Background information

The government representatives and the social partners represented at the Permanent Commission of Social Concertation (CPCS), with the exception of the trade union confederation CGTP, signed on 9 October 2022 a tripartite agreement: the Medium-Term Agreement for Improving Income, Wages and Competitiveness. This agreement includes short-term and medium term measures (2022-2026).

The tripartite agreement foresees a wide range of goals and measures among which the following: wage policy guiding collective bargaining; mandatory minimum wage; high skilled youth and labour market integration; increase of severance pay and overtime pay; fiscal benefits to low wage workers; fiscal benefits to employers.

Content of measure

The Medium-Term Agreement for improving Income, Wages and Competitiveness established:

Creating the conditions for increasing the wage share of GDP by, at least, three percentage points, reaching 48.3% by 2026, in order to converge with the European Union average. In line with this goal it sets guidelines for collective bargaining in the private sector, with the overall target of increasing the average nominal wage by 20%, between 2022 and 2026, corresponding to a rise by an average of 4.8% per year until the end of 2026 (increase of 5.1% in 2023; 4.8% in 2024; 4.7% in 2025; and 4.6% in 2026).

Increasing of the statutory minimum wage by 7.8% in 2023, with the goal of reaching €900 in 2026.

Encouraging income and the integration of young people in the labour market and retain high skilled young people: increasing youth personal tax benefits (50% in the first year, 40% in the second year, 30% in the third and fourth years and 20% in the fifth year); launching a programme for integrating graduate young people with basis of open ended contracts in public service technical career; and extension of the program Regressar for the return of young high skilled emigrants to Portugal.

Increasing overtime pay, exceeding 100 hours of overtime (to 50% in the first hour; 75 % in the following hours; and 100% in weekends and holiday days).

Increase severance pay to 14 days payment in the case of collective dismissals and dismissals on the grounds of job extinction;

Reviewing and updating the personal tax brackets in view of neutralising effects of wage nominal increases; and make the personal tax more progressive, benefiting those with monthly income up to €1,000.

Among the measures, figures the measure Tax Incentives for Salary Increase which consists of an increase to 50% of employer’s tax deductions in return for salary increases for companies complying with at least one of the following conditions: have a dynamic collective bargaining (signed or renewed collective agreements less than three years before); annually increase wages in line with or above the values foreseen in the Agreement (for 2023, this benchmark is 5.1%); and have reduced the gap between the 10% higher paid jobs and the 10% lower paid ones.

The Limitation of the increase of the rents for 2023 and the Extraordinary support to renting were discussed under the scope of the agreement.

Use of measure

Most of the measures cover all the workers in the private sector, but those related with personal taxes encompass both the private and the public sector; while some of the measures foresee to target the public sector, such as the recruitment of young people for technical careers. Therefore there is not an estimation, due to the wide range of measures foreseen. Also, the large majority of measures will have to be approved by the parliament to come into force.

Contents

• Employment retention
• Income protection
• Other topics
• Pay increases
• Training and employability

Target groups

Workers	Businesses	Citizens
Applies to all workers	Does not apply to businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Social partners jointly Trade unions Employers' organisations Company / Companies Public employment service	No special funding required

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Agreed (outcome) incl. social partner initiative	Agreed (outcome) incl. social partner initiative
Form	Consultation through tripartite or bipartite social dialogue bodies	Consultation through tripartite or bipartite social dialogue bodies

Social partners' role in the implementation, monitoring and assessment phase:

• Social partners jointly
• Main level of involvement: Peak or cross-sectoral level

Involvement

Social partners´ involvement took place in the context of the tripartite Permanent Commission of Social Concertation (CPCS), which includes: government representatives; representatives of employer confederations, i.e., the Entrepreneurial Confederation of Portugal (CIP), the Confederation of Commerce and Services of Portugal (CCP), the Confederation of Farmers of Portugal (CAP), and the Confederation of Portuguese Tourism (CTP); and the representatives of trade union confederations, i.e., the General Confederation of Portuguese Workers (CGTP) and the General Union of Workers (UGT). Their involvement was requested by institutional setting by the initiative of the government. CGTP, the largest trade union confederation did not sign the tripartite agreement, bu participated in its discussion at the CPCS rounds.

Views and reactions

While all the employer confederations (CAP, CCP, CIP and CTP) and the trade union confederation UGT signed the tripartite agreement, CGTP did not sign it, questioning some of the measures foreseen. Namely, CGTP questioned the level of wage increases envisaged to guide collective bargaining as well as the increase of the mandatory minimum wage, considering they do not compensate for the past and future inflation. Also, this confederation considers insufficient the increases of overtime payment and severance pay, insofar their level will remains below the provisions in force before the intervention of troika (2011-2014). Moreover, CGTP criticizes the fiscal benefits foreseen for the employers.

Sources

• 09 October 2022: Acordo de Médio Prazo de Melhoria dos Rendimentos dos Salários e da Competitividade (ces.pt)
• 10 October 2022: Posição da CGTP - Acordo de Médio Prazo de Melhoria dos Rendimentos, dos Salários e da Competitividade (www.cgtp.pt)
• 30 December 2022: Lei n.º 24-D/2022 de 30 de dezembro (files.dre.pt)