Social Security revenue plummets by 63 per cent


Portugal’s social security system is in trouble as the recession has caused revenues to nose-dive by 63 per cent.

High unemployment and social security payments, falling income tax, business tax and value added tax receipts coupled with historically low interest rates are all to blame, says

the government.

But the main culprit is the deeply entrenched economic recession in Portugal, which has seen the number of out-of-work soar by 10 per cent on average and up to 20 per cent in some hard-hit regions in the Alentejo and interior of the country.

It means that the future funding for Portugal’s social security and health system will be placed high on the agenda at the forthcoming general election campaign which kicks off next week when both political parties officially unveil their election manifestoes.

Social Security’s balance plummeted 63 per cent between January and July compared with the same period last year.

The government has actually only predicted it would fall 44 per cent for the entire year.

With receipts practically stagnant and expenses soaring, its budget hovered at around 466.5 million euros according to figures released by Social Security Finance Management, Gestão Financeira da Segurança Social.

According to the Work and Employment Ministry, the situation looked worse in July because of the payment of holiday subsidies paid twice yearly to pensioners.


Now it has ignited discussion that Portugal may have to scrap holiday subsidies for new employees or employees under a certain age – it is one of the only countries in Europe to enjoy such as privilege.

The report revealed that although contributed receipts rose 0.6 per cent, social handouts have shot up by a two digit figure, as is the case in unemployment benefits which have skyrocketed 26.2 per cent.

In the first half of 2009, the Directorate-General of the Budget published a positive balance for Social Security payment receipts of 1.179 billion euros.

However, that figure had fallen drastically in July to 457 million euros as government receipts from taxes shrank

Meanwhile, Portugal’s Minimum Social Income Benefit (Rendimento Mínimo Social de Inserção), a kind of Income Support Benefit, climbed 17 per cent to 875 million euros while unemployment benefit to July reached a whopping 1.134 billion euros. 

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