After a harsh recession and unemployment figures reaching 14% in Portugal, the Portuguese Government endeavours to cut costs, but is likely to need bailout.
After a harsh recession and unemployment figures reaching 14% in Portugal, the Portuguese Government has been working hard to cut costs.
The measures have included agreements with Unions and employers to cut holidays and the amount of compensation awarded when a worker is laid off, making it easier to hire and fire staff. This has won the Government praise from the so-called ‘troika’ (a term used to refer to the presence of the European Union, the European Central Bank and the International Monetary Fund) and has resulted in Portugal receiving their bailout payments with far less difficulties than Greece.
However, this has not come without a cost; steep cuts have hit public sector workers particularly hard resulting in a drastic reduction in their income. Mass protests have erupted to oppose the Portuguese Government’s measures, with a general strike planned for March.
Nevertheless the country has passed the most recent review of spending and economic reforms, meaning that they have qualified to receive an economic bailout worth £12 million from the ‘troika.’
Despite this, things are predicted to worsen for Portugal. The Government have revised their prediction that the economy will contract by 3% in 2012 to 3.3% instead. Economist Diego Iscaro, of IHS Global Insight, has voiced that Portugal is likely to need a second bailout before the year ends.