Portugal's parliament rejects labour reform in blow to minority government

Portugal's centre-right government suffered its heaviest defeat since returning to power last May, as parliament rejected its labour reform proposal amid opposition from unions and main opposition parties.

​Portugal's centre-right government suffered its heaviest defeat ‌since returning ​to power last May when parliament on Friday rejected its labour reform proposal, which had sparked two general strikes. The main opposition parties — far-right Chega and the centre-left ‌Socialist Party — joined forces to block the bill, which the government argued was crucial to boosting productivity and economic growth. The vote underscores how difficult it will be to push through reforms with a minority government.

Unions have dismissed the proposed ‌overhaul of the labour code as favouring employers at the expense of workers' rights and have staged two general ‌strikes against it in the past six months. The strife and heated debates around the bill have affected the ruling coalition's popularity as it sank to third place in two recent opinion polls, behind the first-placed Socialists and Chega.

Only the 91 lawmakers from the ruling coalition and ⁠nine members of ​the Liberal Initiative party ⁠backed the bill, with the rest of the 230-seat chamber voting against, including Chega's 60 lawmakers and the Socialist Party's 58. The rejection provoked heavy ⁠applause from union representatives in the galleries.

Prime Minister Luis Montenegro regretted that "the two extremes of the Portuguese political spectrum have joined forces" ​to block the reform, an act he qualified as mere politicking, and vowed to keep trying to ⁠change the labour laws. "Portugal has missed a major opportunity to have a more competitive economy … but we will not give up," he told reporters ⁠in ​Brussels. He said that the government's "convictions and proposals remain intact" and will be brought back at "the right time and in the appropriate way."

The reform aimed to make just-cause dismissals easier, allow companies to avoid reinstating workers ⁠in cases of unlawful dismissal by paying compensation, and lift limits on outsourcing. Chega leader Andre Ventura and Montenegro had been negotiating ⁠until the last minute ⁠but failed to reach an agreement. Ventura was pushing for a gradual reduction in Portugal’s retirement age, aiming to bring it down from the current 66 years and 9 months ‌to 65 — ‌a proposal the government flatly rejected.