Brussels, 24/09/2012 (Agence Europe) - Under pressure from a raft of demonstrations, the Portuguese government is now prepared to hold talks with the trade unions and employers to change the austerity measures announced ten days ago (see EUROPE 10690), particularly the controversial decision to increase workers' social security contributions from 11% to 18% and to reduce employers' social security contributions from 23.75% to 18%, a plan for which the prime minister, Pedro Passos Coelho, has been nicknamed Robin Hood for the Rich (robbing the poor to pay the rich).
The government will soon be holding formal talks with the Portuguese social partners (employers and trade unions). Commenting on the situation, a European Commission spokesperson, Olivier Bailly, called on the government on Monday 24 September to present as soon as possible new austerity measures, adding that the current situation did not change the objectives or timelines in any way. The Portuguese government has been asked to submit the measures to Eurogroup by 8 October, when the eurozone finance ministers will be deciding on releasing the latest aid instalment (€4.3 billion, see EUROPE 10687).
The head of the S&D party at the European Parliament, Hannes Swoboda of Austria, welcomes the news that the austerity measures are to be changed, pointing out that it confirms the S&D's argument that austerity alone is unaffordable because it only affects those who are already vulnerable.
Described as a star pupil among the eurozone countries in receipt of international aid, Portugal has been given breathing space for reducing its budget deficit to 4.5% of GDP - in 2013 rather than 2012 as originally planned (3% in 2014). Falling tax revenue, a sharp recession and mass unemployment have led the troika of lenders (the European Commission, European Central Bank and International Monetary Fund) to agree in the latest progress report on the Portuguese programme to allow various adjustments to the programme. (SP and MB/transl.fl)