Liberalised dualisation. Labour market reforms and the crisis in Portugal

Abstract

Drawing on quantitative and qualitative data, this article examines how the main dimensions of labour market legislation (employment protection, security in unemployment, collective bargaining and activation policies) changed in Portugal during the sovereign debt crisis from 2011 to 2014. We show that the reforms passed during the Troika years were qualitatively different to earlier reforms. Despite building upon previous trends, there were path-shifting changes. First, security in employment and in unemployment for standard workers (insiders) declined substantially. Second, a significant decentralisation of wage bargaining shifted the balance of power towards employers, while a move from joint to statutory regulation stalled social cooperation. Third, neither of these trends was offset by any relevant unemployment compensation strategy or activation effort targeted at outsiders: no recalibration occurred in a historically dualised labour market. The balance of power between employees and employers shifted towards the latter at the expense of the former. A worse situation for insiders and outsiders points to wide market flexibilisation and enduring segmentation at a lower level of security. The austerity-driven reforms brought the Portuguese labour market to a liberalized dualisation, signalling a new departure for Portuguese labour market relations.