The Guardian 28 September 2012
We have reached the limit. People are tired of making sacrifices because you don’t see any improvement whatsoever. Quite the opposite.” Marina Padeiro, 36, is one of Portugal’s estimated 1.3 million unemployed – a number that has shot up in the past year and a half, as a result of the stinging austerity measures imposed on the country in exchange for a €78bn (£62bn) bailout.
Sitting in a café in the northern industrial belt of Lisbon, she shrugs. “If there was some sort of hope you may see a decent future … the problem is they are not showing it to us.” Her father, a retired lorry driver, says the evidence is on the streets. Out here – far from the capital’s pretty, cobbled centre, which still attracts tourists – shops are closed up for good, or open only sporadically.
Marina has been out of work for three years. In 2009, the insurance company she worked for said it would not renew her contract “because of the crisis”, one month before she gave birth to her second child. “It was like taking the carpet from under my feet.” The family now gets by on €600 a month, their diet supplemented by carrots, onions and fruit from her father’s allotment.
She is not the only one to have reached her limit. Two weeks ago, hundreds of thousands marched in the streets of Lisbon and other cities across the country, in the biggest protest since the end of the dictatorship in 1974. The demonstration forced the prime minister into an embarrassing U-turn over social security reform – one of the first times a government tied into austerity as part of a bailout programme responded so decisively to popular revolt.
On Saturday, demonstrators will gather again to march against the spending cuts they believe have pushed their country deeper into recession. Meanwhile, workers have downed tools in protest over changes to working regulations. At Lisbon’s usually busy port this week, the cranes were still, the containers stacked high and the lorries parked up, as dock workers staged one of a series of strikes taking place over a five-week period. Graffiti around the town calls for an end to the cuts, a general strike, and even revolution.
The Portuguese are seen to be mild-mannered and accepting compared with their hot-headed Spanish neighbours but, as one trade union veteran noted drily: “We had a revolution, the Spanish had a transition from dictatorship.”
Pedro Marques, a politician in the opposition Socialist party, sits on the cross-party budget committee and works with the “troika” – the European Central Bank, the EU and the International Monetary Fund – that bailed out Portugal on condition that it follow a strict programme of budgetary discipline. He wonders how they will respond to the protests in the country previously held up as a poster child for austerity.
“We had that huge demonstration but a week after you had the demonstration in Spain where everyone was arrested. I don’t know what impresses the troika more, what is more a sense of despair. We are calm, we abide by the law, but 1 million people in the streets, it is 10% of our population. If they don’t see this is a country rising against this approach, what kind of message do we have to give?”
The number of protesters is disputed but, in many ways, the message from Portugal could not be clearer. The rightwing coalition imposed austerity with almost religious zeal. It cut wages, raised taxes, privatised state-owned companies and overhauled labour laws. But still the deficit stays stubbornly high, while the country has sunk into the worst depression since the 1970s.
Many of the measures simply backfired. In January, for example, the government raised VAT in restaurants from 13% to 23%, hitting sales and therefore tax revenues almost immediately. What was previously a regular outing for many became far too expensive for a population that had seen its wages cut. Restaurant owners can now be seen staring mournfully out of empty glass-fronted dining rooms as potential customers hurry past.
Local manufacturers also suffered. Portuguese companies sell almost 70% of their goods to domestic consumers, many of whom no longer have the money for non-essential items. As companies went bust or sales slumped, so did the government’s tax receipts.
But the rise in unemployment has been the most shocking. Official figures put the jobless rate at 15.7% but that only accounts for those registered with job centres. Portugal’s largest union, the CGTP, says many have given up looking for work and the jobless rate is over 20%, or 1.3 million. That puts a further strain on the public finances, as those who have never been on benefits before become reliant on the state. As a result, many of the savings made through austerity have been wiped out. What’s more, Portugal is far from growing its way out of the deficit, with the economy expected to shrink by 3% this year, and another 1% next year.
Marques says: “It’s so clear now. In the case of Greece they said that they were not fulfilling their responsibilities. In Portugal they say that we are fulfilling them, but the recession is here anyway. So it is not a problem of the way [austerity is imposed], it is also a problem of the general approach.” His Socialist party signed up to the troika agreement but says it would implement it less harshly and would promote growth at the same time. Marques admits it is a good time to be in opposition.
Even outside the mainstream political parties, few are calling for Portugal to default on its debts and drop out of the euro. Over at the offices of the CGTP, there is a buzz ahead of the demonstration. The phones are down and email is not working. “This always happens before a big protest,” says one member conspiratorially.
Augusto Praça, international secretary of the union, explains their position. “If you put the question to leave or not to leave the euro, you don’t resolve the problem.” He says it is a false choice facing the Portuguese, the equivalent of asking someone if they want to die this way, or that way. “You say no, I don’t want either. In this crisis, I think there is another way that they are not putting on the table.” The CGTP has proposed a package of measures to increase taxes on capital, rather than employees. One of its suggestions is a financial transactions tax of 0.25%, which it says would raise €2.38bn a year.
Praça seems to epitomise the Portuguese reserve. Although apparently a firebrand union leader, he is softly spoken, with a calm, determined manner. The only time he shows a flash of anger is when asked if he feels sorry for the prime minister, Pedro Passos Coelho. “He is a liar,” he retorts. “He promised many things he didn’t do. He wouldn’t raise taxes, wouldn’t change salaries, wouldn’t create any VAT increases. Nobody believes him today.”
There is a sense of complete distrust in politicians from across the political spectrum. During the protests, people chanted “thieves” at the presidential palace and a taxi driver joked that he would take me to “where the burglars are”, when asked for the parliament building.
Tucking into a plate of sushi in a restaurant opposite the gleaming white Assembleia da República, Marques agrees that people are fed up with politicians. “It is a worrying situation, of course. I think that people elect politicians to get their problems resolved. And for about a decade people have seen almost no positive result from political activity. It is too much time with no clear response to their problems.” But he hails the fact that Portugal has no real far-right party. The extreme left, although strong, is some way from gaining power.
For the time being, it seems that Passos Coelho has averted a political crisis by ceding to the demands of the last protest. The demonstration was triggered by a badly thought-out, badly communicated policy, which met with almost universal opposition. Passos Coelho had proposed to raise employees’ social security contributions from 11% to 18% of salaries – equivalent to the loss of a month’s pay each year – while cutting the same tax for companies by almost 6%. The idea was to cut employers’ costs and make them more competitive. But it was a gift to the unions who immediately claimed the government was “robbing workers to pay their bosses”.
Even the employers’ federations opposed it, saying it would damage morale and further strangle the economy. Sérgio Silva, 41, who runs his own taxi company, put it bluntly. “If this happens, my worker says, ‘Boss you are very lucky, now you will go to the whorehouse with my money.’ But actually my clients will disappear.”
The question now is whether that protest marked a line in the sand; whether this is the point where the mild-mannered Portuguese say enough is enough. Back in Vialonga, Marina’s father thinks, if it has not arrived already, that moment is close. “The thread is pulled very taut at the moment,” he says. “It may break very easily – and very quickly.”