PM defends much-disputed labour reform as key to transforming Portugal’s economy

Still riding the crest of the wave that saw him declare yesterday that other countries are ‘green with envy’ over Portugal’s economic resilience, prime minister Luís Montenegro told MPs in parliament today that they must choose between “ambition and progress”, or “stagnation and mediocrity” when they vote tomorrow on the government’s much-disputed labour reform.

Holding the floor during the fortnightly parliamentary debate, Montenegro continued to ‘bang the drum’ that Portugal must modernise its labour market if it is to tackle weak productivity, youth unemployment and sluggish economic growth.

“MPs will decide which side they want to be on – the side of ambition and progress or the side of stagnation and mediocrity,” he told parliament.

The labour reform debate is at a crossroads: if Montenegro can satisfy the various ‘demands’ of right-wing CHEGA, he will effectively have the number of votes he needs to push the new legislation through, in spite of the fact that unions and all other opposition parties are vehemently against the coalition government’s proposals.

Montenegro has always described the reform as “essential” for increasing Portugal’s competitiveness, creating jobs and delivering higher salaries.

“Portugal is one of the OECD countries with the lowest productivity, some of the most rigid labour legislation and a high level of youth unemployment. Changing this requires courage and a spirit of dialogue,” he said today, rejecting criticisms of the varous measures, suggesting public debate around them has often been “misinformed and superficial”.

According to the PM, the package seeks to balance productivity and business competitiveness with stronger protections and opportunities for workers.

Among the measures highlighted by the government are expanded parental leave rights, improved work-life balance provisions, incentives to hire young people and long-term unemployed workers, greater flexibility for pre-retirement pensioners to continue working, and measures aimed at strengthening collective bargaining agreements.

Education Reforms and Youth Opportunities

Opening his address, Montenegro congratulated the thousands of students across Portugal beginning their national secondary school examinations this week.

He used the occasion to highlight recent government measures in education and higher education, including a new student support system and the approval of the future University of Leiria and the West and Technical University of Porto.

Drawing a parallel between education and economic policy, the prime minister said Portugal must encourage hard work, reward merit and create opportunities for people to fulfil their ambitions.

Montenegro also used the debate to defend the government’s proposed Single Social Benefit (PSU) – describing it as the “face of a stronger welfare state”.

The measure aims to consolidate social support programmes while targeting assistance more effectively towards vulnerable individuals and families.

“It is a proposal that breaks the poverty trap, believes in the potential of every person, recognises effort and merit, encourages work and supports the creation of life projects with dignity and a future,” he said.

The prime minister added that the system would include stronger oversight mechanisms to prevent abuse and fraud, while ensuring support reaches those most in need.

The labour reform and PSU proposals are among the flagship measures of Montenegro’s government and are expected to face intense scrutiny in parliament as the administration seeks support for its wider economic and social agenda.

But as it was, once the PM had said his piece, the opportunity came for opposition leaders and MPs to say what they thought of it – and this honed in on the situation that so many have described as ‘two Portugals’: one where the government seems to think that it is doing a good job, and in charge of things; and another where the cost of living/ cost of property, continues to increase, with salaries failing dismally to keep up, and a health service incapable of properly looking after people.

At a point where the whole country is focused on Portugal’s first World Cup game, broadcasting tonight at 6pm, PS leader José Luís Carneiro remarked that he just hopes Cristiano Ronaldo (and the rest of the national team), perform better than the head of government and his ministers, who, in Carneiro’s opinion, have just made everything in this country a lot worse since they took over the ‘reins of power’ in 2024.

Source material: noticiasaominuto/ LUSA