Social convergence, development failures and industrial relations: The case of Portugal

The Dutch polder model has practised secular moderation of bargained wages – 25 years’ standstill of purchasing power. Regulatory capture let the minimum wage lag behind and lowered the lowest wage scales, increasing wage inequality. This combined with strong employment growth – mostly in part-time jobs, often low paid and insecure. The household employment rate remained stagnant as single-earner and dual-earner households traded places. The frequent association of higher with lower earnings within dual-earner households mitigated the effects of wage inequality on household income inequality for the persons involved, but also increased inequality as it lifted many of these households higher up the distribution vis-à-vis other households. More than half of all actual aggregate wage growth has accrued to the top decile of the income distribution. Dual-earner world households’ joint access to jobs and working hours adds an essential dimension to income inequality that the polder model has missed.