An average Portuguese citizen might make about €800 per month, has bought a house and is paying back the loan to the bank, leaves home each day at 7am and returns at 7pm. He has one child, whom he leaves at school all day.
Take those €800 and let’s do some math. The mortgage will cost an average of €300, leaving €500 for food, transport and basic services. By the end of the month his bank account will just have small change left – if not a huge credit card hole.
This data is accurate as of May 2012 and can be checked at Pordata, the private national database, run by the former Socialist Party agriculture minister from the seventies and eternal presidential candidate, the respected António Barreto.
Barreto and other influential Portuguese personalities all agree that doomsday for the middle class has arrived. Another influential opinion maker, Medina Carreira, a former finance minister in the seventies, is a loose cannon when it comes to announcing the end of the world as we know it and for some years his comments were not taken seriously. But last June, when the IMF, the EU and ECB arrived in Lisbon, everyone turned to Carreira – and he was the one who foretold Portugal’s fate.
The 81-year-old Carreira now has his own prime-time TV show on Portugal’s most watched broadcaster, TVI. And again, he is forecasting trouble: “This cut, cut, cut policy that we are pursuing, more than we are asked to, it’s Portuguese stupidity”, he said on his weekly show Olhos nos Olhos (or Eye Contact). “What the EU and the IMF asked us to do was just to spend what we have. That’s correct. But now this government is trying to cut what we have. Not spending less, not adjusting the budget, but impoverishing us all.”
The Portuguese government, however, is not happy with the budget cuts and wants to do more. Pedro Passos Coelho, the liberal prime minister, said in April, during a dinner celebrating the 38th anniversary of his PSD party: “This is the time to do more, to do the hard things, to go ahead with reform as needed”.
The “bad cop” role, however, is played by Finance Minister Vítor Gaspar. Gaspar, a former EU technocrat-turned-minister, is believed to be influenced by European Commission President José Manuel Barroso.
Gaspar talks slowly and with such tricky grammar and vocabulary that most Portuguese citizens have little patience listening to him.
Since Gaspar has been in office he has raised VAT two points, income tax more than three points for those who earn less than €35,000 yearly and cut, until 2018, Christmas and holiday salary bonuses. In a year, Gaspar and Coelho also introduced a labour reform that allows employers to fire temporary workers for no reason and with no compensation.
One would think that an uprising was about to be staged in Lisbon, Porto or in the Algarve.
But no.
Still waters
On May 1 – workers’ day and an official holiday in Portugal – the big news was not the protests, the union leaders’ speeches, or the first anniversary of the country’s EU bailout. Pingo Doce, the country’s biggest supermarket chain, was offering a 50-percent discount to those who spent more than €100. The promotion was a huge success and a tremendous mess. More than a million people rushed to the supermarkets, clearing shelf after shelf. They bought not just food, soap or dairy products, but also whisky, pretzels and clothes. Pingo Doce is now under attack from unions and producers, who say the chain is guilty of dumping. On May 2, IKEA opened its doors with a similar promotion. And now Continente, a Pingo Doce rival, is giving away 75-percent-off coupons.
In Portugal, politics is not the major concern and this crisis is simply regarded as “others’ fault”. Nuno Tuna, 42, a designer and illustrator, is unemployed. “An unemployed freelancer”, he jokes. “People do not want to see what is going on. They know it all, they have opinions, I believe. But they will not do anything. You learn that someone set himself on fire in Greece because of the crisis. And what are the comments? ‘Crazy Greeks’, even if Portuguese finances are in as much dire straits as those of Greece”.
As a designer he gets no work. “In the nineties, I would charge about €5,000 for a full portfolio. Now clients want to pay €200 or €300. How can you survive on that? You just can’t,” he says.
On Lisbon’s streets there are no billboards or graffiti demanding that the government step down. And apart from some leftist opinion makers on late-night shows on the three Portuguese news channels, many people even seem afraid to speak out.
Isabel Santos, 37, is a business executive for a major Portuguese company. “I will not say anything at work about politics. There have been some informal warnings from the top, telling workers: ‘Be quiet, we need the government to go along with us. Don’t mess up’,” she explains.
Sadly, there are no other options except ceding from the EU and reinstating the Escudo which would bring more poverty to the Portuguese. Also, Portugal has just under 600,000 Civil servants, about 200,0000 more than Canada, a country over a hundred times larger, geographically, and over 3 times larger in Population. This is indicative of poor governance, btw, here in Canada, we consider our public servants here in Canada lazy oafish pen pushers.
The problem, though, is that Portugal is expected to do too much too soon. Had these austerity programs and downsizing of the civil servants been done systematically over the last 20 or so years, along with an easing of bureaucratic red tape and rent seeking, easing up on rent controls and other essentials, instead of building new tollways, bridges, counsel buildings, churches, port extension projects, new submarines, new auto fleets, etc. etc. etc. Portugal would not be in this mess today.
Lastly, one needs to remember, that as a part of the EU, Portugal has no choice but to adhere to the demands of IMF and ECB. Coupled with the fact that the 3 big ratings agencies have effectively prevented Portugal from funding itself through the cutting in ratings scores, Portugal is really up a Creek.
As sad as it is, Portugal and the Portuguese have no choice but to go through these austerity implementations, it will be extremely painful but in 5 years from now, the Portuguese will be much better off.
One last thing, the Portuguese should be demanding that anti-corruption agency be set up to investigate and incarcerate any and all politicians, banksters and corporate rogues who have embezzled money from the state. This is where the Portuguese need to make their stand.
It’s going to be a difficult few years ahead but necessary. Hopefully now the country can shake off some of the things that are holding it back – political croynism, inane bureaucracy, corruption and ridiculous Salazar-era legislation that still exists.