wage inequality in portugal
TRANSCRIPT
Wage inequality in Portugal
Ministry of Labour, Solidarity and Social SecurityJuly 2016
1
InequalityInsufficient impact of past labour market reforms:
SkillsSegmentationWage structure
PolicySkillsSegmentationMinimum wageCollective bargaining
2
InequalityInsufficient impact of past labour market reforms:
SkillsSegmentationWage structure
PolicySkillsSegmentationMinimum wageCollective bargaining
3
Inequality
Source: SILC/Eurostat
4
Income inequality - from 2011 to 2015, there was almost no change inthe inequality indicators in Portugal, which remain very high.
Inequality
Wages, productivity and poverty – Unemployed and other inactive personsare more at-risk-of-poverty than employed and retired persons.
5Source: Statistics Portugal, ICOR (2015)
At-risk-of-poverty rate by poverty threshold and most frequent activity in the previous year (%)
InequalityInsufficient impact of past labour market reforms:
SkillsSegmentationWage structure
PolicySkillsSegmentationMinimum wageCollective bargaining
6
Insufficient impact of past reforms
Source: DGEEC/MEdu7
Skills – Decrease of adult education
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
180 0002000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
Secundário
3.º Ciclo
2.º Ciclo
1.º Ciclo
Insufficient impact of past reforms
Source: Eurostat8
Skills – Reduced participation in lifelong learning
0% 5% 10% 15%
PT
EU
9%
11%
Insufficient impact of past reforms
Source: Quadros de Pessoal9
Segmentation – Important wage difference between low and high skilllevels
0 500 1000 1500 2000 2500
Nenhum
1.º ciclo
2.º ciclo
3.º ciclo
Secundário
Pós-secundário
Bacharelato
Licenciatura
Mestrado
Doutoramento
Insufficient impact of past reforms
Source: Quadros de Pessoal10
Wages inequality - Lower proportion of workers and higher skill levels insectors with higher wages
Segmentation
The incidence of temporary employment was much higher for youth (67,4% in2015Q4) than for employees aged 25 to 64 years old (19%).
Temporary employees as a percentage of the total number of employees, by age
Insufficient impact of past reforms
Source: Statistics Portugal (INE), LFS11
46,2
67,5
31,0
42,7
16,018,8
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
UE28 15 a 24 anos UE29 25 a 29 anos UE28 25 a 64 anos
Portugal 15 a 24 anos Portugal 25 a 29 anos Portugal 25 a 64 anos
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Insufficient impact of past reforms
Segmentation – The incidence of temporary contracts in new admissions to the
“Fundo de Compensação do Trabalho” (i.e. workers’ compensation fund) is alsosignificant. In the first semester of 2016, temporary contracts accounted (on average)for 81,3% of total admissions.
Source: GFCT – Gestão do Fundo de Compensação do Trabalho
Note: admissions in the categories of “service commission regime”, “telework” and “intermittent work” were excluded from the analysis, since there is no information available concerning contract type (overall, these employment forms account for less 1% of total admissions).
21,9% 20,8% 21,4%
78,1%79,2% 78,6%
84,3%
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
80,0%
90,0%
jan
feb
mar
apr
may jun jul
aug
sep
oct
no
v
dec jan
feb
mar
apr
may
may jun jul
aug
sep
oct
dec jan
feb
mar
apr
jun
Admissions, by type of contract (%)
Permanent Temporary
Insufficient impact of past reforms
Source: Quadros de Pessoal13
Wage drift – The wage drift has been increasing, which shows that wagesare increasingly set at the individual level
125,6
133,3139,2 139,0
142,5
152,3
160,7167,6 167,3
172,8
1998 2003 2008 2011 2014
Remuneração base Remuneração ganho
Remuneração convencional =100
30,428,428,4
27,526,7
25,6 33,3 39,2 39,0 42,5
26,727,5
28,4 28,4 30,4
0
20
40
60
80
100
120
140
160
180
200
1998 2003 2008 2011 2014
convencional (=100) base ganho
InequalityInsufficient impact of past labour market reforms:
SkillsSegmentationWage structure
PolicySkillsSegmentationMinimum wageCollective bargaining
14
Policy
15
Skills – Programme Qualifica
• Need to build a new agenda for vocational education, based onthe quality of responses and on a better adjustment to the labormarket
• Revitalize adult education and training as a central pillar of thequalifications system by launching an integrated programme foradult education and training
• Programme Qualifica
Policy
16
Programme Qualifica - main measures:
• Enlargement of the network and reinforcement of activity of the "CentrosQualifica"
• Implementation of a credit system applied to the vocational education andtraining programmes, recognized by the training providers that operate in thecontext of the National Qualification System
• Creation of the "Passaporte Qualifica" as an instrument designed to be anelectronic registration available online for consultation
• Reinforcement of the recognition, validation and certification of professionalskills
• Strengthening of the quality of the VET systems by the promotion of trainingfor teachers and trainers, especially in the area of adult education
Policy
17
Minimum wage (MW)
• Reference in the Portuguese labour market, both from the perspective of firms (competitiveness and sustainability) and of workers (decent work and social cohesion)
• Correlated with poverty: 1 in 10 workers in Portugal are at risk of poverty and the percentage of poor workers has increased (9.9% in 2011 to 11% in 2014)
• MW policy: carried out by the Government in partnership with the Social Partners, taking into consideration several factors, such as productivity, competitiveness, unemployment
• MW: increased from €505 to €530 on January 1st, which led to an increase in the % of workers earning the MW, to around 20% in March 2016
• Extraordinary measure to decrease by 0,75pp the social contributions rate (from 23,75% to 23%) between February 2016 and January 2017, to mitigate the impact on firms of the increase in the MW (decrease in competitiveness)
• First report on the evaluation of the impacts of the increase in the MW
WagesContractual wages, minimum wage and earnings
18
Contractual wages Minimum wage Earnings
Sources: Republic Journals; Statistics Portugal, CPI (base 2012); Stability Programme 2016-2020
Policy
Quarterly report on the impacts related to minimumwage update (1st report: May 2016)http://www.portugal.gov.pt/pt/ministerios/mtsss/docs/20160512-mtsss-rmmg-rel.aspx
Main findings: The share of workers with remuneration equal to the MW increased from
16% to 19%, remaining unchanged the percentage of wages below theMW(9%).
During 2016Q1, the net balance between initiated and terminated contractswas 108,800 employees (114,500 in 2015Q1).
Next reports – main issues to assess: Study of transitions for MW earners, following them in two moments in time,
in order to understand wage transitions: persistence in lower wages and salary progressions.
Assessment in further detail of the decrease of 0.75 p.p. in employers social contributions for employees with a monthly base salary equal to the MW.
19
Policy
20
Collective bargaining
• Government: committed to reinforcing the dynamism of social dialogue at all its levels, from tripartite negotiation to collective bargaining at the sectoraland company levels
• Although the dynamism of collective bargaining strongly depends on the engagement of social partners, it is understood that the Government can (and should, given the current situation of stagnation of collective bargaining) act in order to stimulate it, to make negotiations more appealing both to trade unions and enterprises
• Referring some major topics (like working time and associated compensations) exclusively to the domain of collective bargaining will lead the parties to find greater interest in gathering at the negotiation table
• Collective bargaining: major role in assuring certain levels of labour market integration and social cohesion
21
Policy
Social dialogue – collective agreements slightly increased, as well as the numberof workers covered in 2016 in relation to the same period of 2015.
Collective agreements and workers covered
Source: DGERT (MTSSS) (a) data until 8th June.