Portuguese incomes fall 5.3% with richest and youngest hardest hit
Portuguese average incomes have fallen 5.3% despite the Government credit lines to support families.
This is the conclusion of a Bank of Portugal report into the impact of the novel coronavirus on incomes and wages published on Thursday.
On average, available disposable income before the pandemic was €1,566 per aggregated family member in Portugal.
After the beginning of the pandemic, and taking into account Government support measures, this amount has fallen to €1,482 or €84 down on pre-pandemic incomes.
In the case of employment income (wages), it represents a €71 fall, from €861 to €800. And Portuguese incomes haven’t fallen by a greater extent thanks to the simplified lay-off and extraordinary credit support regimes introduced in March to offset the reduction in economic activities faced by independent and freelance workers.
Nevertheless, the 8% reduction in employee income is greater than the reduction in available income.
The report’s findings come at a time when a further 100,000 Portuguese have applied for unemployment benefit since March according to statistics updated by the Ministry of Work and Social Security published on Tuesday.
However, the difference in the figures between reduction in work income and the reduction in income available is explained by that swathe of the population which is not currently directly affected by the economic consequences of the coronavirus, either because they don’t have work-related income (30% of families), or because they work in sectors that are pandemic resistant.
This is the case of pensioners and public admin workers and those employees in areas that are marginally affected by the crisis, or not at all (from an economic point of view), such as health.
The Bank of Portugal also states in a report that the wealthier will be more penalised by a fall in income than the poor.
The institution led by Carlos Costa states “The poorest of all, who do not have income from work and pensioners, for example, will practically not feel financial effects since they don’t have income or salaries”.
“In the group of the 20% of families with the lowest incomes, the average available income has fallen by 2.4% compared to a reduction of 7.8% in the 10% of families with the highest incomes.”
In terms of age, young employees and people aged 35-44 are most suffering the financial effects of the pandemic.
And in terms of surviving on savings and available income set aside, those on low salaries can pay their expenses for a month while the richest in terms of income can survive for at least a year.
Regardless of the situation, the report concludes that when the pandemic ends, mortgages, instalments on bank loans will have to be paid all the same and it will be the poorer and those who have become unemployed who will face a much more difficult situation.