Tuesday

24th Apr 2018

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.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

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.

Macron and Merkel pledge euro reform

France and Germany have pledged to forge a joint position on euro reform by June, despite German reluctance on deeper monetary union.

News in Brief

  1. Far-right attack migrants on Greek island
  2. Merkel defends accepting UN refugees
  3. EU commissioner plans Malta 'money laundering' inspection
  4. Survey: Half of high polluting farms receive CAP subsidies
  5. Commission will 'not shy away' from Malta killing repercussions
  6. EU Commission opens probe on Alitalia state loan
  7. Paris suspect given 20-year sentence for Brussels shoot-out
  8. Merkel and Pena Nieto praise EU-Mexico trade agreement

Stakeholders' Highlights

  1. Nordic Council of Ministers12 Recommendations for Nordic Leadership on Climate and Environment
  2. Macedonian Human Rights MovementOxford Professor Calls for an End to the Anti-Macedonian Name Negotiations
  3. ACCAPeople Who Speak-Up Should Feel Safe to Do So
  4. Mission of China to the EUProgress on China-EU Cooperation
  5. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  6. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  7. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  8. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  9. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  10. UNICEFCalls for the Protection of Children in the Gaza Strip
  11. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  12. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight

Latest News

  1. Juncker delays air quality action due to busy agenda
  2. Spain makes bid for EU anti-pirate HQ
  3. How Russian propaganda depicts Europe - should we worry?
  4. MEPs tell Chinese ambassador of concerns on trade
  5. Greenland votes with eye on independence
  6. EU court delivers blow to anti-abortion activists
  7. Hungary activists defiant after 'Soros Mercenaries' attack
  8. European Commission proposes whistleblower protection law