Saturday

24th Feb 2018

Portugal in crisis after 1mn say No to austerity

  • Lisbon protests: 'Politicians are thieves, give us back the hope' (Photo: Pedro Ribeiro Simoes)

Portugal is facing a massive backlash against troika-approved austerity measures to raise social contributions for employees.

Portuguese President Anibal Cavaco Silva is on Friday (21 September) to convene a rare meeting of the state council in a bid to defuse a political crisis linked to the controversial measure.

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.

Over 1 million people took to the streets of Portuguese cities on Saturday in protest at moves to boost social contributions from 11 percent to 18 percent for workers and to lower them from 25 percent to 18 percent for companies.

The change would de facto slash one months' worth of salary a year for each and every employee. Employers are also to be given more leeway to fire people.

Trade unions, the Socialist opposition and the junior partner in the centre-right government coalition have all come out against the measure, part of a package of cuts agreed with the troika of international lenders in return for an extra year for Lisbon to meet its deficit targets.

"This measure completely ruins the political consensus that was behind the bailout programme," Ana Gomes, a Socialist Portuguese MEP told this website.

She blamed the government for tabling the moves, but also the troika for accepting them in the teeth of public feeling.

The scale of the popular resistance came as a surprise, with fellow bailout country Greece normally the one in the headlines over anti-asuterity street protests.

"It is not the fault of the Portuguese, they have accepted everything so far. The troika wanted to show Portugal is a good pupil, compared to Greece, abiding by the book. But the problem is that the book is wrong. Austerity is killing the economy," Gomes aded.

In her view, Portugal should be given even more time to pay off its debt and the interest rate on its loans should be lower.

Currently, small enterprises are paying 5-6 percent interest rate even though banks get the loans from the European Central Bank at one percent.

If the stand-off continues, eurozone finance ministers meeting in Luxembourg on 8 October could in theory delay the payment of the next tranche of Portugal's €78 billion bailout.

"Protests and recent developments are a bit odd as they are in contrast to the latest troika decision to give Portugal an additional year to adjust," said Carsten Brzeski, an economist with ING Bank.

"Portugal is not the next Greece but the dire economic outlook won't make the required adjustment any easier. The latest developments show that the recent calm in the euro-crisis will not last forever and that eventually the destiny of the eurozone is in the hands of governments and voters," he noted.

Opinion

Greek government's steady steps to exit bailout programme

Growth predictions are positive, exports increasing, unemployment dropping and credit-ratings up, says the head of Greece's Syriza delegation to the European Parliament. Now the government in Athens is looking to design its own reform programme.

Analysis

We are not (yet) one people

Talks on the next EU budget will start on Friday. Brussels wants to do much more than before – and needs a lot more money. But arguing about funds won't be enough.

News in Brief

  1. EU calls for immediate ceasefire in Syria
  2. UK's post-Brexit vision is 'pure illusion', Tusk says
  3. EU leaders express solidarity with Cyprus in Turkey drill row
  4. EU to double funding for Sahel forces
  5. EU parliament president: 'The immigration problem is Africa'
  6. May to unveil EU departure strategy next week
  7. Pregnant workers may be dismissed, EU court rules
  8. Romanian minister demands anti-corruption prosecutor fired

Stakeholders' Highlights

  1. ILGA EuropeAnkara Ban on LGBTI Events Continues as Turkish Courts Reject NGO Appeals
  2. Aid & Trade LondonJoin Thousands of Stakeholders of the Global Aid Industry at Aid & Trade London
  3. Macedonian Human Rights Movement Int.European Free Alliance Joins MHRMI to End the Anti-Macedonian Name Negotiations
  4. Mission of China to the EUChina-EU Tourism Year to Promote Business and Mutual Ties
  5. European Jewish CongressAt “An End to Antisemitism!” Conference, Dr. Kantor Calls for Ambitious Solutions
  6. UNESDAA Year Ago UNESDA Members Pledged to Reduce Added Sugars in Soft Drinks by 10%
  7. International Partnership for Human RightsUzbekistan: Investigate Torture of Journalist
  8. CESICESI@Noon on ‘Digitalisation & Future of Work: Social Protection For All?’ - March 7
  9. UNICEFExecutive Director's Committment to Tackling Sexual Exploitation and Abuse of Children
  10. Nordic Council of MinistersState of the Nordic Region 2018: Facts, Figures and Rankings of the 74 Regions
  11. Mission of China to the EUDigital Economy Shaping China's Future, Over 30% of GDP
  12. Macedonian Human Rights Movement Int.Suing the Governments of Macedonia and Greece for Changing Macedonia's Name

Latest News

  1. EU agrees budget to focus on defence, security and migration
  2. EU leaders nix transnational lists, cool on 'Spitzenkandidat'
  3. Regions chief: calls for smaller EU budget are 'impossible'
  4. Election fever picks up This WEEK
  5. EU-Morocco fishing deal casts doubt on EU future foreign policy
  6. EU leaders put 'Spitzenkandidat' on summit menu
  7. European far-right political party risks collapse
  8. The key budget issues on EU leaders' table