where yi refers to the result variable of interest, e.B. the rate of employment growth between 2010 and 2011 in all collectively agreed companies i, di is a dummy of equal treatment to one when an agreement i is extended in 2011, and nowhere else (in practice, this means that the dummy assumes zero from 1 March, Since 2011), f (.) is a function that controls the independent effect of relative time t on both sides of the threshold T (i.e., the number of weeks before or from the time threshold), and Xi is a series of controls (see Section 3.3).8 We note that the retroactive effect plays a potentially important role in explaining the negative effects of renewals on employment in unaffiliated companies (Table 5b). The degree of retroactive effect is measured by the number of days between the date of entry into force of the collective agreement between affiliated companies and the date of publication of the extension to unrelated companies. The negative average treatment effect reflects the impact of extensions on the change in employment growth for the typical administrative delay (180 days). The interaction of the treatment effect with administrative delay gives the effect of a one-day increase in administrative delay on the change in the rate of employment growth after an extension. This is negative for unaffiliated companies, while it is insignificant or even positive for affiliates. The difference between affiliates and non-affiliates is consistent with our discussion above, as retroactive effect should directly affect unaffiliated companies, while it can indirectly benefit affiliates by reducing competition from unaffiliated companies. However, an isolated examination of a firm`s employment level can be misleading, as workers can let declining firms work in growing firms, which would leave overall employment intact. On the other hand, flows from unemployed employment indicate that an extension of a collective agreement will have an impact on workers` incomes in the medium term. In addition, the interests of workers are workers whose wages are close to the new minimum wage set in the extension of collective bargaining – workers whose collective remuneration agreements must be preserved. In the 2000s, Portugal experienced low growth, a decline in international competitiveness and a deepening of macroeconomic imbalances (Blanchard, 2007).

As a result, the country has had to face the global financial crisis in an already fragile situation. The global financial crisis led to a sharp increase in public deficits and the loss of market access in a context of sudden halt in capital flows, which led to a request for financial assistance addressed in April 2011 to the European Union, the European Central Bank and the IMF. Financial support was provided, which depended on several structural reforms and adjustment measures. Given the potential importance of adjusting real wages to minimize job losses and concerns about the role of collective bargaining, structural reforms have also included measures to extend collective agreements to unaffiliated enterprises. In addition, the new government`s decision to suspend the renewal of collective agreements was unexpected and therefore could not have been foreseen by unions and employers` associations conducting collective bargaining (a process that can take six months or more). In fact, in February or even March 2011, there was no public information about the April 6 bailout, the May 17 bailout, and the June 5 elections (unexpectedly since a full legislative term would not end until 2013), nor about the new extension policy introduced by the government that took office on June 21. It is therefore not surprising that extensions have been at the heart of recent policy reforms in southern Europe. .