Portugal's quiet poverty crisis

Poster for general strike Thursday's general strike will be Portugal's second in four months

Portugal's relatively new government has privatised several industries, cut public sector wages and raised taxes, including VAT.

Its wide-ranging programme of reforms has pleased Brussels - but thousands of Portuguese who are unhappy are taking to the streets on Thursday in the second general strike in four months.

When it comes to the country's economic crisis, Fernanda Mestre and Fernanda Costa in many ways represent different sides of the same coin.

The two women share the same name and live a few doors from each other in Lisbon's middle-class suburb of Rio de Moro.

Both work in the public sector and both have had their wages cut, as part of their government's wide-ranging reforms.

Civil servant Fernanda Mestre is earning three-quarters of what she earned a few months ago.

And teacher Fernanda Costa has seen her salary fall by 6%. Her husband is also a teacher and he has had the same pay cut.

Similar story, different opinion

Both women tell you how most basic commodities like water and electricity are more expensive now in Portugal, so the smaller amount of money they earn is worth even less in real terms.

"As soon as I get money, it's gone," says single mother Fernanda Mestre. She lives with her 11-year-old son and her 84-year-old mother, whose pension covers the family's rent.

She feels the government, which she voted for in Portugal's general election last summer, is unfairly targeting public sector workers, while private sector companies have been barely affected.

Lisbon suburb of Rio de Moro Public sector workers in Lisbon's middle-class suburb of Rio de Moro are feeling the pinch

However, Fernanda Costa is more resigned to the reality of Portugal's shrinking public sector and the sacrifices its workers are having to make.

"I don't think it's right because I have got less money to spend" she says, "but I think it is necessary because I think we lived beyond our means".

'Missed breakfasts'

The head teacher at Fernanda Mestre's son's school in Rio de Moro, Joao Carlos Simoes, says there is a "new class of poor" whose children attend the school - people who were until recently the "new rich are now the new poor".

Portuguese economy

  • Unemployment 14.8% (Jan 2012)
  • 2011 EU/IMF bailout 78bn euros
  • Austerity measures include privatisations, sales tax increase, freeze or cuts in benefits
  • Spending cuts in schools, pensions freeze, reduction in civil service numbers

He says that over the past year violent and bad behaviour has increased, more kids have free school meals and some children now arrive at school without having eaten breakfast.

"This is a big concern, because if a child is going to do well at school then they need to eat well at home," he says.

"Parents now have two or three jobs and so they spend less time with their kids. The kids are growing up on their own."

As part of its programme of austerity measures, the Portuguese government has increased the nation's sales tax, known as IVA, on some food products.

Dotted around Lisbon there are now small plots of land where people grow their own food to save money.

According to the latest figures, unemployment in Portugal now stands at 14%.

When I met 21-year-old Rita Morbaw at a job centre in Lisbon, she complained that "everything costs too much".

She studied to be a journalist but lost her job at a supermarket two weeks ago. "Before it was the older people who couldn't find a job, now it's the younger ones. It's impossible," she said.

School in Lisbon The head teacher of this school in Lisbon says there is a "new class of poor" whose children attend the school
'We had no choice'

The Portuguese government, led by the centre-right Social Democratic Party, which won elections in June 2011, has been praised by EU leaders for dramatically reducing its budget deficit.

The latest government estimate put its budget deficit for 2011 at close to 4% of GDP, well below the official target of 5.9%.

The Secretary of State to the Prime Minister, Carlos Moedas, told the BBC that the administration had now cut 27% of all managerial positions in central government, as well as 40% of departments in the central government that were deemed to be "inefficient".

"It's not that we had a choice, or we could do this instead of that," he said. "No, unfortunately not."

"The situation was that we have to go through everything and cut."

He says the government is now working hard on making the country's legal and tax systems more efficient, in order to help create more companies to generate growth.

Mr Moedas, who did an MBA at Harvard and worked as an investment banker at Goldman Sachs in London - and whose surname means "coins" in Portuguese - said the government's programme was not being led by Brussels.

"We never talk about the programme of the troika (EU, IMF and ECB) because this programme is about us.

"Eighty per cent of the people voted for the parties that signed this agreement," he said, referring to the fact that Portugal's three main parties all voted in favour of stringent austerity measures for the country.

Jose Manuel Ribeiro outside job centre in Lisbon Not all Portuguese disagree with the government's cuts - even among those who are out of work
A quiet crisis?

Previous protests against austerity have seen large numbers on the streets. However most people, at least for now, seem resigned to accepting the cuts.

Jose Manuel Ribeiro, a financial consultant who has been out of work for two years, "totally agrees" with what the government is doing.

But Thursday's general strike, called by the Confederation of General Workers Union (CGTP), is a test of discontent brewing below the surface.

So far demonstrations have been peaceful. But Joao Pinheiro, a member of the CGTP, who hasn't been paid for the past two months by the bookshop where he works, says people at the moment are "stunned and confused".

"It's blind austerity. The cuts look like a lottery. There's no criteria, no programme, and they are being very, very hard on those who can't afford more austerity."

He agrees that, so far, Portugal has been going through a "quiet crisis". But he warns the government not to wake what he sees as a sleeping giant.

"It's very dangerous if they keep playing with fire, because they could get burned.'"

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