Discretion and (de)centralization in wage bargaining in the construction, hospitality, urban transport and waste management sectors: A study on Portugal

Abstract

For many years, the system of collective bargaining in Portugal could be described as a system dominated by sector level agreements, with high coverage guaranteed by a pervasive practice of administrative extension decrees. Hard hit by the international financial crisis, in 2011-13, Portugal suffered a deep deregulation of the labour market and collective bargaining, under the neoliberal
diktat of the Troika. The imposed freezing of the extension mechanism had a very strong impact on the level of collective bargaining coverage, almost collapsing, while firm-level bargaining was now free from any coordination by the national sector contract. Under the last Socialist Party Governments, the role of collective bargaining in the wage setting has returned to play a more relevant role, and in 2022 83% of all workers in the private sector was covered by some collective agreement. Minimum wages have evolved positively, and Portugal is today at the top of the EU Member States, with a statutory minimum wage equal to the 66% of the median. The problem seems to be the very modest growth of the wage levels above the minimum, as trade unions seem to be too weak for pushing a more dynamic collective bargaining at the different levels.