The XXIV Government’s Program and the Private Sector employment market – What to expect? - VCA

The new Government’s Program was delivered yesterday to the Portuguese Parliament, and they scheduled, for today and next Friday, Parliament’s Plenary Sessions for its presentation and debate.

Regarding employment matters, from the analysis of said Program one can broadly ascertain a certain level of continuity of the policies followed by the previous Government, mitigated by some tax and social security measures primarily aimed at lowering the tax burden over employment related income (thus increasing the employees’ available net income).

We should add, as a preliminary note, that this Government’s Program has as its background the approval, precisely one year ago, of the Law 13/2023, of April 3, that significantly amended the Portuguese Labour Code and other employment related laws. In light of such recent change, and also bearing in mind the fragmentation of the political forces that compose the current Parliament, it is highly unlikely that major changes will be introduced to employment law, at least in the near future.

We highlight the following topics included in the Program concerning employment related matters:

Within the context of the promotion of birth rates and well-being

Mulling the creation of tax benefits for companies that implement programs aimed at promoting parenthood, such as daycare centers at the workplace, that hire pregnant women of people with children up to 3-year-old, implement flexible worktime arrangements and other benefits that promote work-life balance;
Promote work flexibility (worktime, telework, parental leaves), to facilitate work-life balance.

Within the context of promoting youth employment

Confer a structural nature to the so-called “IRS Jovem” measure (aimed at increasing the net income of young employees);
Redesign the eligibility criteria for financially backed professional internships;
Reintroduction of the program Young Technicians for the Industry, further developing the support to Technological Centers, incentive programs for hiring recent graduates in the scientific, technologic and management areas;
Create a Young PHD for the Industry, developing, in coordination with Business Associations, programs aimed at improving the integration into the labour market of young PHDs in the scientific, technologic and management areas.

In the valuation of work

Promote the open and constructive dialogue with the social partners;
Revisit the so-called “Agenda do Trabalho Digno”;
Broadening the scope of matters that can be regulated by collective bargaining agreements, namely concerning types of employment contract, flexibility mechanisms, probation periods, worktime and matters concerning termination of employment contracts;
Set-up incentives to the increases on productivity, increasing the minimum national monthly wage to 1,000 euros by 2028 and establish the conditions for an increase of the average national monthly salary to 1,750 euros in 2030, based on productivity gains and social dialogue;
Promote productivity increased, with measures such as the exemption of tax and social security contributions over performance bonuses up to an amount of 6% of the annual base salary and lowering the tax burden over companies;
Actively promote equality between men and women at work (including the reinforcement of laws concerning quotas for management and direction positions);
Promote professional training in strategic areas for the digital economy.

Within the context of the transition from work to retirement

Study the introduction of mechanisms of partial retirement that enable a progressive transition between active work and retirement;
Enabling the cumulation of employment related income with social security retirement pension and other social benefits.

Encourage savings through complementary retirement schemes;
Improve the asset management role, preparing Social Security services to manage voluntary capitalization funds, competing with the private sector;
Promote mechanisms aimed at ensuring that increases in employment related income don’t lead to a reduction of available income (as a result of the loss of social benefits);
Approval of measures aimed and approaching the social security rights for self-employed workers and employees, namely concerning unemployment, illness, parenthood and retirement related benefits.

Inclusion and fight against discrimination

Creation of a national plan aimed at supporting the transition of young persons with disability from school to the employment market;
Increase tax benefits for companies who hire persons with disabilities beyond the legally established quotas;
Create job-training contract for people with disabilities;