Portugal: Health, Pensions and Labour Constitute the Deadlocks on the Left

President Marcelo Rebelo de Sousa has called for snap elections on 30 January 2022 after António Costa’s (Socialist Party) government was rejected on 27 October, obtaining yes votes only by the socialists’ MPs. Read about the background here.

At the end of 2015, the national elections resulted in an unprecedented scenario in Portuguese politics. The right-wing coalition that for four years applied the troika’s austerity programme, headed by Pedro Passos Coelho (PSD) and Paulo Portas (CDS-PP), was the most voted force, achieving 37% of the votes and 102 seats in the national parliament. The Socialist Party (PS) with 32%, the Left Bloc (10.2%) and the Portuguese Communist Party (PCP/PEV)[1] with 8.2%, together won 122 seats. By the hand of the then president, Cavaco Silva, the Right formed government, only to suffer a vote of censure shortly afterwards, opening the way for the government of the socialist party led by António Costa. The "Geringonça" was formed.

For four years (2015-2019), the Socialist Party governed with the parliamentary support of the Bloco de Esquerda and the PCP, and the participation of these two parties in the government. During the electoral campaign, the National Coordinator of Bloco de Esquerda, Catarina Martins, launched a challenge to António Costa, who was presenting himself for prime-minister with the most right-wing programme in the history of the PS: if the Socialists would drop the easing of dismissals, the reduction in the employer’s contribution to social security and the €1.6 billion cut in pensions[2], the path to dialogue between the two parties would be open. Forced by the one million votes on the parties on his Left, with a minoritarian right, António Costa signed two separate agreements, with  Bloco and PCP, contemplating a vast list of measures, ranging from blocking new privatisations, to the restitution of income withdrawn by the troika, including the increase in the minimum wage and the strengthening of social benefits. The PCP always rejected tripartite negotiations, granting the Socialist government a position of negotiating strength, since it needed Bloco and PCP together to form a majority.

Over the four years, after a troubled and incomplete application of the agreed measures, annual negotiations on the state budgets ensued, resulting in additional gains for the left, as was the case with the PREVPAP[3], the social protection of “autonomous" workers, the reduction in university tuition fees, a new progressive health basic law in or the process of decriminalisation of assisted death, the latter still underway.

Although the reversal of the austerity measures was the common theme of the agreement, the existing deadlocks quickly became clear, particularly regarding the provisions of the European treaties, the parasitic rent seeking of the financial system and the labour laws imposed by the troika[4]. In none of these areas did the PS government show openness to move forward with the structural changes negotiated with the Left.

2019: the end of the written agreements

In 2019, the popular vote in the legislative elections established a new right-wing minority, with PSD (28%), CDS-PP (4.2%), Iniciativa Liberal[5] (“Liberal Initiative”) (1.3%) and CHEGA[6] (“Enough”) (1.3%) totalling 86 mandates. The Socialist Party reinforced its position with 36.3% and 108 mandates, Bloco de Esquerda kept its 19 mandates, reaching 9.5%, and PCP reduced its expression to 12 mandates and 6.3% of the votes. In this new scenario, either Bloco or PCP alone would be enough for the PS to form a majority of votes in the parliament. Given that a significant part of the income restitution agenda had been accomplished, Bloco de Esquerda proposed to the PS a new agreement for the term, but with a specific condition: the elimination of the regressions introduced by the troika in labour legislation (devaluation of overtime work, reduction of the number of holiday days, reduction of the basis for calculating the redundancy payment from 30 to 12 days for each year of work).

The Socialist government formally rejected such a condition and the possibility of a new agreement, relying on PCP, which rejected the methodology of written agreements and stated its preference budgets’ negotiations on an annual basis. Three elements help to understand this refusal to reach a new understanding. Firstly, António Costa’s adherence to Macron’s tactics, betting on a centrism that expels the Left from power positions in the economy and in labour relations, betting on the blackmail rhetoric on the threat of the return of the right to power, establishing PS as the pivotal party of the regime.  Secondly, giving in to the organised pressure from the employers’ field for the perpetuation of troika’s penalising rules in labour laws. The quest for a full majority, a necessary step for a future repositioning of PS vis-à-vis the Left, is the third reason and Costa’s strategic compass since 2015.

2020: the pandemic and structural weaknesses

The COVID-19 pandemic exposed the structural weaknesses and inequalities of the economy and the welfare state in Portugal. Hundreds of thousands of precarious workers lost their jobs in the first pandemic wave, especially those who were subjected to informal labour relationships or depended on public affluence, such as domestic, cultural and tourism workers. The lack of proper housing jeopardised the safeguarding of public health for a part of the population and for migrant workers. Public services reached unprecedented levels of demand. In the year 2020, poverty rates increased by 25% while the number of millionaires rose by 16%. Despite the government putting in place a set of relevant measures (layoff, extraordinary support measures, suspension of water and energy supply cuts), Portugal fell far short of the European average in its response to the crisis, implementing the equivalent to only 5.6% of GDP in extraordinary measures.

The weak budgetary response and the uncovering of inequalities placed the measures advocated by Bloco de Esquerda back at the centre of the political debate. The burden on the National Health Service made the shortage of health professionals – who had been diverted to the private sector for the sake of better wages -, evident. Troika’s labour laws facilitated collective dismissals in large companies, fuelling a precariousness model. The financial hole created by Novo Banco[7] continued to drain public money. The Extraordinary Income Support (EAR)[8] did not encompass thousands of workers. On all these issues, the PS government rejected the proposals of the Bloco de Esquerda, who voted against the Budget proposal. The Budget was approved with the votes of PS MPs and the abstentions of PCP, PEV, PAN[9] and the non-affiliated MPs Cristina Rodrigues[10] and Joacine Katar Moreira[11].

2021: The deadlock on the left

As 2021 came, the Socialist Party did not wane in the tactic of containing advances to its left. The victory of Marcelo Rebelo de Sousa, the conservative and incumbent presidential candidate, benefited from the accommodation to the centre: the support of Rui Rio (PSD leader) and António Costa mobilised the bulk of the electorate. PS leadership wished for Marcelo’s victory, taken as the reinforcement of its political orientation towards the centre. And it had such a win. By choosing to navigate by sight, without written agreements, António Costa was able to reinforce his choice of having budgets approved by the left, while voting together with the Right in the parliament, every single month, on essential matters.

After the September 2021 local elections, in which PS unsuccessfully[12] rehearsed a triumphalist rhetoric based on the distribution of the Recovery and Resilience Plan funds, the 2022 Budget proposal, presented in October, confirmed the choices made towards the centre and a policy of budgetary contention. Rejecting the economic leeway offered by the suspension of the rules of the budgetary treaty, the government fell short when it comes to investment, response to the energy crisis, combating inequality and increasing wages. But it is particularly in health, pensions and labour laws that the deadlocks on the left are to be found.

Bloco de Esquerda tabled nine measures for negotiation, all rejected in full or partially on crucial dimensions. In health (full dedication[13] of health professionals, creation of the career of Auxiliary Health Technician); in pensions (repeal of the sustainability factor and recalculation of pensions to eliminate cuts of the beneficiaries with long careers and exacting professions, valuation of the personal retirement age); in labour laws (reinstatement of the pre-troika rules on overtime work, holiday days, redundancy pay and collective bargaining). In almost all these measures, the Socialist Party used to defend similar positions when in opposition. PCP focused its demands on raising the minimum wage, increasing pensions, and moving forward with free childcare. For the first time, PCP also included labour laws in the budget negotiations.

Since the tabling of the Budget proposal, the President, Marcelo Rebelo de Sousa, had publicly threatened the political parties with the dissolution of the parliament in case of a no vote, manoeuvring within his party (PSD) to strengthen the position of the new leadership candidate, Paulo Rangel. Without constitutional grounds (the budget non-approval of does not require the dissolution of parliament), Marcelo’s threat benefited Costa’s negotiation inflexibility tactics, who is using the political crisis to call for full majority in the forthcoming elections, yet not excluding from his rhetoric a return to left-wing agreements, seeking to put pressure on the Bloco and PCP on both fronts.

Costa’s government was rejected on the 27th October 2021, obtaining yes votes only of the socialists’ MPs, and the abstention of PAN and the two non-affiliated MPs. Marcelo Rebelo de Sousa has announced the date for the dissolution of Parliament and called for the elections on the 30th of January 2022.

2022: the left campaigns for its programme and popular mandate

The call for snap elections comes amid a diffuse climate of popular fear and media pressure on the left. Having made clear the negotiating proposals and the government’s negotiating inflexibility, Bloco de Esquerda does not give up on the dialogue with the left sectors who were inclined towards enabling the Budget approval. The Right is heading into these elections with three congresses planned, two internal leadership disputes (in the PSD and the CDS), and will spend the campaign avoiding the debate on future alliances with the far-right ( party (CHEGA). It is very unlikely (and no poll indicates it) that the Right could achieve a majority of votes. As for a PS’s full majority, it only exists in António Costa’s calculations. 

The elections should not be taken as a settling of scores. The reinforcement of Bloco de Esquerda is the key to a new impetus for negotiations amongst the left on the essential.


[1] Since 1982, the Portuguese Communist Party (PCP) has presented itself in all national elections under the acronym of the Unitary Democratic Coalition (CDU), sharing the coalition with the Ecologist Party "Os Verdes" (PEV). Unlike Green parties in Europe, PEV does not have strategic and functional autonomy from the PCP. 

[2] The Socialist Party proposed in its electoral programme and in public documents: to create a legal figure that would give more power to employers in dismissal procedures; to guarantee a freeze on pensions; to move forward with the reduction of the Single Social Tax, paid both by workers and employers to Social Security.

[3] Fruit of the negotiation between the Bloco and the government, the PREVPAP was a program of extraordinary regularization of precarious ties in the Public Administration, resulting in the regularization and permanent binding of thousands of precarious contracts. The “Precários do Estado” ("Precarious of the State”) platform was launched in December 2016, with the aim of fighting for the integration of all precarious workers in the State, mobilising several collectives to struggle against precariousness.

[4] Between 2011 and 2014, the right-wing government implemented the troika’s plan in labour laws: cutting the number of national holidays and holiday days; reducing overtime pay; restricting collective bargaining; reducing redundancy payments; labour precarisation through temporary work and outsourcing.

[5] Ultraliberal party, affiliated to ALDE.

[6] Proto-fascist party, led by André Ventura (former PSD party official), affiliated to ID.

[7] Formerly "Banco Espírito Santo", the largest economic group in Portugal in the post-25th of April period, with unbridled political influence in all governments, which went bankrupt in 2014, resulting in a loss of around seven billion euros to the public treasury.

[8] Allowance for those who lost work income or access to social benefits during the pandemic.

[9] Animalist party, affiliated to the Animal Politics EU.

[10] Former PAN MP.

[11] Former LIVRE MP, party led by Rui Tavares and affiliated to DiEM25.

[12] Despite being the most voted party and with the largest number of municipal councils, PS lost the dispute in Lisbon. Carlos Moedas, former minister of Pedro Passos Coelho and one of the main responsibles for the application of austerity plans, beat the incumbent socialist candidate, Fernando Medina, and became the new mayor of Lisbon. 

[13] A mechanism that provides health administrations with resources and allows professionals to dedicate themselves exclusively and full-time to the National Health Service.

Originally published at VientoSur