António Costa at the International Club of Portugal
Prime Minister proposes coalitions between Government and companies
Portugal’s Prime Minister António Costa has called for a “coalition” between the Government and companies in order to up the salaries of employees as part of his election wish-list for his party’s next term in office should it win the General Election in October.
Addressing business leaders at the International Club of Portugal (ICPT) on Thursday, the leader of the PS ruling Socialist party said he envisioned various partners from the business community in this tentative coalition.
The Prime Minister said that since 2017 and for the first time since the beginning of the century Portugal has been growing above the European average. It was the same in 2018 and forecasts suggest GDP growth will be the same this year and in 2020.
“And even with the most pessimistic predictions from international entities like the IMF for the world economy, Portugal should continue to enjoy growth until 2021”, he said.
This growth, he said, had been sustainable and supported by company investment and from the export capacity from Portuguese companies selling overseas.
Growth has also allowed growth in employment and job creation, a sharp fall in unemployment, with more long-term, full-time employment for young people, and an unemployment rate that had fallen from 12.6% to 6.7%.
At the same time, the number of full-time contracts have grown significantly, 92% of the 350,000 jobs created were full-time contracts. In terms of the recovery of salaries, not just the minimum salary which had grown 20% in value over the past four years, but salaries taken as a whole had grown by 9.2% on average over the past four years.
This upward growth curve was essential in order for Portugal to find a sustainable path in budgetary consolidation and a reduction in its public debt.
“Today we have the lowest budget deficit in our democracy, in 2018 it was 0.4, this year we predict 0.2 while all international indicators seem to show that notwithstanding the economic threats internationally, trade wars (China and the US), the Brexit effect, the risk of a slowdown in some large European economies (namely Germany), then our economy should continue to progress.
The Prime Minister said that Portugal needed to attract back the talent it had lost during the Great Recession when many young people had gone to work overseas. It was why the Government has created the “Return Programme” which helps talent to return to Portugal by offsetting removal costs as well as a 50% reduction in taxes on IRS income tax.
The Prime Minister, who is widely expected by the polls to win a landslide majority at the forthcoming elections on 6 October, presented his party’s main priorities for the next four years: dealing with climate change, moving Portugal further towards a digital society, fighting inequality and dealing with Portugal’s tumbling birth rate.
The President of the International Club Manuel Ramalho said: “We are weeks away from another important election for our country and all seems to indicate that your party will win the next elections with an absolute majority and I can only say that if this is good for Portugal, I hope you win.”
Another challenge was to work out how to improve the level of salaries and incomes so as to attract young talented people who can contribute towards a greater productivity of Portugal’s companies and competitiveness of the economy and encourage this talent to stay in Portugal.
The long-term sustainability of Portugal’s success, however, also depends on external economic factors. This week the European Central Bank announced a fresh stimulus package in an attempt to prevent the fragile eurozone economy from grinding to a halt, with an interest rate cut and plans to pump €20Bn a month into the financial markets.