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BackOnly a few months have passed since the Assistance Programme for Portugal, imposed by the “Troika”, consisting of the EU Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) came to an end. Following severe financial corrections and reforms, the economy has once again been stimulated. However, a current OECD Report established that further measures are required and recommends that the stricken country adopts further reforms. The ones who suffer will once again be workers and employees as if they had not experienced enough painful cuts. Even the Portuguese government has recently retracted measures, which were clearly aimed against the workforce.
Overall enforceability of collective agreements is bad for competitiveness and Portugal’s export
The OECD carries out a comprehensive analysis of the economies of its member countries in intervals of one and a half to two years. This week, the OECD presented its Economic Survey on Portugal. The report did not attract much media attention even though it comprises a number of controversial details. It contains, for example, a targeted attack on Portugal’s collective agreement system, which is a thorn in the flesh of the OECD, as it was also responsible for the low level of competitiveness and the country’s export weakness. One has to remember that in the past collective agreement negotiations at sectoral level between employers’ associations and trade unions were the most important element in the Portuguese collective agreement system. Only a small number of employers for example conclude collective agreements at company level. That is why Portugal traditionally has a high share of employees, who are secured by collective agreements, which can partly also be attributable to the fact that the government declared collective agreements to be generally binding. The OECD does not only criticise this high standard; it even demands more agreements at company level and the total abolition of the overall enforceability of collective agreements. The Troika had the same in mind and even though the Portuguese government followed it originally, it recently revised this decision and reintroduced the overall enforceability of collective agreements! It now looks as if the OECD was the extended arm of the Troika, happy to continue with its policy. One can only be glad that the recommendations of the OECD are not binding.
Portugal must press ahead with reducing poverty and income inequality
In its report, the OECD also deals with the blatant inequality of disposable household income in Portugal. One of the reasons for this is the youngest reforms within the scope of budget consolidation, which, even though they shifted the main burden towards households with a high income, did nevertheless inflict significant losses on the lowest income groups as a result of the reforms. However, the main reason for the losses of income remains the continuous high level of unemployment at almost 14 %. Hence, the OECD recommends making the claim to unemployment benefit independent of age and that eligibility requirements to unemployment benefit should be reformed to ensure that more people are covered. Maybe a measure, which really makes sense - in contrast to the attack on the collective agreement system. The OECD Report makes us aware of the fact that the Troika does in no way mean the end of unwelcome reform proposals.
Further information:
OECD Economic Survey: Portugal 2014
The OECD carries out a comprehensive analysis of the economies of its member countries in intervals of one and a half to two years. This week, the OECD presented its Economic Survey on Portugal. The report did not attract much media attention even though it comprises a number of controversial details. It contains, for example, a targeted attack on Portugal’s collective agreement system, which is a thorn in the flesh of the OECD, as it was also responsible for the low level of competitiveness and the country’s export weakness. One has to remember that in the past collective agreement negotiations at sectoral level between employers’ associations and trade unions were the most important element in the Portuguese collective agreement system. Only a small number of employers for example conclude collective agreements at company level. That is why Portugal traditionally has a high share of employees, who are secured by collective agreements, which can partly also be attributable to the fact that the government declared collective agreements to be generally binding. The OECD does not only criticise this high standard; it even demands more agreements at company level and the total abolition of the overall enforceability of collective agreements. The Troika had the same in mind and even though the Portuguese government followed it originally, it recently revised this decision and reintroduced the overall enforceability of collective agreements! It now looks as if the OECD was the extended arm of the Troika, happy to continue with its policy. One can only be glad that the recommendations of the OECD are not binding.
Portugal must press ahead with reducing poverty and income inequality
In its report, the OECD also deals with the blatant inequality of disposable household income in Portugal. One of the reasons for this is the youngest reforms within the scope of budget consolidation, which, even though they shifted the main burden towards households with a high income, did nevertheless inflict significant losses on the lowest income groups as a result of the reforms. However, the main reason for the losses of income remains the continuous high level of unemployment at almost 14 %. Hence, the OECD recommends making the claim to unemployment benefit independent of age and that eligibility requirements to unemployment benefit should be reformed to ensure that more people are covered. Maybe a measure, which really makes sense - in contrast to the attack on the collective agreement system. The OECD Report makes us aware of the fact that the Troika does in no way mean the end of unwelcome reform proposals.
Further information:
OECD Economic Survey: Portugal 2014