Portugal: The long and painful path of austerity

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

If the conclusions from the last EU summit refer to the “social challenge” of unemployment, the European Commission can now be considered the more realistic of EU institutions in referring to a “social crisis,” writes Klaus Heeger.

Klaus Heeger is secretary-general of the European Confederation of Independent Trade Unions (CESI).

"László Andor, Commissioner for Employment, Social Affairs and Inclusion referring to the Quarterly Review, which shows unemployment rising further, comments: “The social crisis in Europe keeps worsening and in a number of Member States there is no tangible improvement in sight.” The latest headlines, with regard to Portugal, confirm this outlook.

Portugal´s economy remains in recession with its economy expected to shrink by a further 1.9 % in 2013 – and this against the background of rising unemployment, an increasing public deficit and a rise in the government’s overall debt.

The current figures are particularly frightening: since 2008 the overall government debt has risen from a little more than 70% to 120% as a percentage of GDP, with a further increase predicted for 2013 and 2014.

Compared with a year ago, the overall unemployment rate has increased further in Portugal (from 14.7% to 17.6%) with the youth unemployment rate reaching almost 40%.

Although the public deficit is expected to decrease in 2013 and 2014, a more devastating combination can hardly be imagined: high government deficit, major unemployment, in particular with regard to youth unemployment, and economic recession.

This time last year, I wrote an article criticising “the vicious circle” of austerity and its impact in Portugal. One year on, we see the same policies and the same problems. In this case, I would have liked to have been proven wrong.

What future is there for a country whose citizens do not have jobs and whose young elite are emigrating? What hope is there for the Portuguese citizen if he or she knows that there will be no new employment opportunities in the coming years?

Furthermore, knowing who is accountable for these (difficult) decisions is particularly important. The Portuguese government however is pointing the finger at the austerity measures imposed by the Troika. Yet those responsible are no longer there when the measures take effect; and when the frustration over the ongoing recession and unemployment unloads in the streets.  

If, in the eyes of the jobless citizen, the EU´s only answer to the crises (or the Troika´s for that matter) lies in cutting employment benefits and vital health and education services, it does not come as a surprise that this may lead to the rise of anti-Europeanism. The facelessness of the decision-makers in particular leads to a feeling of total helplessness among citizens.

The events unfolding in Cyprus over the last few weeks do the EU no favours when it comes to confidence and hope. Citizens´ trust and confidence in the EU is understandably damaged when fiscal proposals which target workers´ savings are made. The recent Cypriot case adds fuel to the fire of distrust in the EU´s ability to act across other affected countries – such as Portugal.

In this regard, pressure is mounting on many fronts. A report published this week by the ILO reveal a sharp increase in the risk of social unrest in following these austerity measures. Independent reports such as these should be considered carefully. 

In addition to this report, this week´s development has seen the Portuguese Constitutional Court ruling out certain aspects of the latest proposed austerity measures. The €1.3 billion cuts to this year´s budget were deemed unconstitutional on the basis that the burden of cuts was unfairly distributed, with too much of the burden being weighted on the shoulders of public sector workers. 

With public servants´ pensions and salaries now safe from cuts, alongside unemployment and sickness benefits, there is a glimmer of hope for public administrations across Europe. Further to this, a Commission statement released this week reveals its commitment to working constructively with the Portuguese authorities to alleviate the social consequences from the crisis.

However, at the same time, the Commission is reiterating its support for the Portuguese government in remaining committed to the adjustment programme. The Portuguese Finance Minister has also stated that the Troika will be returning for a special visit before the end of April, far earlier than the expected May visit. 

This feels like a departure from Commissioner Andor´s position at the end of March following the Quarterly Review: “Governments need to invest in order to find the way to inclusive growth and to give people a real chance to make a decent living.”

In continuing down this path, the vicious circle continues, becoming ever more damaging. In the past year, a social challenge has developed into a social crisis. The EU and its Member States cannot afford to sit and wait for the next stage."

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