Impact case study database

Martins’s research has led to policy reforms on collective bargaining in Portugal, Greece and France, which have resulted in more resilient labour markets, saved jobs and aided in economic recovery. Subsequently, the European Commission and the International Monetary Fund applied his research internationally in their recommendations on collective bargaining.

Supporting Economic Growth in Portugal through Labour Market Reform

Martins was Minister for Employment in Portugal between 2011 and 2013. The reforms he instituted have been extended by ongoing employment effects of the collective bargaining policies introduced. The reforms in the collective bargaining system of Portugal promoted greater attention to the representativeness of social partners, contributed to the decentralisation of collective bargaining, and allowed non-represented firms (i.e. firms not members of employer associations) to not have to increase the salaries of their workers at a time of economics crisis. These reforms have had a continued positive impact on the Portuguese labour market during the impact period.

The Organisation for Economic Co-operation and Development (OECD) published studies in 2017 [5.1a, 5.1b] and 2019 [5.1c] that examined the Portuguese labour market reforms based on Martins’s research [3.2, 3.3, 3.5], including the new policy on collective bargaining and their extensions. The reports found that policies restricting extensions of agreements with low representativeness, in contrast to their virtually automatic nature up to 2011, facilitated a stronger link between productivity and earnings at the firm level. This then led to counterfactually higher employment levels [5.1c, pp. 51, 54, 130]. Despite the cost of lower earnings in some cases, the employment gains were particularly important in a context of increasing unemployment driven by a wider macroeconomic adjustment process. The OECD reported [citing 3.2 & 3.3] ‘the Portuguese labour market reforms were a move in the right direction. Since economic growth turned positive again in early 2013, Portugal has experienced significant improvements in both employment and unemployment rates – greater, in fact, than what one would have expected given the pace of the recovery’ [5.1a, p.10].

Martins’s research is cited as evidence that ‘quasi-automatic administrative extensions of collective bargaining agreements in Portugal have harmed competitiveness and employment’ [5.1a, p. 56], and was used to support policy changes in relation to wages and productivity at firm level [5.1a, p. 112]. Following the strong economic recovery, the extensions policy was changed from 2016.

Advising the Greek Government on Policy Change in Collective Bargaining

In 2016, Martins’s research and expertise was instrumental in a decision by the Greek Government to reverse a previous policy favouring the widespread issuing of collective bargaining extensions. As Dr Alfonso Arpaia, Deputy Head of the European Commission’s Labour Market Reforms Unit notes ‘because of his policy experience in the Portuguese Government.... [] and his research record, [Martins] was chosen [by the European Commission and the Government of Greece] as one member of the group of independent experts created to advise the Greek government on the necessary labour market reforms’ [5.2]. The resulting report [5.3 pp. 45-58], used Martins’s research to support the recommendation that collective bargaining extensions should not be issued widely [3.2, 3.3]. This included the relevance of establishing carefully monitored representativeness criteria for the extension of collective agreements and the importance of restricting extensions during periods of high unemployment. In discussions of collective bargaining agreements, Martins’s perspective was significant. The expert's group was split, with a number of members following Martins’s in supporting the continuation of the suspension. Because the decision to reintroduce the extensions needed to be unanimous, this was essential in ensuring they remained suspended.

The Greek government subsequently implemented the recommendations on extensions, which changed their previous policy favouring widespread extensions, to one that ensured extensions were not issued if they did not meet the representativeness criterion proposed in the report. The Deputy Head of the European Commission’s Economic Unit stated that the ‘policy relevance’ of Martins’s research on ‘different fields of labour economics and industrial relations, most notably on segmentation and collective bargaining’ was ‘very effective in dealing with relevant policy questions, including in the context of the work done by above-mentioned group of independent experts.’ Martins’s ability to communicate ‘policy relevant research’ to a ‘non-technical audience’ helped the Greek government in their consideration on necessary labour market reforms [5.2]. These policies have continued to be enforced by the two subsequent governments in power; the suspension policy was extended from 2016-2018, and subsequently reinstated in 2020 in response to changes in the labour market [5.4, pp. 37-38]. According to an OECD report [5.4, pp. 37/38], the suspension was continued for two more years, when ‘The extension and favourability procedures were reinstated when Greece completed the Stability Support Programme in August 2018’ and a number of extensions were issued (‘Fifteen out of 16 occupational and 23 sectoral collective agreements were extended’). The suspension was subsequently reinstated (‘Since then [as of October 2020], no extension of sectoral collective agreements has been signed’).

Informing Reformation of the Labour Code in France

Martins’s research has underpinned a variety of French governmental reports, policy changes and the foundation of new public bodies concerned with collective bargaining reforms [5.6], following invitations to present his findings on collective bargaining [3.2, 3.3] at policy and academic events in France between 2014 and 2018. The invitations were issued by various organisations, including the Ministries of Finance, the Economy and Employment, the Central Bank, the Council for Employment Orientation, and several universities and research centres [5.5].

In 2017, Martins’s [3.2, 3.3] research informed the Government of France’s reformation of the Labour Code, which ‘introduced a number of additional changes in France that can be argued to have been shaped, among others, by Professor Martins’s finding’ [5.6]. This included the requirement that ‘under some circumstances, extensions can only be issued if the underpinning collective agreement contains special provisions for firms that employ 50 or fewer workers (Article L2232-10-1)’ [5.6]. Additionally, it included legally allowing the non-extension of agreements and the greater decentralisation of collective bargaining, particularly in terms of working hours (article 2261/25 of the Labour Code). Martins’s research was cited in official documents issued by the French Government at this time [5.7].

In 2018, the French government created a new public body in the Ministry of Employment, tasked with monitoring the effects of the extension of collective agreements in the country . According to the group’s Chair, Martins’s research directly ‘contributed to the research evidence base that led to the creation of the group’ and his research on the economic and social effects of ‘largely ignored labour market policy’ has continued to inform the group’s work [5.6].

The Competition Authority of France also issued an important report on extensions of collective labour agreements, which has informed industry regulations. Martins’s research in relation to examining these changes within a global economic system on a company/sector specific level, rather than through industry-wide agreements [3.2, 3.3, 3.5], are directly cited in the report [5.7b]. Further to this, following a talk given by Martins’s (and others), the French ‘Council for Employment Orientation’ report that ‘Reforms undertaken […] have therefore helped improve the countries’ cost-competitiveness [5.7a, p. 11]

Contributing to International Recommendations on Labour Reform

Martins’s expertise on collective bargaining led to an invitation to participate in a closed meeting in 2017 with European Commission officials, to discuss a report on social dialogue in the EU Member States [5.5].

In 2017, and 2019, the OECD issued four major policy reports on collective bargaining to its 36 member countries, all of which reference Martins’s research ([5.1a, b, & c], citing [3.3, 3.4 & 3.5]). The reports’ recommendations are consistent with Martins’s findings on the relevance of extensions and their potential negative effects when based on limited representativeness and when issued in recessions.

Similarly, in 2019 the IMF issued a report on labour-market institutions, making several recommendations to governments around the world (and especially developing economies) reflecting the findings of Martins’s research on the ‘adverse employment effects of administrative extensions in both advanced economies and emerging market and developing economies’ [5.8, p. 25]

In 2020, the European Commission launched a proposal for an EU Directive to ensure that the ‘workers in the EU are protected by adequate minimum wages allowing for a decent living wherever they work’ [5.10]. Martins’s research informed the proposal’s sections on collective bargaining, where his findings on the role of positive collective bargaining has been used (among others) to address wage inequality. The proposal’s impact assessment cites Martins’s research in relation to ‘the potential to limit wage inequality by setting common working conditions within sectors’ [5.9, f.n. 131].