Portugal: agreement struck on income and competitiveness

The Portuguese government, four employer confederations and the UGT trade union have signed a medium-term agreement to improve incomes and competitiveness. After a marathon of discussions, it was agreed that wages will rise by an average of 4.8% until the end of the legislature (2026). The increase will be 5.1% in 2023. The minimum wage will rise to €760 euros gross per month (paid 14 times a year) from the current level of €705. With a view to convincing the private sector to keep its commitment to improve incomes, the government has made concessions. It is to fork out €3 billion to help with energy costs. The government also ended the mandatory 1% employer contribution to the work compensation fund and the guarantee fund for work compensation, which was previously a requirement. These two funds are used to pay part of the compensation for redundancies. Finally, the government has conceded a series of tax benefits to companies. The General Confederation of Portuguese Workers (CGTP) did not sign the agreement, taking the view that wages should be the subject of collective agreements alone. Meanwhile the Portuguese Commerce and Services Confederation (CCSP), a business and employer representative that signed the deal, warned that it would be difficult to keep the commitment given the economic context. Inflation in Portugal could reach a cumulative rate of 11% over 2022 and 2023. The social consultation agreement was reached in extremis – on Monday 10 October the executive is tabling its draft budget for next year.