012
Reprints and permission:
sagepub.co.uk/journalsPermissions.nav
DOI: 10.1177/1024258912458866
trs.sagepub.com

Hermes Augusto Costa

Sociologist; Assistant Professor at the Faculty of Economics, University of Coimbra; Researcher at the Centre for Social
Studies at the same University

Summary
Twenty five years after Portuguese EU accession, the labour market in general and the trade
unions in particular are faced with severely regressive social measures that undermine past
expectations of progress towards the achievement of the Social Europe project in Portugal. Thus,
on the one hand, this article identifies some of the ambitions and possibilities earlier opened up for
the Portuguese labour market, as well as trade union attitudes to European integration. It is argued,
on the other hand, that, in the context of the economic crisis and the austerity measures to which
Portugal is subjected, the sense of Portugals backwardness in relation to the European project
has become more acute. The article accordingly focuses on and examines some of the austerity
measures and certain controversial issues associated with them. In a final section, the impact of
austerity on labour relations and the reactions of social partners, in particular the trade unions, are
analysed.
Resume
Vingt-cinq ans apre`s lentree du Portugal dans lUE, le marche du travail en general et les syndicats
en particulier sont confrontes a` des mesures graves de regression sociale, qui remettent en cause
les esperances portugaises suscitees par les perspectives de la realisation progressive dun projet
dEurope sociale. Le present article identifie dune part certaines des ambitions et des possibilites
qui setaient ouvertes pour le marche portugais du travail, ainsi que lattitude des syndicats face a`
lintegration europeenne. Dautre part, il soutient que dans le contexte de la crise economique et
des mesures dausterite frappant le Portugal, le sentiment du retard portugais vis-a`-vis du projet
europeen est devenu plus aigu. Lanalyse se focalise de`s lors sur certaines de ces mesures

Corresponding author:
Hermes Augusto Costa, Faculdade de Economia da Universidade de Coimbra, Avenida Dias da Silva, 165, 3004-512,
Coimbra, Portugal.
Email: hermes@fe.uc.pt

1 This text is an updated version of a talk entitled What has changed in Portugal in the sphere of labour after
25 years of EU membership? presented by the author on the UC-TV (Web television of Coimbra
University) on 20 April 2011.

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dausterite et sur certaines questions controversees quelles ont alimentees. La dernie`re partie
examine limpact de lausterite sur les relations du travail et sur les reactions des partenaires
sociaux, en particulier les syndicats.
Zusammenfassung
Zwanzig Jahre nach dem EU-Beitritt Portugals sind der Arbeitsmarkt im Allgemeinen und die
Gewerkschaften und Arbeitnehmer im Besonderen mit Manahmen konfrontiert, die einen sozialen Ruckschritt mit sich bringen und die Erwartungen der Vergangenheit an die Verwirklichung des
Projekts eines sozialen Europas in Portugal unterlaufen. Dieser Beitrag befasst sich zunachst mit
den Ambitionen und Moglichkeiten, die sich fur den portugiesischen Arbeitsmarkt anfanglich eroffnet hatten, und mit den Positionen der Gewerkschaften im Hinblick auf die europaische Integration. Er vertritt anschlieend die These, dass sich der Ruckstand Portugals zum europaischen
Projekt im Zuge der Wirtschaftskrise und der aktuellen Sparmanahmen noch vergroert hat.
In diesem Zusammenhang werden einige Sparmanahmen und damit verbundene kontroverse
Fragen untersucht. Abschlieend wird auf die Auswirkungen der Austeritatspolitik auf die Arbeitsbeziehungen und die Reaktionen der Sozialpartner, insbesondere der Gewerkschaften, eingegangen.
Keywords
European integration, economic crisis, labour relations, trade unions, Portugal, austerity policies

Introduction
Alongside the internal market, the single currency, and the policies to foster economic and social
cohesion, the European social dimension had been key to the Portuguese peoples support for
European integration. In this respect, what is more, the trade unions (above all through their work
within the European Trade Union Confederation) played a decisive role in the achievement of
progress in the social and labour policy aspects associated with the European model: reduction
of working hours; longer holidays; improved arrangements for the regulation of corporate social
responsibility; more effective social security systems; more universal public services, and thus less
inequality than in other parts of the world; introduction of EU labour legislation in areas such as
health and safety in the workplace, working conditions, gender equality, non-discrimination, or
employee rights to information and consultation (Andre, 2008).
However, particularly during the last five years, the EU has been shaken by great turbulence as a
result of the sovereign debt crisis (notably its impact on the euro area) and one effect of this
turbulence has been to wreak serious damage in the world of labour. The European Commission had,
it is true, initially developed a discourse based on the European social model and on the relationship
between competitiveness and social cohesion. The Lisbon strategy was based, what is more, on an
EU commitment to a form of European capitalism concerned with strengthening the role of markets
and economic growth but geared at the same time to the achievement of full employment and a
strengthening of social cohesion, with the involvement in this process of both sides of industry
(Keune and Jepsen, 2007). When, a decade later, the Commission introduced the 2020 agenda and
focused its attention on seeking a way out of the crisis, its aim was to promote a social market
economy based on a three-way strategy for growth that would be smart, sustainable and inclusive.
Yet this strategy entails measures that are regressive from the standpoint of the European social
model: an increase in indirect taxes; a weakening of the progressive aspect of taxation; incentives
for increased working hours; raising of the retirement age; pressure to privatize pension systems; a

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399

weakening of employment protection legislation; a reduction of direct unemployment benefits; a

liberalization of the public sector, etc. (European Commission, 2011a). And, what is more, these are
measures the implementation of which has, as the European Commission itself admits, proved less
effective than expected: slowing growth hampers the already weak employment recovery and prevents an improvement of the employment rate; the increase in employment has mainly been within
temporary contracts and part-time jobs; the situation of young people has worsened; long-term and
low-skilled unemployment are increasing across the Union (European Commission, 2011b, Annex
III: 24); progress in employment rates is stalling and with current trends, the Europe 2020 target
will not be met (European Commission, 2011c: 28). The European Summit of 8 and 9 December
2011, meanwhile, delivered further disappointment insofar as it was followed, on 13 December, by the
entry into force of the six pack which was aimed at ensuring fiscal discipline, helping to stabilize the
EU economy and preventing a new crisis in the EU (European Commission, 2011b: 2).
However, for the peripheral countries of the euro area (Greece, Portugal, Spain, Ireland) this
fiscal compact which requires countries to keep their budget deficits below 3 percent of GDP
and government debt below (or sufficiently tending towards) 60 percent of GDP does not incorporate any genuine strategy for employment growth and job creation: countries which are burdened by unsustainable debt will have even less prospects of growth (Connolly, 2012). The
inevitable and disastrous labour market consequences are thus readily predictable: the aim of
wage cuts and freezes, reductions in social spending, contraction of employment, and harsher pension terms is not simply to reduce public expenditure but also to lower the cost of labour in the
public sector. If labour costs are lowered in the public sector, the effect is likely to spread across
the rest of the economy (Lapavitzas et al., 2010: 39).
This article is thus located within this play of opposition between the past attraction
exerted by the European endeavour and the present perplexity generated by this endeavour
in its current form. With reference to the Portuguese labour market situation, we will track,
in a first part, both the ambitions and opportunities opened up, in the area of labour, by the
process of European integration, but also the trade union attitudes towards that process. On
the other hand, it is essential also to consider the sense of disillusionment generated by the
economic crisis and the European and national policies devised to cope with its effects.
We will accordingly include a systematic examination of some of the austerity measures and
associated controversial issues and these will be presented in the context of references to the
Memorandum of Understanding or Memorando de Entendimento sobre as Condicionalidades
da Poltica Economica (MECPE)2, signed in May 2011 between the former Socialist government (and supported and implemented by the Portuguese government now in office) and the
troika consisting of the European Central Bank (ECB), the European Commission and the
International Monetary Fund (IMF). Finally, reference will be made to the differentiated
effects of austerity on industrial relations and the social partners, with the workers and trade
unions being shown to be the much more adversely affected party.

European integration: expectations, new paths opened up, and trade

union attitudes
On 1 January 1986 Portugals accession to the EEC represented a first step towards convergence in
the form of a plan for a more developed economy and society. As a result, there was, from the
2 http://infoeuropa.eurocid.pt/registro/000046765

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beginning, a strong expectation that integration would prove positive, based in part on the idea that
Europe would bring to the Portuguese people improvements in their living standards. But if, on the
one hand, accession signified an opportunity for progress, modernization and change, on the other
hand it also generated uncertainty, not only because the accession negotiations had themselves
lasted a total of eight long years but also because, at the time of accession, Portugal was still smarting from the consequences of the second agreement negotiated with the IMF (in 1983) which had
inflicted high levels of both unemployment and inflation together with severe drops in real wages
and private consumption.
Yet the idea of making up for lost time and catching up with the group of European countries
that were in the lead remained present. In the industrial relations sphere, and even before European integration had achieved momentum, the role of the trade unions and negotiating bodies had
provided evidence of the extent to which Portugal was historically out-of-phase with the more
advanced countries of Europe. When, in the 1960s, trade unions in these countries were girding
their loins for action, Portugal remained under the thumb of the oppressive Salazar regime. When
these countries, in the 1970s, achieved macro-level social concertation, Portugal was in the throes
of the revolution of 25 April 1974 and its aftermath, so that it was not until the 1980s that it
achieved an institutionalized social dialogue. It remains a curious fact, what is more, that the
construction of a welfare state in Portugal was getting off the ground at the very time when this
model was showing the first signs of crisis elsewhere in Europe, so that Portugal was, in effect,
trying to jump on to a moving train that was already close to the end of its journey (Estanque,
2011: 54).
Portuguese accession thus opened up a number of new paths on the labour market:
1.

2.

3.

Greater cross-border mobility. Portugal had always been a country with traditions of emigration and, in the 1960s, European countries France and Switzerland being just two examples
were one of the main destinations to which Portuguese workers went in search of a better life
with better paid albeit not always more highly skilled jobs. The strengthening of crossborder mobility then gave rise to the conditions that enabled Portugal too to become a country
of immigrant labour. At a later date this mobility was reinforced still further with the creation
of the Schengen area. A Europe without frontiers thus provided the impetus for greater labour
mobility and strengthening of the EUs GDP.
Access to EU structural funds. These funds created a potential for the countrys development, generating an impetus for modernization, above all in the sphere of infrastructures, communications, roads, etc. However, instead of these funds being made available
to benefit Portugals workforce in a manner that would have enabled people to improve
their skills and training, they were allowed to become easy prey to corruption committed with impunity, meaning that they were sunk in concrete and cement rather than
being placed in the service of an educational, scientific and technological new departure
that could have enabled Portugal to appropriate the European project and make it genuinely its own (Santos, 2011: 53). In other words, the skilling of the workforce, a
strengthening of the labour factor, remained of secondary importance rather than being
given priority.
The European social model as a reference for welfare. It was thanks to the European social model
that the EU became, in the second half of the 20th century, the area of greatest economic prosperity
and social justice, the risk of poverty having diminished thanks to pension guarantees delivered by
national states. Today, however, demographic trends constitute a threat to the welfare state and the
sustainability of public pension systems (Silva, 2011). In the case of Portugal, and after strong

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401

growth in the numbers of civil servants3, the more recent trend has been towards reduction. Indeed,
one of the recommendations contained in the MECPE (specifically in the second update of
December 2011) is for a further significant reduction in this respect, of 2 percent a year, which
could signify 30 000 fewer civil servants by 2014, out of a current total of around 500 000.
Access to credit v. indebtedness. In part as a result of the growth and modernization of the
Portuguese economy, the last decade of the 20th century was marked in the context of a general European trend by increased access to credit facilities, giving rise in turn to a process of
rising household debt. This recourse to borrowing strengthened the weight of the middle
classes which, in the present context of economic crisis, are today once again in decline
(Estanque, 2012). In truth, a number of different factors related to the world of labour
ultimately combined to produce this phenomenon of over-indebtedness: long-term unemployment, lack of entitlement to unemployment benefits; unemployment of several members of the
same household; low-skilled and low-paid jobs, etc. (Frade et al., 2008).

European integration was not a development that the trade unions could have allowed themselves to
disregard. By exposing the relatively underdeveloped Portuguese economy to new forms of competition, European integration prompted the interest of state and business and attempts were made to introduce changes into the existing industrial relations model to the detriment of trade union stability
(Stoleroff, 2000: 454). But the stance adopted by the two main Portuguese trade union confederations
towards the European challenge represented a kind of double vision (Costa, 2006).
On the one hand, the Uniao Geral de Trabalhadores (UGT) with its socialist/social-democratic
leanings associated European integration with the expectations of progress and with a general
and gradual approximation of the country to the average economic and social conditions of the
EU. Over and above these expectations, European integration as an external process created the
conditions for the strengthening of an internal democratic process (Proenca, 2004). For the UGT,
integration into the EU and the subsequent steps entailed would invariably serve as opportunities
for national mobilization in favour of convergence with the European average, leading to improvements of living and working conditions, thanks to lower inflation, greater productivity, better
wages, reduction of unemployment, and so forth (UGT, 2009; Proenca, 2011).
Unlike the UGT, the Confederacao Geral dos Trabalhadores Portugueses (CGTP) which has
Communist leanings has always been more pessimistic and critical of the EU. In its view, the difficulties inherent in the process of European integration had become obvious as from the beginning of
the third phase of EMU in 1999: non-fulfilment of the Stability and Growth Pact; growth of monetarist
policy; predominance of neoliberal ideas in the various decision-making centres (CGTP, 2004).
Finally, since its 5th Congress (1986, the year of Portuguese EU accession), the CGTP has associated
the process of European integration with the acceleration of hardline neoliberal dynamics, with the
free movement of capital, liberalization of the economy, deregulation and forced flexibilization of the
labour market, thus calling into question social and human values (CGTP, 2008; Silva, 2011).

From Social Europe to a Europe of austerity?

European integration brought Portugal closer to Europe and strengthened some forms of interdependency with other Member States. However, in the social and labour sphere not only did it
not make up for its backwardness, measured in relation to the European average, but it can be
3 In the 1960s there were 160 000 civil servants; in 2004 this had risen to 800 000 (data taken from http://
www.pordata.pt).

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observed also that, in the present context, the distance between Portugal and the social values
prevailing in the rest of Europe is actually growing. In a Europe criss-crossed by asymmetries
between central and peripheral countries, and which now regards as of merely secondary
importance the economic and social convergence that was one of the main aims underpinning the
original European idea (Reis, 2012: 37), opportunities for making work more decent and dignified
are being postponed. The following synthesis of austerity measures (see box below) serves to
illustrate this situation.

Synthesis of austerity measures

The austerity package presented here in summary is made up of the following

components: a) government measures; b) the MECPE text agreed with the ECB/European Commission/IMF troika (whether in the original version or its various updates);
c) the social concertation agreement (ACS) entitled Compromisso para o crescimento
e emprego4, signed on 18 January 2012 by the government, the employer organizations and, on the trade union side, the UGT.






At the end of September 2010 (still under the 18th constitutional government led by the
socialist Jose Socrates), the pay cuts of between 3.5 percent and 10 percent affecting
civil servants earning more than 1 500 a month foreseen in Law n 55-A/2010 (State
budget law for 2011) were perhaps the first serious sign of the austerity experienced by
the Portuguese; these cuts remain applicable in 2012;
The 50 percent cut (in the form of a special additional tax) in the Christmas bonus in
2011 announced in June 2011 by the 19th constitutional government led by the social
democrat Pedro Passos Coelho as a contribution to the curbing of public spending;
Non-payment of holiday and Christmas bonuses in 2012 to public sector workers and
also to pensioners (public and private sector), affecting pensions of more than 600 and
gross monthly earnings above 1 100;
Non-application of career promotions and automatic seniority increases;
A major increase in the tax burden, particularly affecting consumers and wage-earners
and thereby widening still further the income gap between capital and labour;
For employment contracts signed after 1 November 2011 it was decided to reduce
severance pay from 30 to 20 days for up to a maximum of 12 months compensation
and without any set minimum (Law n 53/2011, Article 366A). The tendency appears
to be to gradually do away with the classic concept of compensatory payments in such
cases, particularly in that the second revision of the MECPE (December 2011, point
4.4) contains provision for a reduction of compensation in the event of dismissal of
between 8 and 12 days in 2012;
It has been made easier to dismiss workers on the grounds that they are unsuited to the
job or to make them redundant because the job has ceased to exist (point 4.5, i) and ii)
of the MECPE). On the one hand, individual dismissal on the grounds that the worker is
him/herself unsuited to the job without reference to the introduction of new technologies or other workplace-related change is now possible, with the worker being made

4 http://www.ces.pt/download/1022/Compromisso_Assinaturas_versao_final_18Jan2012.pdf

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403

responsible for any failure to achieve specific goals set in agreement with the employer,
signifying quite a degree of subjectivity in the evaluation of concepts of productivity
and quality. Meanwhile, earlier legal provisions requiring that the worker(s) dismissed
be the one(s) most recently recruited have been annulled. It is now up to the company to
define appropriate and non-discriminatory criteria for determining which job is to be
shed (these measures were confirmed in the ACS);
In October 2011 the Portuguese government proposed an increase in working time in
the private sector of 30 minutes per day. This proposal was even approved by the
Council of Ministers (on 7 December 2011) without any prior information to the social
partners or reference to the discussion that was taking place, at the same time, in the
headquarters of the Comissao Permanente de Concertacao Social. This particular government proposal was, in fact, subsequently withdrawn, but the ACS confirms the
increase in working time, which is now to be achieved by other means: reduction of
three days of holiday (based on diligence in the job and enshrined in the Labour Code
since 2003); abolition of four public holidays (two Catholic and two secular); and liberalization of working-time accounts/time banks (Banco de horas) (the employers
are to have at their disposal an individual bank of 150 hours a year to be worked subject
to negotiation with individual workers);
Even though the period of compulsory contributions for entitlement to unemployment
benefits is being reduced from 15 to 12 months a step that will mean a larger number
of persons gaining entitlement to benefit the MECPE (point 4.1) contains provision
for a reduction of the duration of unemployment benefit to a maximum of 18 months for
those becoming unemployed in the future (a measure confirmed in the ACS);

This scenario of austerity causes a number of controversial issues to emerge. These include i)
wage devaluation; ii) reversal of working-time gains; iii) flexible labour market practices:
(i) Wage devaluation. Throughout the last decade, above all in the public sector, the purchasing
power of wages has been deteriorating. But it is particularly important to focus on the wages at the
lower end of the scale, for this is an issue of tremendous relevance in the context of economic
crisis. In addition to being an important source of social justice, the minimum wage also represents
an essential pecuniary support for the survival of large numbers of families. This is particularly true
for countries like Portugal where the risk of poverty among workers is 12 percent (as against a
European average of 8 percent), thereby providing an indicator that wages are frequently inadequate to prevent poverty (Dornelas et al., 2011: 18). The minimum wage in Portugal has hardly
risen since the mid-1990s (on the basis of 2000 prices and without allowing for inflation). In
2009 (when it was 5 100 a year) the amount was only slightly above its 1975 level (4 723 a year),
though the comparison does become more favourable on the basis of a reference value lower than
the 35 years between 1974 and 2009, namely, 3 449 a year, recorded in 1984, on the eve of
Portugals accession to the EEC (Rosa et Chitas, 2010: 6667). In June 2012 (according to the
social security statistics) the Portuguese national minimum wage was received by 605 000 persons
and amounted to 485 per month. This data hardly suggests, in any case, that EU membership has
been decisive to the point of influencing an upgrading of the Portuguese national minimum wage.
In the second update (December 2011) of the MECPE it is even mentioned that any increase in
the minimum wage will take place only if justified by economic and labour market developments
and agreed in the framework of the programme review (point 4.7.i). This appears as confirmation

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of the tendency towards a devaluation of wages. As stated by the CGTP (2010: 13), during periods
of crisis it is easy to put across the message that it is better to forgo a wage increase than to lose
ones job. However, even if, as the CGTP points out, such a message may be valid in certain cases
(e.g. an ailing company), the extension of such wage devaluation to other companies diminishes
demand in the economy which, in the final analysis, leads to company closures.
(ii) Reversal of working-time gains. The effective average working week of the employed
population has been significantly reduced over the last 25 years, in an effort to approximate more
closely to the European trend (especially that of the most developed economies): among employed
workers it thus fell from 40 hours a week in 1983 to 35 hours a week in 2009, although among selfemployed workers in 2009 the average number of hours worked per week was 45 (Rosa and Chitas,
2010: 68).
In the EU in 2010 two groups of countries could be identified in relation to the fixing of a maximum working week: on the one hand, a group of 16 countries with a maximum limit of 48 hours,
according to the terms of Directive 2003/88/EC on working time; on the other hand, a group of 11
countries, including Portugal, with a weekly maximum limit of 40 hours (and, in Belgium, 38
hours) (Cabrita and Ortigao, 2011: 1217). However, some new features were introduced by draft
law 46/XII (which goes under the name of third revision of the labour code and is the formal outcome of indications contained in either the MECPE or the ACS) adopted by the Portuguese Parliament in May 2012 and promulgated by the President of the Republic in June 2012. The main
novelty is the possibility of increasing the normal working day by two hours via the creation of
individual working-time accounts/banco de horas; this is a provision that erodes the possibility
of combining work and family life and reduces the entitlement to rest (Rebelo, 2012).
(iii) Flexibilization of the labour market. A feature of Portuguese labour law has been identified
as being its rigidity, with frequent reference to the difficulty of dismissing workers employed on
permanent contracts (Dornelas et al., 2006: 186), given the supposedly excessive degree of protection enjoyed by employees on permanent contracts, this being a feature of the employment model
that is common to many of the countries of southern Europe (Karamessini, 2007: 24). This excessive protection has, in turn, repercussions on the rate of job creation (Centeno and Novo, 2008). At
the same time, this protection of permanent contracts affects investment in training, either because
employees with this kind of contract do not themselves invest in further training, or because the
young candidates for these jobs also reduce their investment in training given the lack of
opportunities.
On the other hand, it has also been recognized that it may be less relevant to consider the actual
terms of the legislation than the use to which its provisions are put and the consequences of its
implementation. In truth, the capacity of legislation to achieve regulation is quite variable: first,
because recourse to litigation varies from one country, region, sector, profession, situation in the
profession or situation on the labour market to another; secondly, because the role attributed to law,
to participation practices or to collective agreements differs in each employment system; finally,
because assessments that are exclusively based on the letter of the rules governing employer
freedom to hire and fire take into account, among determinants of the employers power, only the
formal terms of the employment relationship. This being the case, it is important also to consider
forms of atypical and hidden employment and their weight in total employment (Dornelas et al.,
2006; AAVV, 2007; Costa, 2009).
The reduction of redundancy payments or steps to facilitate dismissals on grounds of unsuitability or abolition of the job were among the MECPE measures most obviously designed to achieve
greater flexibility on the labour market. But to take the path of flexibilization of collectively agreed
gains will always entail first analysing which standards actually require amendment, and

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considering what will be the effects produced by the amendments adopted (Gomes, 2012). A former Swedish employment minister made the same point: changing the law does not reduce unemployment. It may alter its distribution. The employers say it should be made easier to dismiss
workers. But ( . . . ) what should be made easier is to take on labour, not shed it.5

The impact of austerity on industrial relations and the reactions of

social partners
The Portuguese employment system, industrial relations and the two sides of industry, but in particular the trade unions, were hard hit by the austerity measures. It is important, for this reason, to
briefly recap on the characteristics of this system, to enable us then to perceive how austerity is
affecting labour and industrial relations and how the social partners are reacting to it.
The employment system is characterized by low productivity, low wages, high labour intensity,
a low level of education, skills and qualifications, a lack of quality employment and high incidence
of different forms of atypical work, green receipts6, fixed-term contracts, temporary work,
part-time work, work in the informal economy (Estanque and Costa, 2012).7
The industrial relations system, meanwhile, is characterized by the coexistence of different
models of social policy regulation; a high level of juridification of industrial relations; the heterogeneous and sometimes contradictory character of labour standards; a pluralist and competitive
model of relationship within and among the organizations representative of labour and capital;
strong politicization of the processes for collective bargaining on working conditions; links
between trade union and employer organizations and the political party system; a central role of
the state in the labour-capital relationship even though the legal and institutional apparatus is based
on the principle of separation of powers and on its capacity for self-regulation; increasing impediments to collective bargaining, etc. (Ferreira and Costa, 1998/99; Dornelas, 2009; Ferreira, 2012).
In an employment and industrial relations system with these characteristics, the adoption of austerity measures has had as its main consequence an increase in forms of precarious work8, as well
as of unemployment, which in May 2012 was 15.2 percent (Eurostat, 2012). But over and above
these impacts, austerity translated into law (with the revision of the labour code) has resulted in
numerous additional implications for industrial relations: the loss of the autonomy of the social
partners, above all of the trade unions, which have seen their position become even more subordinate; greater tension in the relationship between the two sides of industry (and also within the trade
union side); a strengthening of asymmetries on the labour market, specifically in the relationship
between high income and low income classes or that between public sector and private sector; a
5 Interview in the newspaper Publico, 11.12.2011.
6 Self-employed workers issue green (coloured) receipts to provide proof, for tax purposes, of supply of
services. However, these green receipts, estimated as numbering around 900 000 in Portugal (AAVV,
2009), are also frequently referred to as false green receipts because workers, while ostensibly selfemployed, end up in many cases becoming dependent on an employer and subject to intensive and rigid
working hours, just as if they enjoyed the benefits of an employment contract, which in fact they do not
have.
7 It is estimated that in Portugal the informal (clandestine) economy accounts for around one-quarter of the
countrys GDP. As pointed out by Dornelas et al. (2011: 16), the heavy incidence of non-declared labour is
attributable more to economic than to social factors and it affects all the various population categories the
further they are located from the typical protected forms of employment.
8 Which represents almost 30 percent of total employment, the incidence being heavier among the 15 to 34
age group, where it is close to 50 percent (Estanque and Costa, 2012).

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sharp reduction in the purchasing power of families, clearly reflected in the fact that, by March
2012, the Portuguese had lost 765m in wages, in other words, a 3.9 percent drop in the wage bill
of the economy as a whole (the greatest on record in the National Statistics Institute); greater
impoverishment of the production sector; creation of conditions for more social unrest; no reduction in the competitiveness deficit of firms; less control by the Labour Inspectorate (ACT/Autoridade para as Condicoes de Trabalho) since firms are no longer required to submit to the ACT their
working-time schedule or agreement on working-time exemptions (Fernandes, 2012; Rebelo,
2012; Gomes, 2012; Costa, 2012).
It was, then, hardly surprising that reactions were different depending on whether they came
from the representatives of capital or from those of labour. Clearly, the employers indicated a
greater readiness to accept austerity insofar as they see in it an opportunity to go ahead with their
preferred positions and options. For example, in the view of the Confederation of Portuguese
Industry (CIP), the MECPE and the ACS enabled two things: both a reduction of the costs associated with the employment of labour and a greater facility to shed labour: if I have in my firm a
worker who performs consistently less well than the others, I offer him some training. But if the
position does not change, then I begin to look for a different option. Now it is becoming possible to
dismiss workers in these situations, whereas before this was more difficult9.
The Confederation of Portuguese Commerce (CCP), meanwhile, welcomed the reduction of the
number of public holidays and long weekends, alongside the introduction of working-time
accounts (allowing high concentrations of labour at times when required by commercial activity),
and even the reduction of overtime pay, and the possibility for the unemployed to combine up to half
of the unemployment benefit with a wage if they accept a job.10 The Portuguese Agricultural Confederation (CAP), for its part, also viewed as positive the role of a working hours account (with a
permissible maximum of 50 hours a week and 150 hours a year) as a means of responding to the
periods of seasonal work required in agriculture, and also the 50 percent reduction in overtime pay.11
On the trade union side, the most salient aspect was the all-out opposition of the CGTP: CGTP
has been arguing against the memorandums terms and goals, pointing to the need for an immediate renegotiation of the debt, the interest payments and deadlines, in order to avoid further recession and an increased risk of unemployment and poverty. UGT has been more cautious about the
memorandums requirements. It stresses the importance of respecting the commitments with the
EU and IMF, in order to be able to renegotiate the extension of the deadline and interests (Campos
Lima, 2011).
In this atmosphere, the Portuguese trade unions, rejecting austerity as the way through the crisis,
accepted that their stance would inevitably entail some degree of opposition, insofar as the social
partner consultation bodies (like the Comissao Permanente de Concertacao Social) were in the situation of being presented with decisions after they had already been taken.12 One example of the
trade union reaction is found in the two general strikes (on 24 November 2010 and 24 November
2011) which, in addition to mobilizing many thousands of people, brought the two rival trade union
confederations together in a united stance. In this case, the strengthening of trade union cohesion
(manifest in the issuing of joint pre-strike notices or joint press conferences) was a positive and

9
10
11
12

Head of CIP, interviewed in Publico, 30.01.2012.

http://economia.publico.pt/Noticia/governo-e-parceiros-sociais-assinam-acordo-tripartido-1529363
http://www.cap.pt/noticias/agricultura/1599-cap-celebra-acordo-de-concertacao-social.html
On 22 December 2011 the CGTP even walked out of a CPCS meeting, accusing the government of not
promoting dialogue, of sentencing the population to bread and water and of imposing changes on the
labour market that it described as social terrorism.

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noteworthy outcome in the trade union world which, as already mentioned, is fraught by internal
competition and displays frequent deficits in terms of trade union unity and unity of action. Numerous
other sectoral strikes (part- or full-time) also took place in the public sector, in particular in transport, in
2011 and 2012.
However, the ACS again muddied the waters of trade unionism in Portugal, confirming the
tendency according to which, after holding general strikes, they turned to the signature of social
pacts, in the framework of mixed strategies of boxing and dancing (Campos Lima and Martn
Artiles, 2011: 390). This happened on 23 March 2011 (signature of the Tripartite Agreement for
Competitiveness and Employment, after the general strike of 24 November 2010) and again on 18
January 2012 (signature of the ACS after the general strike of 24 November 2011). In practice, the
ACS confirmed the measures contained in the MECPE signed with the troika, but only UGT signed
this agreement. According to the UGT leader, the ACS served to avoid even greater evils by
blocking labour law deregulation, introducing improvements compared with the MECPE, and,
above all, preventing the half-hour increase in daily working time, given that the government
agreed to withdraw the proposal to this effect. Yet in signing the ACS (which the CGTP refused
to do), the UGT will have compromised further joint trade union struggles against austerity. This is
why it did not join the CGTP in the new general strike called and carried out by the latter on 22
March 2012, precisely as a reaction to the ACS.

Conclusion
Since, in April 2011, Portugal requested outside help of 78 000m from the troika ECB/European
Commission/IMF, sacrifices and austerity have become the order of the day. A new negative
stance resulting from the financial aid programme gained the upper hand over the old positive
stance in relation to the European labour relations legacy. Even if it has never been euphoric, the
vision of the EU in Portugal today is, if not more defensive, perhaps at least more ambiguous. In a
scenario in which the term assistance has replaced the term cohesion (Reis, 2012: 46), austerity
in the labour relations sphere operates as a golden rule (ETUC, 2011).
The European model as a relevant reference opened up new paths and created conditions for
modernization of the Portuguese labour market. Similarly, the project of furthering European
integration served to legitimate Portugals ambition of making up its backwardness in relation
to more developed European socio-economic patterns. However, if we note that within the
EU-27 only Latvia and Lithuania have more extreme patterns of inequality than Portugal
(Rodrigues et al., 2011) and that an OECD study (2011) even regards Portugal as the country with
the highest degree of income inequality in Europe and sixth among OECD countries, we can state
that, for Portugal, the ambition of not remaining last in the queue is still on the agenda. Apart from
this, a study published by the European Commission in November 2011 shows that, out of a group
of countries currently in the throes of budgetary crisis (Ireland, Greece, Portugal, Estonia, United
Kingdom and Spain), Portugal is the only one where the austerity measures were more stringent for
the poorer than for the richer members of society, since the available income of poor families was
reduced by 6 percent and that of rich families by 3 percent (Callan et al., 2011: 19). The Bank of
Portugals own forecasts, meanwhile, are for a drop in private consumption of 6 percent in 2012
and 1.8 percent in 2013 (Rosa, 2012: 3).
As has been stated here, the labour market is threatened with more unemployment, additional
flexibility, a reduction in labour costs, the proliferation of precarious employment relations, cuts in
wages and unemployment benefits, an increase in working hours, etc. And for the trade union side
above all, a series of major and interconnected challenges have come into being: i) to fight the

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tendency towards an individualization of employment relations which the crisis has served to
increase: in 2011, according to the Employment and Labour Relations Directorate-General, only
25.7 percent of employed workers had their working conditions regulated by collective agreement,
since if there is no possibility for wage increases but only space for wage cuts, it is unlikely that
trade unions and employers will enter bargaining with a view to agreement; ii) the need to resist the
efforts to reduce the power of the trade unions in collective bargaining that are encountered in the
MECPE and the ACS with provisions according to which, for example, topics such as geographic
and functional mobility, organization of working time and pay can be regulated not only by trade
union commissions but also by workers commissions; iii) the need to safeguard collectively
agreed rights and obligations, particularly at a time when the possibility is on the table that the
Portuguese government (under pressure from the troika) may abolish the extension procedures
(portarias de extensao, instruments that extend the effects of collective agreements to all workers
and workplaces in a given sector, whether or not they are affiliated to trade unions and employer
organizations). Such a decision would require, however, information about representativeness on
both the trade union and employer sides (a matter which remains to be investigated) and would
certainly call into question the main political asset currently placing the Portuguese government
in a position to legitimately conduct a process of negotiated austerity, namely, the ACS, which
itself contains no reference to any end to the extension procedures.
Translation from the Portuguese by Kathleen Llanwarne
Funding
This research received no specific grant from any funding agency in the public, commercial, or
not-for-profit sectors.
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