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Portugal aiming to protect young workers, interns in jobs market
Global Banking & Finance Review®
Company
By Sergio Goncalves
LISBON (Reuters) – Portugal’s government is aiming to protect young people in the jobs market with a new law to cut the repeated renewals of short-term contracts, increase overtime and redundancy payments, and secure minimum pay levels for interns.
The ruling centre-left Socialists have a majority in parliament, meaning the bill, with 70 stricter labour measures, should be approved by its intended entry into force from Jan. 1.
In the first quarter, Portugal’s unemployment rate dropped to the lowest level in 20 years at 5.9%, but the share of precarious jobs is among the highest in Europe, and youth unemployment has remained above 20%.
Labour Minister Ana Mendes Godinho said 62% of young people who work had precarious short-term temporary contracts, compared to the EU average of 49%.
In 2021, eight out of 10 new contracts were short-term or entailed services for third parties such as delivery apps, without permanent labour links.
Mendes Godinho said the legislation would combat the “abusive use of temporary work and unprotected work”.
“We want to send a strong message to young people: Portugal values them, we want to attract and retain talent,” she told a news conference.
Companies will only be able to renew temporary contracts four times in a row, down from six times now, before the workers must become fully employed.
Workers of unlicensed temporary employment firms, such as those hiring seasonal staff, will be automatically integrated as staff of their actual employer, the bill stipulates.
Companies will be barred from paying interns less than 80% of the minimum wage, now at 705 euros ($756) per month, and there will be additional overtime pay for those who reach 120 extra hours per year.
Severance compensation will rise to an equivalent of 24 days of paid work for each year of employment from 18 days now.
($1 = 0.9327 euros)
(Reporting by Sergio Goncalves; Editing by Andrei Khalip and Alison Williams)
A short-term contract is an employment agreement that lasts for a limited period, typically less than a year. These contracts often do not provide the same benefits as permanent positions.
Redundancy payments are financial compensations given to employees who are laid off due to job redundancy. The amount is usually based on the employee's length of service and salary.
Minimum pay for interns refers to the lowest amount of compensation that an intern can receive for their work. In Portugal, companies must pay interns at least 80% of the minimum wage.
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