Unemployment increases

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Unemployment increased sharply in Portugal during 2002 and the early months of 2003. Trade unions attribute much of the rise to economic effects of the government's policy of controlling public debt and expenditure, and have called for a different approach. The CGTP union confederation organised a day of action in protest on 21 March 2003.

In February 2003, the Portuguese unemployment rate, according to Eurostat, stood at 6.7%, compared with 4.3% a year earlier. Over the year, Portugal recorded the largest increase in unemployment of all 'euro-zone' countries. The age groups most strongly affected by the rise in unemployment are those over 25 years, although youth unemployment continues to rise (up 3.6 percentage points over 2002). The rise in unemployment has been felt by men more than women, although, overall, women continue to be more affected than men. According to the National Statistics Institute (Instituto Nacional de Estatística, INE), manufacturing employment fell by 4.4% in 2002, the most affected sector being machine manufacturing (down 23.1%), with employment in overall capital goods production also dropping (down 5.5%). Employment fell 0.9% in the service sector, with a significant 10.1% drop in tourism activities but a 1.5% rise in commerce.

The coalition government of the centre-right Social Democrat Party (Partido Social Democrata PPD/PSD) and the right-wing People's Party (Partido Popular, CDS/PP) has responded by initiating or increasing active employment and social welfare policy measures, such as payment of temporary unemployment insurance benefits in order to deal with unemployment situations more rapidly, and providing incentives for businesses to hire unemployed people, particularly young people and long-term unemployed people over 45 years of age. The government also wishes to increase workers' geographical mobility and boost industrial reconversion programmes for businesses facing economic difficulties.

According to the General Workers' Union (União Geral de Trabalhadores, UGT), when the reported number of registered unemployed is added to the number of unemployed workers who want to work but have given up looking for work, the unemployment rate in Portugal actually stands at 7.6%. Both UGT and the General Confederation of Portuguese Workers (Confederação Geral de Trabalhadores Portugueses, CGTP) have stated that rising unemployment is overloading the social security system because it encourages early retirement, increases reliance on unemployment insurance and decreases social security contributions. The unions are calling for measures to foster public and private investment and stimulate consumption, which are seen as more important than controlling the debt and public expenditure.

In a document addressing the situation, CGTP states that:

• the deterioration of the economy is due to the government’s main policy objective of balancing the state budget (PT0206101N). This policy has sacrificed public investment (13% in 2002), reduced the confidence of investor companies and families, prevented pay increases (PT0211101N) and reduced pensions. According to CGTP, much unemployment is caused by fraudulent bankruptcies, relocations and discouraged foreign investors;

• the government should mobilise the social partners in an effort to implement concrete measures to fight unemployment, particularly vocational training measures.

On 21 March 2003, CGTP organised a day of action against 'social regression' and the erosion of social rights.

The Competitiveness Forum (Forum para a Competitividade) has called on the government to go beyond the current focus on public expenditure and the deficit in Portugal and instead seek to make 'policy more economic', acting on the factors that influence production costs and stimulate the economy - namely energy prices, telecommunications and transportation networks, improving the tax system, productivity, training, and introducing a culture of efficiency.