Portugal drops extended working day, agrees other reforms

(LISBON) - Portugal dropped plans Tuesday to extend the official working day, abandoning a key labour reform aimed at helping jumpstart an economy hit hard by the eurozone debt crisis.

After 17 hours of tense negotiations with unions and employers, the government of Prime Minister Pedro Passos Coelho gave way on adding 30 minutes to the private sector working day, a measure seen as boosting the country's competitive position.

In exchange, however, the government secured agreement on other reforms, including the cancellation of four public holidays, the reduction of annual holidays by three days and the easing of rules on working hours.

Economy Minister Alvaro Santos Pereira said the deal was "important for the image of the country.

"After months of intense negotiations, the country now has an agreement that reinforces the national economy's competitive standing," the minister said.

Portugal's two biggest unions, meanwhile, split sharply on the deal.

The UGT, the second largest in the country, approved the agreement while the country's largest union, CGTP, broke away early from the talks.

The measures are part of a tough austerity programme launched after Portugal was bailed out in May last year with a 78-billion-euro ($100-billion) rescue package put together by the European Union and the International Monetary Fund.

In November, the Portuguese parliament adopted a tough austerity budget for 2012 that cut salaries, raised taxes and was to increase working hours for vast numbers of workers already squeezed by recession.