Portugal's first quarter figures reveal spike in unemployment rates, with government cuts expected to harm growth further
Bailed-out Portugal added to the unemployment woes of southern Europe on Thursday as the country's jobless rate hit a startling 18% of the working population.
The first quarter figures from the national statistics institute revealed that youth unemployment had soared even higher, with 43% of the under 25s who are not studying now unable to find work.
"It is a dramatic and brutal increase," said Helena Pinto, a deputy for the Left Bloc party, who also pointed to a leap in emigration by people desperate to find work.
Portugal's economy is expected to shed yet more jobs and shrink by a further 2.3% this year, as prime minister Pedro Passos Coelho's government forces ever-deeper austerity on the country at the bidding of the troika of lenders who keep it afloat - the International Monetary Fund, the European Central Bank and the European Commission.
Portugal has now been in recession for almost three years and Passos Coelho's announcement last week that he would cut another €4.8bn spending over the next three years is expected to harm short-term growth further.
Recent measures include the decision to sack one in twenty public employees, increase civil service working week from 35 to 40 hours and raise the retirement age by a year to 66. On Thursday government sources let it be known that civil service pensions may also suffer as the country tries to plug holes in the social security system.
But austerity has so far failed to achieve its main target of taming the country's budget deficit, which increased last year from 4.4% of GDP to 6.4%.
Last month the country's constitutional court threw out €5.8bn in cuts to, amongst other things, civil service pay and sickness benefits.
A troika mission is this week studying government measures designed to replace those cuts and study Portugal's progress since it requested a bailout in April 2011.
There was better news earlier this week with the government selling ten year bonds on Tuesday for the first time since the bailout, raising €3bn.
The partial return to markets, where it offered 5.7% interest, was seen as a sign of potential recovery in a country which needed €78bn of bailout money to escape bankruptcy after its debt rating was reduced to junk status. Officials said it could have sold three times as much debt this week, raising hopes that Portugal could wean itself off aid next year.
"We have not only completely got the financing we need for this year, we've also started gathering the financing we need in 2014 so as to ensure we can exit the bailout program successfully," finance minister Vitor Gaspar said.
The government forecasts a third straight year of recession in 2013 and the European commission see unemployment rising to 18.5%.
As austerity measures fail to spark growth in other southern European countries, the troika has shown some slight signs of softening and recently extended the repayment period for Portugal's bailout loans by an average of seven years - but it has to produce cuts to compensate for the constitutional court decision first.
Meanwhile figures from Greece on Thursday showed youth unemployment rose above 60% for the first time in February, reflecting the pain caused by the country's crippling recession after years of austerity under its international bailout.
Greece's jobless rate has almost tripled since the country's debt crisis emerged in 2009 and was more than twice the euro zone's average unemployment reading of 12.1% in March.
While the overall unemployment rate rose to 27%, according to statistics service data released on Thursday, joblessness among those aged between 15 and 24 jumped to 64.2% in February from 59.3% in January. A year ago in March 2012 youth unemployment was 54.1%.
Athens has lowered the minimum monthly wage for those under 25 years by 32% to about €500 to entice hiring.
Greece's economy is in its sixth year of recession and expected to slump by 4.2 to 4.5% this year.
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