Silver bullet

Friday, 17 April 2026RSS
Silver bullet

The revision of labour legislation has become a tedious soap opera, despite recent episodes adding some drama: the suspense of the UGT vote or a party with less than 5.5% of the electorate accusing unions of representing only 7 to 15% of workers (and what about employer confederations, by the way?). Overall, the dramatisation surrounding the process is based on a misconception: that it is the 'silver bullet' that will solve economic growth problems. While some norms need updating, a conflict-driven approach fuels 'class struggle' rhetoric, which is the antithesis of social-democratic logic. Worse, it fosters illusions and loses sight of other, perhaps more priority, dimensions. Coincidentally, the OECD published the study 'Foundations for Growth and Competitiveness' this week. Portugal's gap compared to the OECD average in numeracy and problem-solving skills for people aged 16 to 65 is around 15% (25% for top-tier countries). If Portuguese workers had the skills of those in Finland, Japan, or Sweden, productivity could rise by 35%. Some OECD proposals involve labour law but outline concrete trade-offs (e.g., more permanent contracts to stimulate training investment, alongside simplified dismissal procedures). The difference between being involved and being committed is essential for credible negotiation. In reality, the conditions for such productivity gains are complex, involving everything from the productive structure to management process quality. Interestingly, a study from a few years ago suggested that if Portuguese companies adopted Swedish processes, the productivity gap would shrink by 25%. Revising labour law may make life easier for managers, but if they assume they are already doing everything right, it will achieve little and could even have perverse long-term effects. Crucially, we must not lose sight of the fact that the fundamental aspects of competitiveness policies remain unaddressed.

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