Friday

24th Feb 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.

News in Brief

  1. Spanish court jails former IMF chief Rato
  2. Macron proposes Nordic-style economic model for France
  3. Germany posts record high budget surplus
  4. Labour ousts Ukip in Brexit homeland
  5. Dutch lower house approves EU-Ukraine treaty
  6. WTO says Russian pork ban was illegal
  7. Belgian nuclear plant made 'significant progress' on safety
  8. Report: Commission gauging EU support for Poland sanctions

Stakeholders' Highlights

  1. EURORDISJoin the Rare Disease Day and Help to Advocate for More Research on Rare Diseases
  2. European Healthy Lifestyle AllianceStudents Who Are Considered Fit Get Better Grades in School
  3. QS World MBA TourMeet with Leading International Business Schools in Paris on March 4th
  4. Malta EU 2017Economic Governance: Agreement Reached on Structural Reform Support Programme for Member States
  5. Socialists & DemocratsWomen Have to Work Ten Years Longer to Match Lifetime Earnings of Men
  6. Counter BalanceTrans-Adriatic Pipeline Is a Major Risk for Banks, Warns New Analysis
  7. Martens CentreEU and US Migration Policies Compared: Join the Debate on February 28th
  8. Swedish EnterprisesTechnology and Data Flows - Shaping the Society of Tomorrow
  9. UNICEFNearly 1.4 Million Children at Risk of Death as Famine Looms Across Africa and Yemen
  10. Malta EU 2017End of Roaming Fees: Council Reaches Agreement on Wholesale Caps
  11. Nordic Council of MinistersNordic Innovation House Opens in New York to Help Startups Access US Market
  12. Centre Maurits CoppietersMinorities and Migrations