The Labour Crisis in Portugal

on 9:53 pm

Avoid the crisis, rent this lovely T0
Unless you have been living in a cave for the past few years (which is likely given the rising housing prices and rent in recent years), you know that Portugal has been going through tough times as of late.

 While creating employment was one of the proposed solutions of the former government to avert the current financial crisis, with programs being created as early as 2008, the unemployment rate, especially amongst the younger generation, is at an all time high of 28.1% as of May, according to the latest Eurostat figures.

We wouldn't have know, if were not for the sign...

The Portuguese government, due to the concessions imposed on it, has been announcing new austerity measures every day, many of these focusing on employment and labour legislation.

The new government has stated that they are planning to change current labour laws, making them more flexible in order to enhance the ability of employers and big business to respond to the financial crisis. With a more flexible labour force, employers can respond to peaks and lulls of consumer demand more dynamically, cutting costs and improving efficiency. Even before the financial crisis, many international corporations criticised Portugal as a tough market to establish a business, precisely due to the protectionist labour laws.

Unfortunately, what these changes entail is facilitating layoffs and dismissals of employees, leaving them with very little protection or rights. The government plans to eliminate the figure of temporary contracts and make probation period more flexible. Consequently, changes will be made to the legal regime of permanent contracts, reducing them to a figure comparable to the “at will” employment regime of many US states, where either part can rescind or terminate the contract without cause. Apparently, the objective here is to make every workplace in Portugal a temp agency.

The beaver of justice has a nice ring to it
They have also proposed cutting employer social security contributions, meaning that employees will endure the brunt of social security contributions, in order to make the Portuguese market more attractive for companies by reducing their costs. They have also announced tax breaks to large business, while hiking the taxes of the workers.

As a result, they are also planning to cut unemployment benefits, since, as a direct result of lowering of social security contributions, the current system of benefits will be (not to say already is) unsustainable. Pensions will also be cut and a ceiling imposed.

The conjugation of all of these proposed changes makes for a grim future for the Portuguese worker. Frankly, I am surprised at the lack of popular reaction to these measures, compared to what we see in Greece.

How long until this is downtown Lisbon?

On the other hand, Portugal is the title holder of the world’s largest “arroz de lapas”, so at least not everything's bad.

Rice is nice.


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