Portugal’s minority centre-right government has unveiled a slightly revised draft of its labour reform plan, pressing ahead despite the recent collapse of talks with unions. The government is now aiming to secure parliamentary approval for the overhaul, which targets more than 100 articles of the labour code, with the potential support of the far-right. Launched in September, this reform is considered a pivotal element of the government’s agenda to enhance national productivity and stimulate economic growth, addressing what it describes as overly rigid labour laws.
Labour Minister Maria do Rosario Ramalho highlighted that Portugal possesses the second most rigid labour legislation among Organisation for Economic Co-operation and Development (OECD) countries. She argued this rigidity has contributed to current levels of low productivity, stagnant wages, and even in-work poverty, necessitating a significant reversal. Eurostat figures support this, placing Portugal’s labour productivity per hour worked at 80.5% of the European Union average, ranking it as the bloc’s fifth-lowest. Among the most contested measures, the reform proposes making just-cause dismissals easier, allowing companies to deny workers reinstatement in cases of illegal dismissal provided compensation is paid, and lifting existing limits on outsourcing.
The proposed changes have drawn strong criticism from various fronts. Unions have accused the government of favouring employers at the expense of workers’ rights, suggesting the new rules could increase job insecurity. Meanwhile, Andre Ventura, leader of the far-right Chega party, indicated a willingness to negotiate but demanded a reduction in the current retirement age of 66 years and nine months, alongside the restoration of three days of annual leave that were removed following the country’s 2011 bailout. The third-largest parliamentary force, the Socialist Party, led by Jose Luis Carneiro, has vehemently opposed the reform, cautioning it would “open the door to the law of the jungle” in the labour market without genuinely improving productivity.
