António Pedro Santos / Lusa
Maria do Rosário Palma Ramalho, Minister of Labor, Solidarity and Social Security
A new study by Iscte analyzed the impact of extensions prior to the term of fixed-term contracts and estimates that the Government’s measure will leave an additional 13 thousand people per year trapped in precarious employment.
The changes proposed by the Government to contract deadlines could lead to around 13 thousand workers per year stop seeing your contract become indefinite, concludes an analysis by Iscte.
The estimate is contained in “Panorama 2026“, the new annual from the Institute for Public and Social Policies of Iscte (IPPS-Iscte), coordinated by Pedro Adão e Silva, sociologist and former Minister of Culture of António Costa’s third government, which anticipates what will happen in the new year in five areas: geostrategic challenges, national political situation, macroeconomic scenarios and evolution of the job market and Portuguese income.
“If the rules on fixed-term contracts are relaxed again, we can estimate that around 13 thousand workers per year would no longer see their contract converted indefinitely”, concludes the Iscte analysis prepared by Paulo Marques, in light of the draft revision of labor legislation presented by the Government of Luís Montenegro.
In the draft, the Government proposes an increase in the maximum duration of fixed-term contracts, from two to three yearsas well as that the first fixed-term contracts can now last one year, when currently the limit is six months.
To arrive at the estimate of the 13 thousand workers who could be “trapped” in fixed-term contracts, researcher Paulo Marques was based on several studies.
A study on the reform carried out by Bagão Félix in 2003, which increased the maximum duration of these contracts from three to six years, concluded that “the probability of conversion into an open-ended contract decreased by an average of 1.9 percentage pointswage inequality between stable and precarious workers increased and there was no lasting gain in employment that would compensate for the greater precariousness”.
Another study focused on the impact of the changes made by Álvaro Santos Pereira that extended the maximum duration of some fixed-term contracts from 3 to 4.5 years showed “a around 20% reduction in conversion probability of these contracts into permanent ones, without relevant gains in terms of employment level”.
Based on these assumptions and taking into account the most recent data from INE, which indicate that in 2022 there would be around 685 thousand workers employees with a fixed-term contract or temporary contracts, and 34.3% of these workers, around 235 thousand people, switched to an open-ended contract in 2022, if the new reform progresses and “reproduces the type of effect observed in 2003, it is reasonable to assume a drop in the probability of conversion of around 1.9 percentage points”, says the IPPS-Iscte publication.
And he adds: “applying this value to the current universe of workers with temporary contracts (around 685 thousand people), a reduction of 1.9 percentage points in the conversion rate implies that approximately 13 thousand workers per year would no longer see their contract become indefinite”.
The researcher also admits that the impact “could be smaller or greater than that observed in 2003”, given that the Government’s proposal is to increase the maximum duration of fixed-term contracts, from two to three years, and not from three to six.
“Even so, the design is similar in what matters to workers on fixed-term contracts: it extends the horizon in which companies can keep workers on fixed-term contracts and expands the situations in which these contracts are admissible”, he concludes.
Extending contract terms is one of the measures most criticized by trade unionsalong with the return of the individual time bank or the repeal of the rule that provides for restrictions on ‘outsourcing’ in the event of dismissal.
The changes foreseen in the Government’s proposal aim to change more than a hundred articles of the Labor Code and are being discussed in social consultation, whose next plenary meeting is scheduled for January 14th.
