2003 Annual Review for Portugal

The political debate during 2003 was dominated by the worsening economic situation and the measures to be taken to reduce the public deficit and comply with the EU’s Growth and Stability Pact. In this context, in June the government presented a draft 'Social contract for competitiveness and employment' (Contrato Social para a Competitividade e Emprego) at a meeting of the Standing Committee for Social Concertation (Comissão Permanente de Concertação Social, CPCS), the tripartite body with a consultative role on economic, social and labour relations matters. The aim was that the social partners would sign up to this 'social contract'. The basic assumptions of the document were acceptance of pay moderation, investment in innovation and vocational training and a review of the company taxation regime, excluding VAT. The government’s objective was to establish a medium-term pay agreement based on the sharing of productivity gains, with pay negotiations taking place on a biannual basis, aimed at improving productivity. The outcome of the meeting was low-key and talks over the idea of a social contract had not borne fruit by the end of the year.