New employment incentive to counteract social tax rise

A new employment incentive that will come into effect in October is expected to cover 110,000 newly-signed contracts over the coming year, said the Minister of Solidarity, Employment and Social Security Pedro Mota Soares.

The move is expected to counteract the impact the single social security contribution, Taxa Social Única (TSU), will have on businesses as it will rise from 23.75% to 24.75%, affecting companies that hire workers after October 1, 2013.

This social contribution, paid for by companies, will ensure the financial stability of two new workers’ compensation funds that will secure compensatory payments in the event of dismissals.

However, with the new employment incentive, companies will be receiving financial support from the State equivalent to the value of the social contribution rise, which is 1%.

“We believe that this measure, which is financed by €25 million of EU funds, will have an impact on 110,000 labour contracts in 2014,” said the minister. “It is a very important incentive at a time when signs of slowly growing employment are surfacing.”

Portugal’s Trade Confederation (CCP) and Industry Confederation (CIP) support the measure and the president of CCP reiterated that companies were in no condition to bear the rise of the TSU.

CGTP (General Confederation of National Workers) leader Arménio Carlos, however, contested the incentive and said that EU funds should be used to stimulate “quality employment”.