Portugal: the farce of successful austerity

Lídia Fernandes and Rita Silva, HABITA, Lisbon
01/07/2015

If someone asked us for a successful case, we say: Greece! 

In fact, the way Greeks are saying no to austerity, facing such as an adverse context and powerful elites’ blackmail, is giving us, in Portugal and all around Europe, the strength TO SAY NO TO AUSTERITY.

When someone says that the austerity program applied in Portugal was a success, it’s important to ask: Whom was it a success for? Who benefited from austerity?

Several austerity programs were applied in Portugal: in 2010, three austerity packages (PEC1, 2 and 3) were carried out by the government in power (from the Socialist Party – PS), but already with strong pressure from European institutions (ECB, EC, Eurogroup) and international (IMF); since April 2011, under a memorandum of understanding, was signed between the EC, the ECB, the IMF, the resigning government (PS) and the then largest party in opposition, the right-wing PSD (Social Democratic Party).

Thus, the first type of effect of austerity was a gigantic democratic setback, similar to the one occurred in Greece, but with a specificity: the memorandum wasn’t discussed in the Portuguese parliament, it was negotiated by a resigning government, conditioning the debate and the elections held in June 2011. The dominant discourse in the media was only allowed to debate proposals compatible with the «commitments» made with creditors – the troika – even they were fairer, legitimate or constitutional. As someone summarized, the “power of non elected” became the rule.

The second type of effect was a huge transference of income from labour to capital.

The austerity program included a set of measures, highly specific and detailed, aiming to devaluate labour, which included: reduction of wages and costs with salaries; dismantling collective bargaining; facilitation of redundancies; reducing unemployment protection and generalization of compulsory schemes.

As a result people are now more poor and vulnerable:

  • It’s estimated that direct and indirect (through taxes) cuts had resulted in reduction of approximately 20% in monthly net salaries between 2010 and 2014.
  • Much less workers are covered by the collective bargaining: in 2010, 1.407.066 were covered by some kind of collective protection of workers rights, but in 2014, only 246.388.
  • Dismissing workers became far cheaper which, coupled with economic recession, resulted in the destruction of 471.700 nearly half a million jobs.
  • In 2014, about 1.2 million people in Portugal were unemployed. Approximately 75% of them hadn’t any kind of unemployment benefit. Also, due to compulsory schemes, many unemployed are forced to work without being entitled to any salary or labour rights. The social situation of the unemployed, notably the long-term unemployed, worsened sharply, leaving them more unprotected and dependent on family support.

In a country marked by a structural poverty – were it’s easy to fall into poverty and very difficult to get out of it – the austerity reversed the tendency for reduction of poverty verified up to that point: in 2013, 27,5% of population was in risk of poverty and, most probably, this figure has increased dramatically, as effects of austerity have been worsening. Poverty affects more strongly young people, children, the elderly and women – especially women being in charge of children, as in mono-parental families.

Gender issues are very critical in a context of strong female activity and wage inequalities but with a conservative background – for example, the right to abortion was achieved very recently (2007) and the conservative sectors attempts to re-launch the issue on the political agenda.

It’s also particularly significant the situation of immigrants and so called “second generation” – many of them born in Portugal but subject to very strong segregation processes and vulnerable to institutional racist violence.

There was a generalization of informal, precarious and very cheap work, at the same time that emigration rose sharply: although there are no accurate data, the most conservative estimates indicate more than 350.000 have left Portugal between 2010 and 2013. Emigration has soared to historical levels.

More and more students abandoned their universities because they can’t afford to continue studying and people don’t have access to the hospital treatments they need. Public education and health systems, a critical element for fighting inequalities and developing the country after the 1974 Revolution, have been suffering an unprecedented attack.

Thousands of families are loosing their homes every year. Evictions are rising, with the new law that liberalized the rental market.

Finally, the austerity programme includes an unprecedented privatization program, which weakened the collective resources and public control in strategic sectors of the economy.

We sold every successful public company to national and foreign elites: the energy, the airport, the air company, cultural assets, the post, the last insurance company, the metropolitan, bus and train railway (in the process), the water, etc

So, looking at the facts, it’s not difficult to see that the tale, repeated to exhaustion, about Portugal’s austerity success story is a farce or, at the very least, biased: it is the elites that profited from austerity in Portugal – not the common people, the workers, the more vulnerable or even democracy.

If someone asked us for a successful case, we say: Greece!

In fact, the way Greeks are saying no to austerity, facing such as an adverse context and powerful elites’ blackmail, is giving us, in Portugal and all around Europe, the strength TO SAY NO TO AUSTERITY.