By CHRIS GRAEME [email protected]
The PSD government has announced that it would scrap holiday subsidies for over a million public sector workers earning over €1,000 a month.
Prime Minister Pedro Passos Coelho told the country that around 1.3 million civil service and public sector employees working for the bureaucracy and state companies would either lose their double summer and Christmas salaries or see them cut until 2014.
The unpopular measures, including an extra 30 minutes on the length of the working day for the private sector, were needed, he said, for the country to make up the shortfall of billions of euros in the State’s accounts which had been “diverted”.
With this measure, announced on October 13, the Government should generate annual savings of €2.9 billion.
The money will help fill 70% of the additional hole in the public finances – caused by, among other things, the situation in Madeira and the cost of propping up toxic bank BPN – which the ‘Troika’ says must be filled by 2012.
Speaking from the official residence, Pedro Passos Coelho said that the various “state of national emergency” measures were designed to prevent the country suffering the same fate as Greece.
“We are living through moments of the utmost gravity. All Portuguese are feeling in their lives the effects of financial strangulation,” he said.
“In the cases of both the public administration and public-owned companies, we have to cut out holiday subsidies, including that of Christmas, including for those who have pensions over €1,000,” he said.
State workers earning between the national minimum wage of €485 and €1,000 will be subject to having their holiday subsidies being progressively cut depending on their earnings.
In practice, it will mean that of the two holiday subsidies, most employees will lose one of the double payments.
But the Government cuts will not affect private sector employees. The prime minister stated in Leiria on Saturday that the “private sector subsidies would be maintained”.
At a meeting of PSD party affiliated municipal council chiefs, Pedro Passos Coelho said that public sector salaries were “higher than the national average”.
He said that extending cuts in holiday subsidies to the private sector would “not solve the problem of the deficit”.
In any case, to do so would require parliament enacting a special law which would unlikely be passed by opposition parties.
Pedro Passos Coelho said in Parliament on Friday that he did not feel obliged to “apologise to the Portuguese people” for the measures. “The measures are entirely mine, but the causes do not rest with my Government but with the previous PS government,” he said.
Among other controversial “emergency” measures adopted by the Government in a desperate bid to balance the books, include:
• Adding an extra half-an-hour per day to private sector working hours for the next two years. Private sector workers will therefore work an extra two-and-half hours a week.
• Banning until the end of 2013 public companies from awarding performance bonuses. The Portuguese Tourist Board Turismo de Portugal will be authorized to use €12 million from gambling receipts for investment purposes.
• Axing overtime and extra expenses for employees working in foundations and other public establishments.
• Forcing local authorities to hand in quarterly spending reports and information on recruitment.
• Forcing ‘mobile’ public sector workers refusing to move to posts where they are most needed without due justification to lose 30% of their salaries.
• Portuguese bank holidays or feriados are likely to be moved to a Monday or Friday to avoid making bridges or pontes midweek. Some public holidays and saints days, after consultation with the Church, will be scrapped.
• The Employer’s National Insurance Contributions (Taxa Social Única) will not be changed further, for the time being.
• Value Added Tax will remain at 23% and not climb to 24 or 25% as had been mooted. However, VAT on many drinks and foodstuffs will climb to 23%, although the tax on books will remain at 6%. VAT will also go up to 23% on concert and show tickets while the catering and restaurant industry will see VAT climb from 13% to 23%.