The Portuguese Government has decided to extend the austerity of all workers, not just public servants and pensioners, but also the private sector.
Specifically, from 2013, the Portuguese workers suffer a wage cut of 7%, through an increase in their Social Security contributions, rising from the current 11% to 18%.
In return, companies will benefit from a decrease in the single social tax (TSU), ie will reduced its contribution to Social Security, which will drop from the current 23.75% to 18% per employee.
This was announced tonight by the Portuguese Prime Minister Pedro Passos Coelho said in a statement.
Conservative leader announced his proposal stating that it is a “fair contribution, an all out effort for a common goal.”
With this measure, the Government of Lisbon wants to “lower labor costs and increase incentives to growth and unemployment”, which in the words of Passos Coelho has to be slowed “dramatically” because it reached “unsustainable levels” above 15%.
In the Budget this year, the Executive included as containment measure cutting two extra payments to all public servants and retirees who should win at least a thousand euros a month. Subsequently, the Constitutional Court rejected the measure as unfair because the affected all Portuguese workers. Based on this argument, Passos Coelho has decided to extend the austerity also to the private sector.
In the public sector, rather than eliminate two extra payments, public servants will lose one and the other will be distributed throughout the twelve months of the year. In return, they also suffer the 7% increase in the contribution to Social Security.
For retirees and pensioners , the court held the two extra payments (one from the 600 euros per month and from the two thousand per month) for the time to maintain the foreign aid program.
“The financial emergency is not yet over and the problems are still unresolved,” said Pedro Passos Coelho before announcing new austerity measures.
Portuguese Prime Minister also highlighted the “remarkable patience and effort” of the Portuguese over the past year and a half, in which according to the head of the government in Lisbon, Portugal “has regained the reputation abroad”, which is manifested in the decline in interest in the last auctions of government debt.