From Europe as a model to Europe as austerity

Abstract

German

French

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 Portugal’s 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.

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 people’s 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 (André, 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 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: 2–4); ‘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 Política Económica (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 Portugal’s 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 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:

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 cross-border 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 EU’s GDP.

Access to EU structural funds. These funds created a potential for the country’s 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 Portugal’s 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 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 União 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 (Proença, 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; Proença, 2011).

Unlike the UGT, the Confederação 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 inter-dependency 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 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 José Sócrates), 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 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 Comissão Permanente de Concertação 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 Portugal’s accession to the EEC (Rosa et Chitas, 2010: 66–67). 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 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 one’s 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 self-employed 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 Ortigão, 2011: 12–17). 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 employer’s 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 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 receipts’⁶, 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 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 Condições 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 difficult’⁹.

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 memorandum’s 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 memorandum’s 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 Comissão Permanente de Concertação 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 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 Martín 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 Portugal’s 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 Portugal’s 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 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 extensão, 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

Footnotes

Funding

This research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors.

Notes

References

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