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Press Release on holiday and Christmas subsidies at Banco de Portugal

Following the request of 11 January 2012 lodged by Mr. João Pinho de Almeida (member of Parliament for the CDS-PP party), and without prejudice to the fact that the requested information is already fully or partly reflected in the further clarifications on Banco de Portugal's salary containment measures in 2012, issued by the Board of Directors on 13 January 2012, the following letter of reply was sent today:

1. Banco de Portugal’s statute as national central bank and the principles governing the relationships between central banks and their national authorities, notably the principle of central banks’ independence and the prohibition of their financing of the state and public sector, establish that the European Central Bank (ECB) shall be consulted by national authorities on any draft legislative provision in its fields of competence, including human resources management.

In accordance with the opinion issued by the ECB in November 2010 and requested by the Portuguese Parliament (CON/2010/80), the State must refrain from imposing wage or any other restrictions on the central bank, where they take away its powers of internal organisation or impair its ability to employ or retain qualified staff as deemed necessary for a proper performance of its tasks within the European System of Central Banks (ESCB). According to the said ECB Opinion, to safeguard this objective, any measures affecting the central bank must only be approved by legislative bodies after close cooperation with the central bank.

2. The State Budget Law for 2012 (Law No 64-B/2011 of 30 December 2011) did not establish that Banco de Portugal would have to apply the public sector employee remuneration provisions, including the provision on the suspension of the holiday and Christmas subsidies. By not including Banco de Portugal in the scope of the public sector employee remuneration provisions, the State Budget Law for 2012, similarly to that for 2011, has chosen to entrust Banco de Portugal with the responsibility of defining, in the exercise of its independence, the measures deemed necessary to bring the Bank’s remuneration policy into line with the social and economic environment of which it is part. However, certain constraints flow from this that Banco de Portugal must abide by, while acting in accordance with the law.

3. Banco de Portugal had already expressed its commitment in early 2011 to follow the salary containment effort in the public sector, by adopting the measures deemed necessary for that purpose. It did not do so to contribute to budgetary consolidation via the maximisation of financial results, given that this management criterion is prohibited under ESCB rules, but to comply with a principle of solidarity that it sees as its duty. However, in defining a salary containment policy for itself, Banco de Portugal may only use instruments that are compatible with the (individual and collective) contractual nature of the relationships with its employees and the rules governing these relationships.

4. The salary containment measures chosen for 2011 and 2012 were subject to the legal framework governing Banco de Portugal, which is bound by the Labour Code and the collective bargaining agreements in force, and not by the Budget Law. This notwithstanding, Banco de Portugal has decided to implement wage remuneration containment and benefit reduction measures in 2012 leading – on a general and comparable basis – to an equivalent effect to that arising from a suspension of the holiday and Christmas subsidies of its staff. The Directors of the Board of Banco de Portugal have chosen to forego these subsidies in 2012.

5. It should be noted that since Portugal joined the euro and Banco de Portugal was integrated into the Eurosystem, the Bank’s areas of intervention have been widened, and the qualification requirements of its staff have become more stringent. Despite the extension of tasks, Banco de Portugal has progressively reduced its staff. The number of staff members went down from 1,826 (end-1999) to 1,689 (end-2011). The latter figure already includes the recruitment drive under the organisational restructuring for the Bank’s new tasks in banking supervision. Optimisation and rationalisation of human resources is hence an objective pursued at the Bank, culminating with the adoption of a series of containment measures with structural repercussions on personnel costs last year. From a multi-annual standpoint, the trend of personnel expenses from 2005 to 2011, in which the number of staff remained generally stable, clearly illustrates the results of this salary containment policy. Costs in this period declined by around 4.5% in nominal terms, representing a decline of around 17% in real terms.

6. It was never the intention of Banco de Portugal to circumvent the efforts implied by the State Budget Law, much less use the principle of independence for that. However, Banco de Portugal cannot accept responsibility for a salary decision that it cannot legally make.

7. Pursuant to this principle, as an autonomous institution Banco de Portugal is prepared to decide on the suspension of the holiday and Christmas subsidies of its employees, in similar conditions as those applicable to the public sector, so long as the competent authorities consider the possibility, after due consultation with the ECB, of adopting legislative provisions authorising it, by way of derogation from the obligations provided for in the employment law and the relevant collective bargaining agreements. Banco de Portugal is thus fully open to defining such solutions, as an alternative to the previously mentioned measures of equivalent effect.

Lisbon, 27 January 2012