In press conference the four key federation bosses (left to right) Francisco Calheiros (Tourism), António Saraiva (industry), João Vieira Lopes (commerce and services) and Eduardo Oliveira e Costa (Agriculture)

State Budget crisis: ‘Employers declare war on government’

This is one of the headlines in today’s popular press as negotiations ostensibly aimed at ‘saving’ Portugal’s 2022 State Budget appear to be going right to the wire.

Employers confederations have abandoned ‘Concertação Social’ – talks the government has been having with lay groups (as opposed to political parties) – accusing the executive of ‘negotiational dishonesty’.

With the latter sector still deeply hostile over the budgetary proposals – promising to vote against them when the document comes up for ‘voting in generality’ next Wednesday (October 27) – employers in four key sectors are infuriated that the government has taken decisions, simply to please the left-wing, that should have been discussed with them first.

The heads of CIP (the confederation of industries), CCP (the confederation of commerce and services), CAP (the confederation of Agriculture) and CTP (the confederation of tourism) say they ‘feel disrespected’ and are ‘demanding an audience with president Marcelo’. 

President Marcelo has sought to play down the furore, saying ‘yes’ he will be meeting employers representatives (next Friday), but the meeting was already planned.

Confederations’ outrage centres on the government approving changes in employment law, a day after a meeting between the two sides in which there was no indication this was coming.

The changes involve “increasing compensation for the ceasing of contracts; repositioning values for ‘extraordinary overtime above 120 hours’ and widening the principle of more favourable treatment”, writes Correio da Manhã.

“Consertação Social (Social dialogue) hasn’t been this disrespected since 1984”, says António Saraiva, the president of CIP (1984 being the year ‘concertação social’ was created).

Prime minister António Costa has called the situation ‘a lapse’, and offered his ‘apologies’.

Returning home from the two-day European Council in Brussels last night, he reaffirmed that he was committed to ‘doing everything’ to reach an agreement over the State Budget, “but not at any price”.

The fallout is causing ripples within the Socialist party. Former PS Euro MP Francisco Assis, now president of the CES (economic and social council) has admitted employers’ fury is a ‘serious and delicate matter’.

He tells Expresso he is seeking meetings with the prime minister and President Marcelo to try and reach some sort of conciliation.

“There will be no agreement without the presence of employers’ confederations (…) and this is a concern that has to be taken into consideration”, he said. 

“It would be pointless, and even criminal, to invalidate dialogue at a moment when the country is preparing to discuss the use of fundamental instruments for its development” – this being a reference to the arrival of Brussels’ ‘bazooka’ billions for recovery and resilience.

This is the point where the developing drama suddenly comes into sharp focus: without the State Budget there will be no Brussels’ billions.

Secretary of State for the Treasury João Nuno Mendes has explained: “We need a State Budget to executive the PRR (the plan for recovery and resilience which Mr Costa particularly has been ‘proclaiming’ as Portugal’s road to prosperity for months).

“For Portugal to receive the money, it will have to comply with measures and objectives that will be approved by the European Commission”, João Nuno Mendes continued, describing the way ahead as a “pyramid of approvals which will not happen without a State Budget”.

Round and round it goes, with fringe parties not being sought-out for support – namely CDS-PP, Chega and Iniciativa Liberal (IL) – saying the equivalent in the background of “we could see this coming”.

João Cotrim Figueiredo, the leader of IL, explains his reasons for rejecting the budget – in essence very similar to those given last Sunday by television pundit Luís Marques Mendes: “They do not answer the principal priority which is economic growth”.

“It’s a bad budget”, he told parliament yesterday.

After the months and weeks where every effort has been made to ignore the gathering storm clouds, Expresso admits President Marcelo is “preparing himself” for a new crisis in which the logical ‘next step’ would be to dissolve parliament and call early elections.

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