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Portugal's post-crisis policies

Economic growth and employment get boost

Successful results were supported by social dialogue between government and the social partners.

Thesynergyonline Economics Bureau
LISBON : The combination of sound social and economic policies and constructive social dialogue between the government and employers 'and workers' organizations has helped Portugal recover from the 2008 economic and financial crisis and has driven economic growth and employment, according to a report by the ILO. The study, entitled Decent Work in Portugal 2008-18: From Crisis to Recovery, finds that Portugal's way out of the crisis is based on a combination of social policies and economic, which have contributed to improving the business climate, the efficiency of the public sector, education and training, and integration into global supply chains. These factors - some pre-crisis - paved the way for the country's current trajectory towards a solid recovery.

According to the report, the Portuguese experience does not support the traditional idea that economic recovery can be accelerated and international competitiveness quickly recovered by simply reducing the cost of labor and making the labor market more flexible.

With unemployment estimated at 351,800 (6.7 percent) in the second quarter of 2018, unemployment has returned to pre-crisis levels. In 2013, unemployment reached a record level of 927,700 compared to only 455,200 unemployed in 2008.

The social dialogue between the government and the country's social partners before, during and after the crisis, even though it has not always resulted in a consensus, has been decisive in the country's results over the past decade, says The report. However, "when decisions were made unilaterally or against the interests of unions and / or employers, they aroused opposition and discord".

Nevertheless, in spite of the economic recovery and employment, the quality of jobs continues to be a problem and it is essential to strengthen the productive fabric to improve resistance to external shocks, two objectives that are not incompatible.

In addition, the segmentation of the labor market "has resulted in a high rate of involuntary temporary contracts, raising issues of equity and efficiency at the same time. Policies need to address these issues, in particular the low number of workers moving from temporary to permanent employment and the disparity in working conditions between different types of contracts, "the report adds.

In this context, the authors of the report welcome the commitment made by the Portuguese Government to further fight the segmentation of the labor market which is a step in the right direction. The willingness of the government and the social partners to work together on this issue was illustrated in a tripartite agreement last June.

It also recalls that the extension of collective agreements is essential to promote collective bargaining, reduce inequalities and promote inclusion. The study therefore recommends maintaining this system of extensions.

While wages had risen before the 2008 crisis, they fell sharply during the period 2010-2013 and finally stabilized at a level slightly higher than before the crisis. The report notes, however, that the wages of low-paid workers have increased as a result of Portugal's minimum wage policy in recent years. This has contributed to a reduction of wage inequalities.

Following consultations with Portugal's Minister of Labor, Solidarity and Security, these conclusions update the ILO's 2013 report, Controlling the employment crisis in Portugal.