Abstract
The Dutch polder model has practised secular moderation of bargained wages – 25 years’ standstill of purchasing power. Regulatory capture let the minimum wage lag behind and lowered the lowest wage scales, increasing wage inequality. This combined with strong employment growth – mostly in part-time jobs, often low paid and insecure. The household employment rate remained stagnant as single-earner and dual-earner households traded places. The frequent association of higher with lower earnings within dual-earner households mitigated the effects of wage inequality on household income inequality for the persons involved, but also increased inequality as it lifted many of these households higher up the distribution vis-a-vis other households. More than half of all actual aggregate wage growth has accrued to the top decile of the income distribution. Dual-earner world households’ joint access to jobs and working hours adds an essential dimension to income inequality that the polder model has missed.
Highlights
Since joining the European Union (EU) in 1986, convergence has been a constant issue of public scrutiny and discussion in Portugal, and the main concern of political actors
The need to consolidate a sustained trajectory of reducing income-per-capita gaps has evolved together with the ambition of developing a modern welfare state clearly inspired by the European model
This was the case in the foreign exchange crisis of the 1980s, which was tackled with the support of the International Monetary Fund (IMF), but mainly in the decade 2000–2010 and the following bailout agreement in 2011
Summary
Since joining the European Union (EU) in 1986, convergence has been a constant issue of public scrutiny and discussion in Portugal, and the main concern of political actors. The difficulty of achieving sustained economic convergence and the increasing evidence of the exhaustion of the growth model generated in the golden period that followed EU accession show that structural change of the Portuguese economy has been slower than expected. The interruption of convergence and the emergence of signs of divergence in terms of real income per capita undermine the generally disseminated expectations of social convergence; secondly, it is becoming clear that the structural changes needed to regain a sustained trajectory of economic convergence are not independent of the particular configuration that social convergence might come to assume Issues such as a more effective combination of flexibility and security in the labour market, and the needed transition to a skills-based competitiveness model, bring new challenges regarding the needed social protection of the unskilled (long-term) unemployed people illustrate the type of social interdependences we are referring to. The established tradition in Portugal of strong political influence over industrial relations and social dialogue is not a friendly environment for mainstreaming competitiveness and distributive concerns in combination
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