Thursday

29th Jun 2017

EU 'surprised' by Portugal's unemployment rate

  • Lisbon: The EU commission is pleased with the government's austerity measures (Photo: Valentina Pop)

The EU commission on Tuesday (3 April) praised Portugal for its austerity measures and said unemployment benefits had to be further cut even though the percentage of jobless people was "surprisingly" higher than expected.

"The budgetary adjustment is currently on track and it is likely for the Eurogroup to say yes to the fourth disbursement (of bail-out money)," said Peter Weiss, an EU commission official part of the 'troika' of international lenders overseeing the reform process in Lisbon.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

"Overall compliance with the programme is very good," he said, noting that the Portuguese government has implemented 110 out of the required 130 measures attached to a €78 billion loan granted last year. The money is being paid out in tranches of some €15 billion each, if troika inspectors say Portugal is on track and eurozone finance ministers (Eurogroup) agree.

Weiss said that Lisbon's budget cutting measures - amounting to 7.5 percent of the gross domestic product in only two years - was "enormous and very ambitious" and that there was nothing left for the government to do outside this programme in order to regain market confidence.

But because of strong trade relations with Spain, whose economic outlook is worsening and because markets are hard to predict, Portugal may still face troubles ahead, he warned.

Its government should be able to borrow directly from the markets in 2013, but its borrowing costs remain much higher than Ireland's, considered the A student among bailed-out eurozone countries.

However, Weiss strongly rejected the idea that Portugal may need a second bail-out like Greece. The only 'adjustment' that could be considered later this year is an Irish-inspired bond repayment scheme allowing the government to postpone the deadline of when it has to pay in cash.

'Surprising' unemployment

The EU commission remains convinced that the harsh austerity measures will eventually bring Portugal back to economic growth.

Eurostat figures released on Monday, however, showed that 15 percent of Portugal's labour force was officially unemployed in February, one percent higher than what the troika had reckoned with. And over 35 percent of Portuguese under 25 years of age were unemployed, an increase of almost ten percentage points compared to the same period last year.

"We have seen the figures and were a bit surprised by the rapid rise in the last quarter. We still have a bit of difficulty in interpreting the figures, it may be that seasonal factors were not taken into account properly," Weiss said.

He also speculated that people may have been laid off in bigger waves in the past few months, as labour reforms are kicking in, cutting back some of the redundancy benefits.

The centre-right government led by Pedro Coelho has to stick to the benefits-cutting measures agreed last month and go further still by "cutting unemployment benefits for some groups with preferential treatment," the official said.

A one-day long general strike was held last month against the labour reform which will curb holidays, decrease compensation for overtime work, and lower the amount of money received when being fired.

Restrictions to individual dismissals and working time flexibility are also part of the package. The commission hailed all these measures as "good progress", while Portuguese trade unions warned they are "killing the welfare state."

Eurozone unemployment hits new record

Eurozone unemployment reached 10.8 percent in February, the highest level since the currency was introduced in 1999. Youngsters remain the most affected, with every second Spaniard under 25 unable to find a job.

Lisbon, troika agree details of €78bn bail-out

Portugal's caretaker administration has reached an agreement with the troika of the European Commission, the European Central Bank and the International Monetary Fund for a three-year €78 billion bail-out.

EU mulls post-Brexit budget options

EU seeks novel ways to plug a Brexit-based budget hole of up to €11 billion, but income from fines, such as the one on Google, cannot be relied on.

EU approves rescue of Italian banks

The European Commission gave the green light to a €17-billion plan by the Italian government to save Banca Popolare di Vicenza and Veneto Banca.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Stakeholders' Highlights

  1. EU2017EEGet the Latest News from the 2017 Estonian EU Council Presidency @EU2017EE
  2. International Partnership for Human RightsEU-Kyrgyzstan Human Rights Talks Should Insist on Ending Reprisals Against Critical Voices
  3. European Free AllianceEFA Is Looking for a New Intern
  4. Malta EU 2017Conservation of Atlantic Tunas: International Measures Become EU Law
  5. European Healthy Lifestyle AllianceCan Statin Therapy Interfere With a Physically Active Lifestyle?
  6. EPSUOn Public Services Day, Stop Austerity! Workers Need a Pay Rise!
  7. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  8. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  9. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  10. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  11. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  12. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million