Subsidy to offset indirect cost of higher wages sought by 96,000 firms

In Portugal, around 96,000 companies have applied for state funding to offset the indirect cost of this year’s increase in the statutory minimum wage, with 3,000 of them also submitting complaints about the way the remuneration was calculated, the minister of economy, Pedro Siza Vieira, has said.

“There was a set of companies that presented a complaint regarding the way their minimum wage was quantified,” he acknowledged, adding that “out of 96,000 companies that requested compensation, 3,000 drew attention to some discrepancies” afterwards.

“For these, we will try to make the adjustment; for the others, we will try to make the payment as soon as possible,” he said on Monday, a few days after the deadline for companies to apply for this support, which reimburses companies for part of the increase in social security contributions resulting from the higher minimum wage.

Last week, the Portuguese Commerce and Services Confederation (CCP) warned that hundreds of companies, employing a total of more than 100,000 people, had been excluded from compensation for the 2021 minimum wage increase.

“Two days before the deadline for companies to apply for support negotiated with the Government to compensate for the 2021 minimum wage increase, hundreds of companies from various sectors, employing more than 100,000 people, find themselves excluded from this compensation,” the CCP warned in a statement.

According to the confederation, the situation had been “pointed out several times” by the CCP in the Permanent Commission for Social Dialogue (CPCS) and also mentioned to the minister of employment by the CCP’s president.

According to the CCP, the situation “penalises in a totally unfair and unjustified way two types of situations very common” in companies in those sectors whose collective agreements foresee a sectorial minimum wage indexed and increased in relation to the national minimum wage – for example, the collective agreement for cleaning companies foresees a minimum wage 0.5% higher than the national minimum wage – and companies where workers are on the minimum wage but whose pay is linked to cash flow, due to their roles.

“In the first case, the discrimination discourages sectors to pay above the national minimum wage,” the CCP argues, while in the second “they are penalising workers with a specific function that requires them to assume cashflow failures.”

In January this year, Portugal’s statutory minimum monthly salary increased by €30 to €665, as another step towards the Socialist government’s stated goal of its rising to €750 by the end of the current parliament.

During formal talks with employers and trade unions to set this year’s national minimum, the government announced plans to return to companies part of the increase in social security contributions implied by the rise in the minimum wage. With the latter set at €30, the extra costs are €7.13 per month.