Portugal struggles under weight of austerity

Women washing clothes Many families wash clothes by hand in free spring water in the city

Related Stories

Half a dozen women are working outdoors at an ancient stone sink set high above a river.

They are doing their family's washing - rubbing and rinsing in cold water gushing from a galvanised pipe fed by a cliff-top spring. This might not be a remarkable sight in many parts of the world. But we are in the EU - in the centre of the second largest city in Portugal and the regional capital, Porto.

Yet for those with unpaid electricity bills or for jobless families who can't afford to replace a broken washing machine, this free medieval equivalent of a launderette is the only place they can afford to use.

Just across the water, there is one sign of Porto's export success. The clue is in the city's very name - it's famous for producing port wine. Every night, backlit advertising signs on a string of historic wine lodges twinkle on the Douro river below.

From the southern side (officially it is Vila Nova de Gaia), you have the choice of six bridges to take you into Porto - a steep-sided patchwork of medieval and baroque architecture. But the reality is that many hundreds of the city's buildings are close to falling down.

Walking round the centre, you find not just empty shops but whole blocks of abandoned property. Porto is fast becoming a kind of European Detroit or mini-Havana. Many say the place has always exuded an indefinable air of melancholy. But today every street corner is a monument to the economic crisis.

Harsh reality

But hardship can breed innovation - and there is an alternative for visitors bored with official tourist tours that gloss over the everyday realities.

Gui Castro Felga Out-of-work architect Gui Castro Felga says austerity is hurting society deeply

Some young out-of-work architects who refuse to leave the city or join the Portuguese brain-drain have opened an unlikely walking-tours agency they call The Worst Tours. Follow them for a couple of hours and you soon get lost up back alleys, past cheap taverns and through mean streets to old markets with crumbling masonry.

The walks show the real impact of the bailout measures in sharp relief. Tax rises and welfare cuts have changed lifestyles and accelerated the neglect of the physical environment. Rival tours may focus on the historical highlights, but the truth is there are now far more lowlights - an estimated 2,000 businesses have closed in the city over the past two years alone.

These tours are also unashamedly partisan. Above all, tour guide Gui Castro Felga says, she wants people to understand that austerity measures are not theoretical - they are something you can touch and feel as you walk around the country's second city.

"The cuts that were supposed to make Portugal more competitive with places outside, but they are causing a downward spiral," she says.

"People have less money and the result is that stores and local businesses close. It's hurting society deeply in practical terms."

Struggling businesses
Mario Jorge Gomes Mario Jorge Gomes has cut his workforce since austerity measures came in to force

One surviving, second-generation family business is printers Molografica. It once kept 40 staff busy, but is now trying to keep 11 employed. Its rambling city centre offices house impressive digital machines that can process and print anything from full colour books to top quality brochures and tickets.

But what Molografica needs is longer print runs, that will probably come only from customers who export goods or services outside Portugal. Inquiries in Porto may be up a little, but boss Mario Jorge Gomes says orders from industry customers are often much smaller than they used to be.

He says: "I just had an inquiry for a thousand labels for clothing from an old customer. At one time it would be for 1,200 labels. So you see that I can't create more jobs like the government wants us to. What I am waiting for is more orders."

So if jobs are continuing to disappear from cities like Porto, then what will the jobless do - or at least where will they go?

International labour organisation figures compiled in Lisbon show more lower income families heading for the coast.

One such emigre is fisherman Augusto Braga, returning to the nearby port of Matosinhos - about 7km (four miles) north of Porto. This wasn't in his career plan. Made redundant from his job in security, he's returned to the traditional occupation of his family to make ends meet.

Augusto Braga Augusto Braga has returned to his family's fishing business after losing his job in security

"I took the job because they stopped paying my salary and I was made redundant," he says.

"There were only small jobs on the land - not enough to live on. I like to be on the sea so it was the only choice."

Family ties count here - the fishing cooperative is almost an extended family. It's also one that seems to tolerate cash-strapped locals who swarm round as the boats are unloaded - competing with voracious seagulls for a few dropped fish to sell or eat for lunch.

One financial sign of the times is that, after years of decline, tinned sardines are making a comeback and more are going for processing. Not so long ago, Portugal's canneries looked outmoded. Yet now fresh fish is too expensive a treat for many, there's a ready market for cheap, yet high-quality, protein.

New life

The nearby Minerva factory of the family firm A Poveira cooks fish fresh from the local seas in the morning and its army of mainly women workers pack and can it in the afternoon.

It's one of just seven surviving fish canneries in northern Portugal. New investors have put in 5m euros ($6.7m; £4.2m), not just preserving the company but breathing new life into it. Fancier new varieties are boosting export orders and saving jobs in a region that badly needs more of both.

Women working in fish factory Canneries are benefiting from increased demand for tinned fish

One of the the longest serving workers is Rosa Macaes. As she speaks, she deftly tailors the sardines with scissors so they fit exactly the tins, nose to tail.

"Times are more difficult and we all have to work longer than ever before," she says.

"Everything is more expensive and it's more difficult to help my children and their families than in the past. It's very important to be in a job and I know many people who don't have one. But I believe the jobs are out there - they are hard and younger people just don't want to do them."

Many might take issue with that in a country where unemployment is falling, but remains at nearly 16%. But as a visit to the country's second city so graphically illustrates, the road to economic recovery is long and the city of Porto and its people bear the scars.

More on This Story

Related Stories

More Business stories

RSS

BBC Business Live

  1.  
    DVLA DELAYS Via Email Brian Milligan Personal Finance Reporter, BBC News

    DVLA is having major problems with the car tax website today, on the first day of the new system. They blame an "unprecendented volume of traffic". Some people have spent up to 13 hours trying to buy their car tax. DVLA is advising people who need to pay their tax today to go to a Post Office.

     
  2.  
    GERMANY DOWNTURN 10:03:
    German factory

    Activity at German factories shrank for the first time in 15 months, according to the latest survey of purchasing managers from Markit. The index fell to 49.9, which is bad because anything below 50 indicates contraction. It is "a worrying picture of the health of Germany's goods-producing sector," said Markit economist Oliver Kolodseike.

     
  3.  
    NETWORK RAIL 09:54:
    work

    The Office of Rail Regulation says Network Rail, which owns manages rail infrastructure like track, missed its target on cost savings in the five years to March 2014. It cut costs by 15.5% that was less that its target of 23.5%. That means even stiffer targets for the next five years.

     
  4.  
    ROYAL MAIL 09:44:
    Royal Mail shares

    Royal Mail shares have risen almost 4% this morning. They have been helped by a positive report from the bank UBS. It has removed its "sell" rating on the shares. Royal Mail shares are trading at 407p today but that's down by third from January when they hit a high of 615p.

     
  5.  
    LABOUR PRODUCTIVITY 09:35:

    Labour productivity was unchanged in the second quarter of 2014 compared with the previous quarter, and 0.3% lower than a year earlier, according to the Office of National Statistics. The UK has been troubled by low productivity for years and it is something that the Bank of England is watching closely as it mulls the timing of a rise in interest rates.

     
  6.  
    PARIS MOTOR SHOW 09:22:
    Paris Motor Show 2014

    This should be good. Our coverage of the Paris Motor Show starts on Thursday. The BBC's Theo Leggett and Russell Hotten will be there. Visit BBC Business for news, insight and analysis.

     
  7.  
    PARIS MOTOR SHOW 09:07: Radio 5 live
    Paris Motor Show 2014

    The Paris Motor Show opens today. Maxime Picat, chief executive of the Peugeot brand, is on Radio 5 live. He trumpets "impressive" growth in China where Peugeot is the fastest-growing car maker. But, he concedes that electric cars have been disappointing. He doesn't expect significant expansion of that market until the 2020s.

     
  8.  
    SUPERMARKETS 08:56:

    Supermarkets are now the top three losers on the FTSE 100.

     
  9.  
    SAINSBURY'S RESULTS 08:52: Via Email John Ibbotson, Director, Retail Vision

    "With these results, it's increasingly clear Mike Coupe took the hospital pass just like Philip Clarke. Who needs Sainsbury's, or Waitrose even, when you can get £9.99 Beluga Caviar at Aldi?"

     
  10.  
    MARKET UPDATE 08:33:

    London's FTSE 100 benchmark index fell 0.15% to 6,613.03 points, led lower by supermarket Morrisons, which has dipped 2.9%.

     
  11.  
    MOD CONTRACT 08:28:
    HMS Daring

    It's the second biggest defence contract placed by the government. The MoD has awarded £3.2bn of contracts to run naval bases and maintain warships and submarines. Babcock wins £2.6bn to run Devonport and Clyde, BAE Systems gets £600m to manage Portsmouth Naval Base. Around 7,500 are employed to support 56 warships.

     
  12.  
    FRANCE BUDGET 08:15:
    Michel Sapin

    France's finance minister, Michel Sapin, has been presenting the nation's 2015 budget. He says the budget deficit will meet the European Union's target by 2017. France has made such promises before and then been forced to backtrack. Mr Sapin forecast a gradual economic recovery, with growth on 1.0% next year. Mr Sapin.

     
  13.  
    MARKET UPDATE 08:02:

    After early gains, in Tokyo the Nikkei 225 index closed 0.6% lower at 16,082. Markets in China and Hong Kong are closed for a holiday. A report indicated modest expansion for China's manufacturing sector. The official purchasing managers' index for September came in at 51.1. Numbers above 50 suggest expansion.

     
  14.  
    SAINSBURY'S BOSS 07:52: Radio 5 live

    Tesco is in trouble over mis-stating its profits, how about Sainsbury's? Well Mike Coupe, Sainsbury's chief executive is "100% confident about the integrity of the accounts". He should know - he was finance director before becoming the boss.

     
  15.  
    SAINSBURY'S BOSS 07:46: Radio 5 live

    It is the most challenging environment in the supermarket industry for 30 years says Mike Coupe, Sainsbury's chief executive on Radio 5 live. There is food price deflation for the first time in a generation. Potatoes and milk are 20% cheaper from a year ago. That means customers on average are £5 a week better off he says.

     
  16.  
    CO-OP BANK ETHICS 07:34: BBC Radio 4

    Laura Carstensen, chair of Co-op Bank's Values and Ethics Committee is talking about the lender's new advertisement campaign. A man gets a tattoo about his commitment to Co-op's ethics. What does a fake tattoo say about the company's commitment to ethics, asks presenter Justin Rowlatt? Customers are savvy enough to understand the message, she says.

     
  17.  
    MINIMUM WAGE 07:26: BBC Breakfast
    BBC

    The minimum wage is most commonly paid in the hospitality, retail and care industries says Charlotte O'Brien a lawyer from York Law School on Breakfast. Many workers who think they are being paid less than minimum wage cannot afford to take their employer to an employment tribunal, she says. That's because they now have to pay £390 for a tribunal - or 60 hours work at £6.50 an hour.

     
  18.  
    SAINSBURY'S BOSS 07:21: BBC Radio 4
    CEO

    "It wouldn't be surprising in any business for us to try to sell more," says Sainsbury's chief Mike Coupe. He's talking about that gaffe earlier in the week, where a Sainsbury's store placed a motivational poster encouraging staff to get customers to spend an extra 50p in store, in the shop window. It was a simple mistake, he says.

     
  19.  
    HEADLINES
    • Tesco to be investigated by FCA over profit warning
    • Sainsbury's reports third quarter of falling sales
    • DVLA website hit by 'unprecedented volume'
     
  20.  
    SAINSBURY'S BOSS 07:18: BBC Radio 4

    Mike Coupe is doing his first broadcast interview of the day on Today. In the last few months things have changed in the industry, he says. Customers are changing how they shop, he says. Is he worried about the fact Sainsbury's is the most short-sold (bet-against) stock on the FTSE 100, asks presenter Justin Rowlatt? "I'm a very calm individual," he says.

     
  21.  
    SAINSBURY'S RESULTS 07:11:

    Sainsbury's is not expecting sales to pick up in the rest of the financial year. Chief executive Mike Coupe says "we now expect our like-for-like sales in the second half of they year to be similar to the first half".

     
  22.  
    TESCO PROBE 07:05: Breaking News

    The Financial Conduct Authority will conduct a "full investigation" into Tesco's £250m overstatement of profits, the supermarket said.

     
  23.  
    SAINSBURY'S RESULTS 07:00: Breaking News

    Sainsbury's has reported a 2.8% decline in like-for-like sales in the second quarter, excluding fuel. That's the third consecutive quarter of falling sales.

     
  24.  
    CO-OP BANK ETHICS 06:45: Radio 5 live

    Oh dear. The chair of Co-operative Bank's ethical board, Laura Carstensen appears on Wake Up to Money. She can't name a single country with an oppressive regime that the bank has declined to do business with. She also does not want to talk about the bank's private equity owners, but says all investors realise that the bank's ethical values are what makes it different. Co-op bank launches an advertising campaign today to publicise its ethics.

     
  25.  
    SAINSBURY'S RESULTS 06:34: BBC Radio 4
    Sainsbury's store

    Sainsbury's releases results at 07:00. Sales are expected to be down 4%, says Bryan Roberts, from Kantar Retail on the Today programme. "What it reflects is we are in a zero-growth market. The pie isn't getting any bigger. Aldi and Lidl aggressively expanded in the South East and London," he says.

     
  26.  
    PENSIONS 06:28: Radio 5 live

    "People are getting it," says Tim Jones the chief executive of National Employment Savings Trust (NEST) on Wake Up to Money. It's been two years since the government launched automatic enrolment for workplace pension schemes. Only 8% of people are opting out, but a quarter of those aged between 60 and 65 are not taking up the offer. "Older folks are thinking it's too late," says Mr Jones.

     
  27.  
    DOLLAR YEN 06:19: Radio 5 live
    yen

    The dollar has hit a six-year high against the yen, trading above 110 yen. On Wake Up to Money the BBC's Rico Hizon says that there are expectations that the Bank of Japan will further ease monetary policy. Currency traders are also looking ahead to Friday's US employment report, which should give an indication of the strength of the US economy.

     
  28.  
    MINIMUM WAGE 06:11: Radio 5 live

    Mike Cherry, National Policy Chairman for the Federation of Small Businesses says the raise in the minimum wage is still "realistic". But he wants a longer-term view of the wage. On Wake Up to Money he complains that business only gets six months notice of changes. He would like to the level to be set for a whole parliament.

     
  29.  
    MINIMUM WAGE 06:03: Radio 5 live
    Hand pennies

    From today the minimum wage rises 3% to £6.50. Conor D'Arcy, Policy Analyst at Resolution Foundation welcomes the move, until this raise the minimum wage was worth the same as it was in 2005, he says on Wake Up to Money.

     
  30.  
    06:01: Ben Morris Business Reporter

    Good morning. You can email us at bizlive@bbc.co.uk or tweet @bbcbusiness.

     
  31.  
    06:00: Howard Mustoe Business reporter

    Good morning everyone. This morning we are expecting an update from Sainsbury's on how trading has gone for them. The National Minimum Wage annual increase also takes effect, rising by 19p an hour to £6.50. Stay with us for more breaking news and analysis.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.