Unions voice fears on inflation and consumption
Summer 1999 saw increasing concern among Portuguese trade unions over a number of economic indicators. Although individual income has gone up, the inflation rate and the rate of indebtedness of Portuguese families are considered to be sources of major concern.
In mid-August 1999, after the Organisation for Economic Co-operation and Development (OECD) had issued a forecast of a 2.5% inflation rate for Portugal, the trade unions once again stated that it would not be possible to achieve the 2.0% mark forecast in the country's 1999 state budget.
After inflation reached 3% in April, the general council of the General Workers' Union (União Geral de Trabalhadores, UGT) in May had called attention to the inflation issue because:
- it threatened to have a negative impact on the income of workers and pensioners, since pay subject to collective bargaining, plus the minimum wage and pensions, were to increase in 1999 at the rate of 2%;
- family spending, which is still on the rise, has increasingly been bolstered by recourse to loans. Family indebtedness has therefore risen and is, according to reliable sources, among the highest in the European Union; and
- the indebtedness issue is cause for even more concern, since loans are taken out for the purchase of consumer goods. This type of "consumerism" has, it is claimed, been sparked by advertising campaigns for special credit lines.
The unions' latest concern comes at the same time as a report issued by the Central Bank (Banco de Portugal), whose findings include:
- a slowing down of Portuguese convergence with the rest of the EU; and
- significant family indebtedness and higher inflation pressure than was expected. This inflation pressure, however, is said not to constitute a cause for concern.
In UGT's opinion, the following measures should now be taken:
- control of inflation by, for example, lowering the cost of fuel, which is at a higher price than the European average;
- immediate changes to the income tax system with a view to making it fairer for employees; and
- prevention of excessive family indebtedness through information campaigns, and taking a closer look at the nature of loan contracts themselves and the pitfalls of easy credit.