The European Commission (EC) warns that raising the minimum wage (NMW) for 505 euros, in force since 1 October, can slow the pace of reducing unemployment and hinder the entry of the most vulnerable in the labor market. The criticism in the report that assesses the evolution of the Portuguese economy after the departure of the troika, released Monday by Brussels.
With increasing SMN in 2014, warns Brussels, “the transition prospects for employment for the most vulnerable can deteriorate, at a time when unemployment remains high and may aggravate existing s egmentation of the labor market between the who have jobs and those without. “
The increase in the minimum wage, recognize the EC technical, represents an improvement of incomes of those who are employed, but” can make more permanent poverty for those who still unemployed, “while the positive effects on domestic demand encourage imports, undermining the process of external adjustment.
But if the immediate effects on employment, poverty and competitiveness” may be relatively small, “there consequences to be considered in the short term. “The risk of [increased SMN] slow down the process under way to reduce the high unemployment, especially among young people and low-skilled workers; and rebalancing the economy, which could in turn trigger second-round effects that are difficult to project at this stage, “said the commission.
The EC even admits that, in absolute terms, the minimum wage in Portugal is low, but opposes also average wages and productivity are low. And remember that in 2013, the SMN represented 56% of the median wage. “Compared to other countries with similar levels of income and competing at least kind of foreign investment, particularly from central and Eastern Europe, the minimum wage in Portugal is relatively high,” adds, noting that in 2013 the annual net SMN was 6580 euros, “significantly higher” to 4902 euros defined as the poverty line.
In the report, the EC recalls the recommendation of the European Council July, and that the Government has not complied. At the time, Brussels recommended Portugal to keep “the evolution of the minimum wage in line with the objective of promoting employment and productivity”, which considers not.
Brussels also says that, with based on the impact of the increase in the minimum wage between 2006 and 2011, “would have been a longer period with more moderate increases in the minimum wage more prudent to avoid risks to the recovery of the Portuguese economy and the labor market.”
“Ideally, this step should be accompanied by other reforms in the labor market, reducing its segmentation and improve the functioning of the wage bargaining system,” reads the document.
The SMN was frozen since 2011, but with the departure of the troika, the government began negotiations with the social partners with a view to increase. The agreement which decided the increase of 485 505 euros was closed on 24 September and was offset relief from burdens on businesses that employ workers to receive at least.
The only social rate (TSU) paid by the company by workers receiving SMN decreased from 23.75% to 23%, as in force until the beginning of 2015. This reduction in charges is to Brussels, insufficient as it compensates only partially rising minimum wage, eventually “harm “business competitiveness and productivity.
Also in the labor area, the EC welcomes the new rules that reduce the coverage periods terms of collective agreements, which may” give a new impetus to collective bargaining. ” But the rule that allows the suspension of these agreements in corporate crisis situation is “unlikely” to have a significant impact, since it depends on agreement between unions and employers.
Have the criteria for extension of collective agreements for workers from companies that are not part of the associations who signed (the extension of ordinances calls) are by Brussels viewed as a “step backwards” and would “harm the adjustment of wages in companies with less productivity.”
“This represents a major setback in the reform of collective bargaining in Portugal,” reads the report.
In the report, EC technical alteraçõesà also criticize the law of commercial lease that , they say, can “undermine the soundness and effectiveness of the overall mechanism.” At issue is the extension of the transition period and its application to micro-enterprises and non-profit institutions and national interest that allows the agreements only start to be governed by the new rules of urban leases after five years in the absence of agreement between landlords and tenants.
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