… but government shows no inclination to act
Salaries are facing the greatest fall in terms of purchasing power since the desperate era of the ‘troika’ (Portugal’s ‘bailout years’) but neither the government nor the Bank of Portugal – led by former Socialist finance minister Mário Centeno – are willing to sanction further pay increases.
Mr Centeno reaffirmed the contention at a press conference yesterday that inflation is “temporary”.
“At this point it is important to be very careful when evaluating salary updates”, he said. “I insist that this question of reinforcing available income is not a matter of a semester, or a year. It is much more long term and, fortunately, Portugal has a recent history in which real available income was reinforced, something that hadn’t happened for many years”.
In other words, in Mr Centeno’s opinion, workers should sit inflation out and accept it.
Unsurprisingly, syndicates see the situation very differently, and are refusing to accept it without a fight.
Expresso explains that, right now, inflation has reduced any salary increases written in to the 2022 State Budget by 0.6% “but this could reach 2.8% if the worst inflation forecasts happen.
“Whatever the case, it will always be the greatest fall (in salaries’ purchasing power) since the troika years (2011-2014)”, says the paper, adding that prime minister António Costa has postponed discussions on new agreements with social partners over salaries and competitivity to October (instead of July, which was the month initially fixed).
INFLATION HAS SPREAD TO ALL SECTORS
One of the messages coming out of yesterday’s press conference to present the Bank of Portugal’s Economic Bulletin for May was that inflation has now spread to all sectors of the economy. When last pegged (April) it was running at 7.5% – the highest rate since 1993.