A new ILO study on the future of work in this sector in Portugal will be launched on 14 June, with the presence of the ILO Director-General and the Prime Minister of Portugal. The event will also be attended by the Minister of Labour, Solidarity and Social Security and the representatives of the Social Partners.
The study commissioned, in 2019, by the government of Portugal to the International Labour Organization (ILO) paints a nuanced picture of the sector that highlights the growth in employment and turnover in recent years but identifies a complex set of issues that challenge future growth.
To break this cycle and to protect the sector’s role as a major employer, a coherent strategy of supporting public policies and good will in the industry are needed, to make Portugal an attractive location for decarbonized vehicle manufacturing.
Portugal initially benefitted from a restructuring of the automotive industry that relied on outsourcing and the search for cost saving opportunities in assembly and the manufacture of components, leading to particularly strong growth since the 1990s. The business models of automotive firms in Portugal continue to differ from those of original equipment manufacturers (OEMs) – i.e. the larger brands in their respective headquartering countries. With electrification on the rise, the Portuguese reliance on cost suppression is bound to become less relevant, as the manufacture of electric vehicles is less labour intensive than that of ICE-powered vehicles. This raise concerns as to how changes by OEMs will affect the sector in Portugal.
Some companies have responded with increasing product diversification to decrease their dependency on automotive OEMs. Meanwhile, OEMs demand increasingly flexible production regimes that rely on flexible deployment of labour. In Portugal, this manifests itself in rising numbers of temporary and agency workers, leading to a vicious cycle of wage compression and contract precariousness, which hinders the ability to attract talented and young workers, and weakens industrial relations.
Given the context of high uncertainty within which the sector operates – technological uncertainty, changing environmental regulations and incentives, disruptions in supply chains – the study sketches four potential future scenarios as a basis for the discussion of strategies that may better support the sector in navigating change and achieving better employment outcomes.
In an attempt to steer the sector towards the most favourable scenario, the study details a set of policy considerations to help achieve more favourable ouctomes.
These can be grouped in four main dimensions:
- policies for economic and employment-intensive growth;
- supporting business in navigating the twin transitions;
- protecting workers through facilitation of transitions and social security; and
- fostering social dialogue to navigate uncertainty together, including by managing and embedding technological change at all levels of social dialogue.