Labour Market Reforms in Portugal 2011-15

A Preliminary Assessment

image of Labour Market Reforms in Portugal 2011-15

This report, commissioned by the XIX Government of Portugal, provides an evaluation of the comprehensive labour market reforms undertaken in Portugal over the period 2011-2015. It describes reforms in the areas of employment protection legislation, unemployment benefits, activation, collective bargaining, minimum wages and working time. The report reviews the reforms in detail and assesses the available evidence on the impact they have had on the labour market. The report concludes that the Portuguese labour market reforms were a move in the right direction. However, despite the progress made, many challenges remain and some of the reforms may not have gone far enough. Unemployment remains high and this situation has fuelled an increase in both poverty and long-term unemployment The labour market remains highly segmented and, in the context of very low inflation, the presence of downward nominal wage rigidity is likely to remain a barrier to the competitiveness of the Portuguese economy – unless productivity growth is strengthened.



Policy priorities for achieving better labour market outcomes in Portugal

This final chapter offers some thoughts on the road that lies ahead. The labour market reforms carried out over the past few years in Portugal were comprehensive and, as argued in this report, it will take time for their full effects to become both visible and entirely understood. In this sense, the present report should be seen only as a preliminary assessment of those reforms. That being said, it is possible, even at this stage, to make some observations about key policy priorities for the future. While most of these will require further reforms of labour market institutions, policies and practices, achieving higher levels of employment and greater inclusiveness in Portugal will also depend on factors that lie outside the realm of labour market policy. These include first and foremost the need to return to higher and more sustainable levels of growth, but also, amongst others: further investments in skills, product market and tax reforms, and improving the access that firms have to credit.


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