UNEMPLOYMENT IN Portugal will only begin to fall from 2008 onwards, claims Portuguese Finance Minister, Luís Campos e Cunha. Until then, unemployment levels will keep above the seven per cent mark, despite the fact that the private sector will create 170,000 new jobs this year.
Of these new jobs, the Finance Minister said that it was important to take into account the 20,000 public administration posts that would be dissolved and should be subtracted from the figure.
This year, the unemployment rate is expected to reach 7.4 per cent, rising to 7.7 per cent by 2006 and 7.6 per cent in 2007.
Private sector employment is also likely to register a slight overall increase of 1.5 per cent over the next four years, according to government forecasts. It is also expected that there will be a moderate growth in salaries in real terms, even though it will be lower than productivity growth levels.
The Finance Minister also warns that inflation is likely to grow over the next four years and is likely to remain at around 2.7 per cent by the end of this year.
The economic forecasts that have been advanced by Campos e Cunha are more pessimistic than figures given by international organisations. The European Commission has predicted unemployment in Portugal at seven per cent, while the Organisation for Economic Co-operation and Development (OECD) sets inflation at 1.6 per cent.
Meanwhile, the Portuguese economy will grow less than was originally anticipated. Presenting Portugal’s Stability and Growth Pact Programme (PEC) for 2005-2009 to the European Commission’s Budgetary and Financial Committee earlier this month, Campos e Cunha said that Portugal’s economic growth would only be around 0.8 per cent in 2005 rather than the 2.4 per cent presented by his Social Democrats (PSD) predecessor, Bagão Félix.