Recovery Tsar calls on a ‘New State’ with grass roots reorganisation

 In Digital economy, Economy, In Focus, News

The man who has been appointed by the Portuguese government to coordinate the most significant restructuring, reinvestment and radical change in Portugal’s contemporary history says the country needs a New State which is agile, aware, dynamic and forward looking.

António Costa e Silva, who last year was called by Portugal’s prime minister to design an economic strategy for the next 10 years outlined some of his ideas to tackle the extremely difficult situation the country is going through at the International Club of Portugal and what could be done to rebuild the economy and help Portugal to recover.
Producing a bleak snapshot of Portugal’s current economic situation, the executive president of oil company Partex said, “We cannot be under any illusions that the situation we are going through today is extremely difficult, with a fall in GDP of 7.6%, a fall that would require looking back decades to find a parallel, over 400,000 unemployed at social security centres, more than 27% of our companies with negative own capital that are fighting to survive”.
Not only this, Costa e Silva said the latest figures reveal that one out of every five Portuguese are living on the breadline, affecting hundreds of thousands of people, a dramatic scene aggravated by the economic crisis resulting from the pandemic and the results of which were “just the tip of the iceberg”.
In fact, Costa e Silva said there had already been an economic and social crisis in Portugal and globally before the health crisis, one which was very profound and based on climate changes that have not been experienced for 12,000 years.

Portugal’s ‘trilemma’

Taking stock on what could be done in the short term in a world where the democratic system had been “tested to the limit,” Costa e Silva said democratic countries were not faced with dilemmas but “trilemmas” which meant the three-option struggle to align political power struggles with democracies and the pluralities of political parties and combine these with taking beneficial political decisions for the good of society and companies.
More important than this, inverting the triangle regarding collective goods, promoting the public good, responding to the pandemic and minimising risks to public health.
“We now have to mobilise the cognitive infrastructure (meaning the best minds) that we have in this country and use the knowledge and wisdom of great minds in multiple areas from health and science. We have an immense accumulated knowledge in terms of our companies and economy in the capacities our companies have at the levels of science and technology, in terms of territory and environment and on climate change,” said the Partex executive.
“If we can manage to work more with each other, maintain competition for political power at a healthy level, and above all create large platforms of collaboration, we will be able to prepare our country better for future crises,” said António Costa e Silva.
The recovery Tsar who heads the government’s task-force to apply billions of euros of EU funding to help green up and digitalise the Portuguese economy, said that Portugal should be under no illusions. “We were not prepared for this pandemic, nor are we prepared for the next, let alone a food crisis or natural disaster such as an earthquake which Portugal is prone to,” he added.

Over-dependent on imported gas

Portugal is also over dependent on imported natural gas via the Magreb oil and gas pipeline which represents 50% of the gas used in the country and which could so easily be interrupted.
It is therefore important to build centres of resilience (and focus on alternative sources and supples of energy) to offset such risks and prepare Portugal for future crises.
But meeting the challenges of the pandemic cannot be done without two main strategies: putting people and companies at the centre of the recovery; the other, making Portugal resilient.
Putting people at the centre means investing in qualifications and skills said Costa e Silva who pointed out that the percentage of the population that completes secondary education in Portugal is among the lowest in the European Union.
“If we carry on like this, in 10 years we will have a Sword of Damocles hanging over our heads in terms of our ability to compete in the world. Investing in skills and qualifications generates value. We must create a new appetite for risk,” he said.
And the socio-political pillars of social housing, social facilities, support for the more vulnerable and healthcare delivery should not be forgotten, neither retraining. All are very important he said because the hallmark of a civilisation is not leaving anyone behind.
“We cannot have a healthy society if at its margins we have sections of that society that are continually living on the limits of poverty.”
It was also important to invest in recovering the entire national heath system, into an integrated and inter-operational system that is rationalised, better managed and organised along the same lines and indicators used in some of Portugal’s most successful companies in the private sector.
“We have stopped becoming a de-industrialised country; we have skills in the chemical sciences area, in the creation of active substances used in medicines, in industrial fertilisers, in the pharmaceuticals area and in the production of medical equipment. But we don’t have an industrial policy that enables us to capitalise on these skills and capacities and develop them for the future,” he said.

Companies drive wealth

Costa e Silva said the second core element for Portugal’s recovery were its companies. “We should be under no illusions here that it is our companies that create wealth. They are the drivers of economic development”.
“This dichotomy we always fall into in the discussion between the State and the country’s companies is one that is wrong. The pandemic crisis clearly showed that we need a new state, one that is agile, aware and provides services to its people in health and education, and other areas and this has to be articulated with a dynamic market and healthy companies.
“Over the first two decades of this century Portugal’s variable GDP per capita has been 30-40% below the European average and this is not acceptable. This means that our economy has stagnated, been anaemic and hasn’t grown, and the reasons for and solutions to this dichotomy is what we need to examine and to change it,” explained Costa e Silva.
Economies have to generate wealth, and we have to be capable of doing this. We always discuss the need to redistribute wealth yet never how we create wealth. Skills and education is the first step, focusing on technological innovation is the second, changing the low salaries model by having cutting-edge companies in multiple domains and areas including Internet of Things (IoT), electronic data processing is the third to equip the societies of the future.

Paralysis in decision-making

Portugal also needed to take a long hard look at its companies, especially when the level of capital per worker were among the lowest in the European Union. “We have a capitalisation problem in our companies and I hope within the Recovery and Resilience Program (RRP) to be able to deal with these problems our companies face and have discussions to create new policies here too,” he said.
“When we look at our companies, we see a country of indecision. We’ve been discussing a new airport for Lisbon for 50 years, and we still haven’t got one and for many years we’ve been talking about a development bank, yet we couldn’t seem to decide,” said Costa e Silva.
“If democracies turn into governments that cannot decide, then how can they serve the people. The fundamentals of policies and politics is always to address people’s problems and the task for policymakers in the next decade will be to civilise the future and change our mindset away from being a country which is very focused on the individual. We have extraordinary potential but we just don’t know how to use it,” explained Costa e Silva.
Between 2001 and 2016, according to a range of academic studies, Portugal’s economy and industry produced 39 new products. Costa e Silva asked how it was possible for a country that does not grow and has an anaemic economy to create 39 new products and is Nº 12 in the ranking of countries in the world to do so.
“This means we have the functional skills, but we are falling down in the persistence and quality of our public policies, the quality of our management, our marketing and putting the best we can do onto international sales networks.
“We are a country that stays in silos, we are very autophagic, but the poverty and suffering our country and the difficulties our companies are now in require a change of attitude and direction where we work together and look to the future,” he said.
“We are always looking in the rearview mirror or grabbing hold of the banister of ideas that have already been tried and trusted, we have to change with new ideas and focus on sectors the will shape the future.”
Giving the example of the footwear industry as a sector that had reshaped and modernised to face the future, António Cost e Silva sad that in 2018-2019 shoe sales had achieved a record 83 million pairs. “The sector invested in design, reinvented itself and managed to compete with Italy”.
In metal-mechanics some companies were already working in three-dimensional technology and digital, so what is lacking, says António Costa Silva, is not just helping companies but also looking at the State and the public administration. “If we continue to follow the same methods, the same slow decision-making in processes and legal cases, in planning permission decisions for projects that need implementing, we will fail,” he warned.
António Costa e Silva pointed out that when he was invited by the prime minster to head the recovery commission he had insisted that it had to be independent, autonomous, would not only implement the RRP, but also introduce a new system based on bottom to top action and not the old hierarchical top down method, one that will involve companies, enterprise associations, territorial organisations, autonomous regions, inter-council entities, social solidarity institutions and technology and science institutions, creating platforms between them to mobilise all of the skills and knowledge that the country has. “If we can do all this, we will overcome this grand dilemma,” concluded António Costa e Silva.