The government will create a mechanism to support the incomes of young workers with about 500 million euros from the Labor Compensation Fund (FCT), which will be extinguished, DN/Dinheiro Vivo has learned. The measure, which is part of the Medium-Term Agreement to improve salaries, income and competitiveness signed yesterday by the government, UGT and employers’ federations, is still under study, so not in time for the 2023 state budget approved yesterday in the Council of Ministers. and will be handed over to Parliament today. The measure will only take effect after 2024.
In practice, this means that companies that have contributed 0.925% of base salary to the FCT, which is intended to pay up to 50% of severance pay, can use a portion of the amount of the fund to help support their employees’ income. from the house, a boon that supplements the employee’s income without salary updates. The final version of the Medium-Term Agreement to Improve Income and Productivity has already lifted a corner of the veil on this instrument by stipulating that government, unions and employers will work in concert to convert the FCT “to have contributed to the empowerment of young workers, to bear part of the housing costs”. DN/Dinheiro Vivo knows it will be to pay the rent of the house. That is, home loans are excluded from this subsidy.
The FCT currently has about €600 million in contributions paid by employers, according to calculations communicated to DN/Dinheiro Vivo by the president of CIP – Confederação Empresarial de Portugal, António Saraiva. According to the fund’s latest report, which refers to 2021, the total amount was EUR 585 million. A large part of this amount, about 500 million, will be transferred to the new fund to support the incomes of young workers, but it will also be used to “finance the qualification and certified training of workers”, according to the pact for the four-year legislature signed between the Executive and the social partners, with the exception of the CGTP, which was left out of the agreement because it considered it too insufficient to absorb the loss of purchasing power.
There is also a small part of the FCT, about 50 million euros, with which the Guarantee Fund for Work Compensation (FGCT) is strengthened. This fund will not disappear, like the FCT, but will not receive the usual corporate contributions of 0.075% of salaries for the next four years, between 2023 and 2026, as they are suspended under the income agreement. Social partners and government agreed to maintain this mechanism in case of need to pay severance pay.
The exact amounts of the FCT to be allocated to both the two new mechanisms, which support the hiring and financing of training, and the FGCT are not yet finalized as they will be collectively negotiated in the coming year.
most expensive layoff
The FCT was established in 2013, during the troika period, as required by UGT, as a counterpart to the reduction of severance pay from 30 to 12 days per year of seniority. It will cease to exist from 2023. However, the severance pay for companies will become more expensive, from 12 to 14 days worked per year.
Another novelty of the agreement, which prompted companies to approach the document, concerns the extension of the 25% IRS tax-exempt exemption to the first few hours of overtime for non-resident immigrants who receive the minimum wage. Currently, foreign workers who do not live in Portugal and who receive the minimum wage must deduct 25% from the IRS if they work overtime. This fiscal deterioration hampered the activity of sectors such as construction, industry, tourism and agriculture, where it is increasingly common to employ migrant workers given the lack of labor.
On the corporate treasury side, there are no longer any deadlines for deducting tax losses. Until now, employers were limited to 12 and five years for reporting, whether they were large or medium and small companies, respectively. With this change, the time barrier is removed, but the deduction is limited to 65% of the profit, while it is now 70%. Also in this chapter relief is given this year to micro, small and medium-sized companies, who will receive a 50% discount on the third payment due to IRC of 2022, a response to the demands of employers, who even demanded the end of this tax advance to the is on the cusp of rising energy prices during this period of inflationary spirals.
There was also a significant increase in support for agriculture. For example, agricultural diesel receives a discount of 0.10 euros per liter or 10 euros per 100 liters to absorb the increase in fuel prices. This extraordinary support will take effect this year and will be retroactive to January 1, 2022, meaning that the discount accrued since January will be credited to the green diesel payment card for agricultural businesses.
Source: DN
