Portugal: Workers' Victory Against Austerity Job And Pay Cuts

Portugal’s constitutional court has ruled that legislation enabling the government to fire public sector workers who cannot be retrained is illegal, blocking a reform that Lisbon sees as critical to meeting the terms of the country’s €78bn bailout.

The ruling announced on Thursday night came only five months after the court rejected public spending cuts of up to €1.3bn, forcing the government to rewrite this year’s budget to meet deficit reduction targets agreed with international lenders.

The decision to reject the bill on “public sector requalification”, which would have allowed the state to lay off workers permanently after they spent a year in reserve, means the government will have to rewrite a reform package aimed at cuts totalling €4.7bn.

It is the third time in just over a year that the court has rejected important government reforms that it judged to contravene the constitution.

Arménio Carlos, leader of the CGTP-Intersindical, Portugal’s largest trade union confederation, welcomed the court’s decision, saying the government had been given “three red cards in a year” and should resign.

The rejected bill was part of an extensive reform package agreed with the troika that seeks to make “permanent” cuts in public spending by cutting back state services and potentially laying off tens of thousands of public sector workers, particularly teachers and clerical staff.

In a letter sent to the troika in May, the government said it envisaged saving €894m over three years by retraining state employees and terminating job contracts.

The bill envisaged sending home workers that the government judged to be excess to requirements on reduced pay – 63 per cent of their salary in the first six months and then 50 per cent.

If they were not retrained and reallocated to other jobs within a year, they would, according to bill, have continued to wait for work without any pay or agreed to terminate their contracts with a right to compensation and unemployment benefits.

However, the court ruled that the bill contravened Portugal’s constitution, partly because it failed to uphold workers’ rights to employment stability. Joaquim Sousa Ribeiro, president of the court, said the government had “aggressively” changed the rules for retraining workers without providing precise motives.