Portugal Faces Labor Reform & Budget Challenges, Agreement Remains Uncertain
Portugal is navigating a complex period with meaningful labor reforms and the 2026 State Budget (OE2026) both demanding attention. The business confederation, CIP, is urging that these two processes proceed independently, warning against using labor reform as leverage for budget approval. CIP leader Armindo Monteiro emphasized the importance of social dialog,rejecting ”political tactics” that could undermine ongoing discussions and hinder the creation of modern labor legislation. He expressed optimism that a consensus could be reached with continued dialogue, anticipating only two further meetings after the next scheduled session on October 8th would be needed to finalize the process.
The government, represented by Labor Minister Maria do Rosário Palma Ramalho, acknowledges the depth of the proposed changes - exceeding one hundred – and stresses the need for sufficient time for thorough consideration. However, she also clarified that the negotiation phase within social concertation will not be indefinitely prolonged, as the resulting proposals will ultimately be presented as a bill to the Assembly of the republic.
To foster progress, the government is already demonstrating flexibility. In advance of the October 8th meeting,a revised proposal will be presented,addressing concerns surrounding breastfeeding and gestational mourning.Specifically, the requirement for a medical certificate for breastfeeding leave before a child’s first birthday will be dropped, and the eligibility for fathers to utilize breastfeeding licenses will be extended to two years of age (currently one year).Clarification will also be provided regarding gestational mourning, with the government opting to maintain existing provisions for pregnancy interruption leave.
Despite these concessions, reaching a broad agreement remains challenging. The CGTP, a major union central, outright rejects the entire reform package and has scheduled a exhibition for October 20th. While the UGT is open to dialogue, it hasn’t ruled out a general strike should the government prove inflexible. UGT representative Mário Mourão acknowledged the “evolution” regarding parental leave but deemed the changes insufficient, citing numerous proposals as detrimental to workers’ rights, particularly those concerning dismissal reintegration and flexible working hours.
Political opposition is also strong. The PS (Socialist Party) has condemned the draft as a “frontal shock” to fundamental values,arguing it disproportionately impacts women,youth,and vulnerable populations. Former Secretary of state for Labor, Miguel Cabrita, labeled the proposal a step backward, an “adjustment of accounts” that threatens recent labor advancements. He specifically criticized the potential reinstatement of three-year limits on fixed-term contracts, warning it would exacerbate job insecurity.He characterized the proposal as fundamentally unbalanced and lacking the necessary focus on building consensus.