Observation (CEACR) - adopted 2000, published 89th ILC session (2001)

Minimum Wage Fixing Convention, 1970 (No. 131) - Portugal (Ratification: 1983)

With reference to its previous comments, the Committee notes with satisfaction the publication of Act No. 45/98, of 6 August 1998, which repeals section 4(1)(a) of Act No. 69A/87, as amended, thereby abolishing the minimum wage for young persons under 18 years of age, which could be 25 per cent lower than the established minimum wage.

The Committee also notes the new observations made by the General Confederation of Portuguese Workers (CGTP-IN).

1.  The Committee notes that, according to the CGTP-IN, despite the fact that the National Constitution and Article 3 of the Convention provide that in determining the level of minimum wages account shall be taken first of social factors and then of economic criteria, in practice economic criteria prevailed in the adjustment of the minimum wage. In this respect, the CGTP-IN emphasizes that, in determining the level of the minimum wage, consideration was not given to the general level of wages in the country nor the living standards of other social groups, and that the minimum wage policy has been converted into a method of controlling and limiting wages and has ceased to be effective through the failure to adjust it to the average increase in wages (the ratio of the minimum wage to the average wage fell from 59.4 per cent in 1990 to 52.7 per cent in 1997), despite the increased stability over the past three years. In 1998, there appeared to be a new calculation of the minimum wage after an increase of 5.3 per cent in the average wage, according to official estimates, and 3.9 per cent in the minimum wage. The CGTP-IN adds that the rate of increase of the minimum wage was lower on average than that of the average living standard of the population during the 1990s, with the exception of 1993 (a year of economic recession). The CGTP-IN argues that these figures show the inequalities which exist in the distribution of the fruits of production between low wage-earners (who earn the minimum wage) and the average earnings of other categories of workers. The CGTP-IN considers that this situation is contrary to the objectives of the Convention, since the concept of "excessively low wages" has to be considered in the framework of the average wage and the earnings of other categories of workers. Secondly, the Committee notes the statement by the CGTP-IN that the minimum wage has been used as an instrument of wage moderation under the pretext that it is necessary to prevent a domino effect leading to rises in other wages. In this respect, it is significant that the Inter-Ministerial Working Group on the Minimum Wage omitted to consider in its reports on the adjustments for 1999 and 2000, as a development hypothesis, the level of inflation in relation to productivity (this criterion generally means that when real wages rise in relation to productivity, they retain the same share in the distribution of national income), and only considered lower estimates of the above figures. Thirdly, the Committee notes that, according to the CGTP-IN, the predominance of economic criteria in social dialogue agreements has been confirmed, for example in the Strategic Dialogue Agreement of 1996, which was not signed by the CGTP-IN and under the terms of which "the minimum guaranteed remuneration, in view of its social function and its contribution to employment promotion, will be adjusted annually in relation to the inflation rate of market goods and the rise in productivity in the most visible sectors of the economy, with a view to ensuring that increases are more rapid than for the average wage".

The Committee also notes that, according to the CGTP-IN, a positive aspect is that the adjustment of the minimum wage for 2000 took place before the end of 1999 and was published in the relevant legislation (Legislative Decree No. 573/99 of 30 December). The CGTP-IN requested the Government to do the same before 1 January each year at the time of the coming into force of the minimum wage so that workers and employers are aware of the rate which will be applied.

The Committee notes the CGTP-IN’s statement that the system of labour penalties was revised in 1999 (Act No. 118/99, of 11 November), which has implications for the penalties applicable for failure to comply with the minimum wage legislation.

2.  The Committee notes that in its reply the Government indicates that the annual rate of increase of the minimum wage between 1990 and 2000 was higher than the rise in consumer prices (except in 1993 and 1994) and also higher than the annual adjustment of wages determined by collective agreement (except in 1990, 1993 and 1994), despite being below the annual rise in real average wages in the labour market. The Committee notes the Government’s indication that workers paid the minimum wage have seen their purchasing power rise and that, since 1995, this purchasing power has followed the same curve without interruption. The Committee notes also that in recent years the difference between the rise in the minimum wage and the rise in the average wage has decreased and that the rates of wage increases determined by collective agreement have been rather lower than those of the minimum wage.

The Committee also notes the Government’s statement that the adjustment of the minimum wage in recent years has complied with the guidance provided in this Convention and the Strategic Dialogue Agreement of 1996. Nevertheless, the Inter-Ministerial Working Group on the Minimum Wage, when calculating the adjustment of the minimum wage, did not take into account the inflation rate for market goods or the rise in productivity in the most visible sectors of the economy, as envisaged by the above agreement, which was rejected by the CGTP-IN, for reasons of practical difficulties in applying such criteria, as well as the expected fluctuations in such indicators. As a result, in view of the expected rise in inflation and productivity, the increase in the minimum wage has been above the average rise in wages determined by collective agreement. The adjustments made since 1995 have totally covered the rise in the consumer price index and a proportion (generally around two-thirds) of the expected rise in productivity. Between 1997 and 1999, this rise was generally higher, due to the fact that the growth of employment was greater than expected, which resulted in a real increase in the minimum wage which, for three years, matched the total increase in labour productivity.

The Committee takes note of the information provided by the Government in respect of the comments by the CGTP-IN and hopes that the Government will continue to provide information on the measures adopted with regard to the determination of minimum wages and the maintenance of the purchasing power of such wages.

The Committee refers to its direct request in which it is raising other matters relating to the application of the Convention.