Portugal & the Crisis!

Portuguese Just Shrug and Go On in the Face of Cuts and Job Losses

Posted: 09 Jun 2012 04:18 AM PDT


By Scott Sayare, NY Times, June 7, 2012
LISBON—Behind the cheery yellow edifice that is this country’s Finance Ministry, where the news is not so cheery these days, Joaquim Marçalo’s waterfront grill is open for business, any business at all, seven days a week.

There was a time not so long ago when Mr. Marçalo could afford to close his restaurant, the Coffer, one day each week, he said; when he could afford a staff of 12, not 8; and when the daily take was around $2,000, not $1,000 to $1,200 or so. There was a time, too, when he paid a levy of just 6 percent on electricity and gas, not 23 percent; when public services were not being slashed; and when austerity was not the national watchword. With a shrug, though, Mr. Marçalo said, “It could be worse.”

That coolheaded assessment, on the lips of Portuguese everywhere, seems an apt summary of this country’s approach to the euro crisis, which last spring drove tiny Portugal into a $96 billion bailout and a painful austerity program.

The most optimistic projections point to a 3 percent contraction of the economy this year, after a 1.5 percent decline in 2011. Officially, unemployment is at 14.9 percent, its highest point in more than a decade, and more than 30 percent of the country’s young people are out of work. But some analysts suggest that the government is underestimating the true jobless rate, especially for youths, which they say may run as high as 40 or 45 percent.

Hospitals are closing. State benefits, public wages and pensions are being cut. New taxes have been added, and old taxes increased. The government has sold its stake in the national electric company to a state-run Chinese corporation.

In Greece, austerity along these lines unleashed chaos and rage in the streets of Athens and brought about the rise of political extremism. The crisis in France helped drive the conservative Nicolas Sarkozy from the presidency in favor of a socialist, François Hollande, who is calling for a renewed emphasis on growth.

But for all the talk of fascism and firebombs, most people in the austerity zone—which includes Ireland, Greece and Spain—seem to accept their lot. Even the Irish, who have occasionally rebelled against their own government, approved the deficit-cutting European Union fiscal treaty last week by a healthy margin.

Perhaps nowhere, however, are people quite so acquiescent as in Portugal. Month after month, the government has obligingly put in place the budget cuts, tax increases and loosened labor laws demanded by its international creditors—the so-called troika of the European Commission, the European Central Bank and the International Monetary Fund—with little protest from the Portuguese.

The troika recently cited Portugal’s success in cutting its budget deficit last year to 4.2 percent of gross domestic product, from a high of 10.2 percent in 2009. And with exports rising to a record level in 2011, Portugal’s trade balance has also improved significantly.

While some opposition leaders and trade unions have called to slow the pace of budget cuts, few suggest that the changes are not ultimately necessary. Nor do they contest the urgency of efforts to improve the economy’s competitiveness.

“The Portuguese are mild people,” Mr. Marçalo said. “We don’t take to the streets so much.”

Memories are still sharp here of the poverty of the mid-20th century, when just half of homes had running water and only 30 percent had electricity. In the 1980s, with the state nearly bankrupt and inflation running at over 30 percent, more than one million workers saw their salaries withheld for months on end. There were no major protests, though, said António Barreto, a sociologist and former government minister. Most workers declined buyouts and continued to work without pay.

“This generation doesn’t want to lose what they have,” Mr. Barreto said. “There is complacency, yes. But there is wisdom, too.”

Joaquim César, a supervisor at the TemaHome factory, said the budget cuts were deeper than necessary, but he accepted austerity as a necessary evil. “Since we were poor before the crisis, we don’t feel so different now,” said Mr. César, 54. “To be angry, it’s not worth it,” he said. “Bad humor won’t get us anywhere.