Sunday

19th Aug 2018

Portuguese court throws out 'unconstitutional' pay and pension cuts

  • Portugal's supreme court has posed its latest challenge to the government's planned austerity measures (Photo: David Baxendale)

Portugal’s supreme court threw out cuts to welfare and public sector pay in the latest challenge to Pedro Coelho’s government.

In a ruling announced on Friday night (30 May), the court stated that public sector pay cuts worth between 2 and 12 percent, as well as cuts to pensions and welfare benefits were unconstitutional.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The court ruling will not be applied retroactively to cuts which were applied in January, but will come into immediate effect.

"Budget execution has reached half way (through the year) and so these substantial amounts could damage budget consolidation targets," said Joaquim de Sousa Ribeiro, president of the supreme court.

Even so, the decision is set to cost the Portuguese government around €700 million.

The move is the latest in a series of court rulings deeming planned austerity measures to be unconstitutional that have challenged the centre-right government of Pedro Coelho since Portugal was forced to take emergency loans in 2011.

As with previous rulings, however, it leaves the government needing to propose alternative spending cuts or tax rises to make up the lost revenue.

Portugal exited its three-year €78 billion bailout programme at the start of May without requesting any further loans, just as Ireland had done in November 2013.

Despite a successful return to the financial markets, where interest rates on ten year bonds have continued to fall, reaching 3.6 percent last week, the country faces a rocky economic future.

The Portuguese economy shrank by 0.7 percent in the first three months of 2014 after returning to growth in the second half of last year. Despite the setback, it is forecast to grow by 1.2 percent through 2014.

Meanwhile, although unemployment has fallen to 15.2 percent from a peak of 17.7 percent, youth unemployment, at 35 percent, is a long-term structural problem for the Portuguese economy.

Portugal must trim its budget deficit to 4 percent by the end of 2014 and to 2.5 percent in 2015.

The country's debt is also a problem – with the bailout having increased the overall indebtedness from 93 percent of GDP to 129 percent.

For its part, the European Commission will give its verdict on Portugal’s progress on Monday (2 June), as part of an annual report containing economic recommendations for all 28 EU countries.

Although a number of countries remain on the EU executive’s 'watchlist', the average deficit rate has fallen to 3 percent, just inside the limit set by the bloc’s stability pact, and all countries, barring Croatia, are expected to record growth this year.

"After years of focusing on stabilizing the crisis we are now looking at growth," a Commission official commented last week ahead of the report.

He added that the Commission's recommendations would "promote reforms that boost demand and competitiveness".

Opinion

The small price of democracy

The Portuguese constitutional court recently rejected government spending cuts for the sixth time – its judgements should give us all pause for thought.

EU gets record response on 'summertime' consultation

The EU Commission has received several million responses from citizens, businesses, and organisations on whether to end the daylight summertime savings. Any tangible change would take ... time.

Opinion

'Nativism' and the upcoming Swedish and Bavarian elections

Swedes head to the polls in September in a national parliamentary election, while Bavarians vote in October in a state election. In both elections, voters' nativist sentiments may well help determine the outcome.

News in Brief

  1. Germany and Greece strike deal on taking back migrants
  2. Merkel confronts far-right critics: '2015 will not be repeated'
  3. UN: Predictable disembarkation process urgently needed
  4. Slovenia set to select former comedian as prime minister
  5. Polish president to veto election rule helping big parties
  6. MEPs blast UK 'alphabetical approach' on citizens rights
  7. EU hits back over Salvini's blame for bridge collapse
  8. Poll: Sweden's social democrat-led government set to win again

Exclusive

Women shun EU-funded site for female entrepreneurs

Wegate.eu, which received €1.2m in EU money since its launch almost two years ago, has less than a thousand registered users - from a possible target audience of at least 10 million.

Stakeholders' Highlights

  1. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  2. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  3. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  4. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  5. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  6. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  7. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  8. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  9. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  10. Mission of China to the EUChina: Work Together for a Better Globalisation
  11. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  12. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma

Latest News

  1. EU gets record response on 'summertime' consultation
  2. 'Nativism' and the upcoming Swedish and Bavarian elections
  3. Former Malta opposition leader fears for his life
  4. Women shun EU-funded site for female entrepreneurs
  5. Building a Europe more resilient to terrorism
  6. Brexit talks resume as chance of 'no deal' put at 50:50
  7. US trial sheds light on murky Cyprus-Russia links
  8. Burned cars fuel Swedish election debate

Join EUobserver

Support quality EU news

Join us