A reflection on 50 years of democracy: Portugal had made huge strides, but the State needs an overhaul says Porto business chamber boss Nuno Botelho

 In Chambers of Commerce, News

Text: Chris Graeme Photos: ICPT

Following the unprecedented crisis caused by the COVID-19 pandemic, Portugal’s recovery and resilience plan has responded to the urgent need to foster a strong recovery, while making Portugal’s economy and society more resilient and future ready. 

At the heart of this is the need for a thorough reform of the State, enhancing public financial management and the efficiency of the public administration, and further boosting its digital transition.

It was one of the several key areas addressed by the President of the Chamber of Commerce and Industry of Porto, Nuno Botelho who was the guest speaker at a lunch organised by the International Club of Portugal (ICPT) at the Marriott Hotel in Lisbon this week.

While Portugal has achieved much in all areas — economic, social, cultural, educational, civic, health and justice since the 24 April Revolution, Nuno Botelho said there were pressing challenges ahead that needed addressing to make Portugal more productive, competitive, efficient and resilient to face the future, and bridge the gap with her European partners as the country has continued to lag behind other Member States.

Rethinking the State

Thanks to some rather “erratic approaches” in the past to reforming the State, the idea is now prevalent that going into politics is something that all parties want to avoid.

“The truth is that we have to rethink the State and its administrative function. Without these reforms demanded by Brussels in return for current and future financial grants, the country will not evolve,” he warned.

“Contrary to all economic common sense, we have more public sector employees than at any time in its history. In a time of digital transformation, of paperless processes and AI, it doesn’t make sense and is difficult to explain, and perpetuates the old aspiration of secure and eternal public employment provided by the State. It is the same problem that was highlighted by the famous early 19th century satirical realist author Eça de Queiroz”, he said.

Putting an end to this entrenched state of affairs was not “an obsession of the right”, it was an urgent necessity for two key reasons: only by an administrative reform of the State could Portugal’s public services become agile, resolute, and facilitate the lives of its citizens and companies. Preventing excessive primary public expenditure which had continued to balloon, causing successive tax hikes to balance the State budget from revenues and never from cutting on the expenditure side was also a problem, he said.

“In a country like ours, with its level of structural needs, and legitimate desire of its professional classes to earn higher salaries, the government needs to rethink the way heath and education function, being more selective in the supply of services, while designing solutions with private and social operators.”

Nuno Botelho warned that it was an “illusion to think we can perpetuate this dualism between the regulating and service-led State given the growing costs that these activities carry, and the urgent necessity for the State to focus resources on other domains”, namely other types of public investment, which today is almost inclusively supported by EU funding.

The challenge of economic growth

After five decades of democracy and three decades of EU funds, Portugal is still a poor country in the European context, with average annual salaries among the lowest in the European Union and with a huge disparity and asymmetry.

“You only have to consider that of the seven regions in Portugal, only Lisbon, Madeira, and the Algarve posted a GDP in terms of purchasing power that was above the national average, with the Metropolitan Area of Lisbon currently the only region in Portugal that favourably compares to the European average.”

“The country has to release its economic potential, adopt public policies that are private investment friendly, and capable of encouraging more cohesive development across the country, while offering more predictability and stability for overseas investors who want to invest in Portugal, as well as making us more competitive from a tax point of view ” added the Porto Chamber of Commerce and Industry president.

Companies also needed to invest more — although how they can do that with such elevated national insurance contributions and taxes at the current rate is a mystery! — to gain productivity, better working conditions and efficiency, investing in ongoing staff training throughout their working lives, and in technological differentiation.

“We have to bring our companies network up to date, and move from being a micro economy of small companies, to one that has larger and more robust companies that can gain scale. Finally, companies that are more export orientated towards international markets, that are more ambitious than they have been, aspiring to have brands and products that are recognised the world over.”

Reforming Justice

Reforming justice was another fundamental area that was required. Contrary to vox pops, the data did not suggest that the problem with the effectiveness and robustness of Portuguese justice was down to a lack of resources and means.

In fact, Nuno Botelho pointed out that Portugal’s budget for the justice system was within the European average, with the number of judges, magistrates and lawyers “frankly above average European levels”.

The problem was one of timing and the discrepancy between the time taken between lodging a case and actually hearing it, which “exceeds acceptable levels”, with administrative red tape that is almost 4 times higher than the European average.

Improving the management of the judicial system and the judiciary was the solution; concentrating services, fostering greater transparency, appraising judges and magistrates, and creating better goal-driven management models and incentives to speed up cases in a system that should be centred around performance indices. In other words giving marks out of 10 for efficiency.

On the other hand, it was also vital to limit or even eliminate irrelevant regulations on the cases side, particularly the excessive appeals that are currently allowed under the law.

Mobility Policy

Transport and mobility in terms of urban planning and territorial management also needed a through rethink.

“There are many who have argued for some time that investing in a good network of public transport is the most effective solution to alleviate the pressure on housing in large urban centres and to reduce an over dependency on private cars from home to work and back again.

“This largely happens because the average time taken in car journeys to work and back is less than half the time that he time the average commuters would take on the same journey by public transport. This discrepancy has two consequences: opting for going by car and increase the pressure to look for housing close to the workplace.”

Nuno Botelho says a more efficient strategy would be to offer a more intelligent and effective system of public transport, which would reduce private car use, and make it feasible for people to live further away from their work places, by investing in a better and more modern rail system.

Institutional Corruption

There is in Portugal a deep seated disbelief and mistrust in public institutions, and an aversion to public service with the gulf between communities and the public sector never so great as it is now.

This is reflected in “civic absenteeism” and an adversity and disinterest in policy proposals, as the population increasingly veer to solutions from populist and demagogical parties. This required a reflection from all moderate sectors of society in order to rebuild the public’s trust lost in a social contract that has been compromised.

On the other hand, this persistent and destructive idea about politics and civic associations is not only contributing to a lack of public trust and credibility, but is also dissuading people from taking part in active civic and public life.

In Nuno Botelho’s opinion three factors negatively contributed towards this: gutter media and social network distortion reduced to basic voyeurism, moral and restrictive incompatibilities that have significantly diminished the possibilities to recruit people to public offices, and paternalistic judicial powers that encourage smokescreens of disinformation and strategies to promote public show trials with a conduct that is inappropriate and not worthy of a State of law. These were two phenomena that were destructive for democracy in Portugal, and it would be a “fitting tribute to 25th April to reverse this trend, giving back credibility to our institutions, restoring public confidence, and making it possible for people to exercise a truly free and full citizenship”.

Portugal has made progress

It has not all been bad, and Portugal has made great strides over the past 50 years. Making a retrospective summary of the past 50 years of democracy in Portugal since 25th April 1974 Revolution, which overthrew and dismantled the Estado Novo dictatorship which had run Portugal since 1933, Botelho drew the conclusion that Portuguese society today, in terms of conditions of life — social, economic and financial — had no parallel compared to 1974.

This was particularly true of education. In 1970, Portugal had a high illiteracy rate of 26%. Today it stands at just 3%.

The number of degree holders in 1970 was only around 50,000 people. Since then it has increased by 34 times, now at 1.7 million.

In terms of sexual equality in higher education, in the 1990s there were 10% more men than women doing degrees in universities and colleges, and women are catching up to close the gap. In 1960 72.1% of women had no schooling at all. Today that has fallen to 7.2%. As for higher education only 0.3% went to college or university; today 22.4% have degrees or the equivalent.

In health, life expectancy has risen from 64 years to 78 in men, and from 70 to 83 in women thanks to national vaccination campaigns and the creation of the Portuguese National Health service (SNS) and health centres, with infant mortally reduced by over 50% with a vaccination rate comparable to the best performances worldwide.

Housing conditions too have improved immeasurably with few properties not having basic infrastructure (electricity, running water and bathrooms), but in 1970, over 36% of homes did not have electricity supplies, 42% were not linked to the sewage system, and 53% did not have running water.

Today there are new problems, such as an ageing housing stock, and energy poverty. But the reality in terms of comfort, hygiene, and safety is incomparably better than the situation pre-25th April, 1974.

And life has got better for the population. Access to better food, improved public and private transport systems and widespread car ownership, the proliferation of telecoms (broadband and fibre Internet and mobile systems), and access to leisure and culture.

But the greatest progress since the revolution for Nuno Botelho has been the conquest of popular sovereignty, the safeguarding of rights, guarantees and freedoms of the Portuguese, and the consolidation of a State of law with civil rights.

However, the challenges that Portugal has before it were no less important or urgent than the challenges Portugal faced in 1974.

“We have this rather excessive tendency to contemplate the past and ignore the defects and problems that also existed. At the same time we sweep the structural fragilities that persist under the carpet. A large swathe of the Portuguese population was on the brink of poverty before the introduction of the social security safety net, so we need to contemplate the victories that have been won and consolidated since 25 April, 1974 so that we can now focus on having a county that is more cohesive, fairer, with better opportunities for all, greater ambition, and also greater productivity”, concluded the President of Porto’s Chamber of Commerce and Industry, Nuno Botelho.