Prime Minister Pedro Passos Coelho announces the new austerity measures during the troika's fifth quarterly assessment mission to Lisbon (Photograph: Miguel A. Lopes/EPA)

In a short televised announcement to the country Friday Evening, Prime Minister Pedro Passos Coelho said employees’ welfare contributions would go up from 11% to 18%, while companies’ contributions would drop from just under 24% to the same level.

Passos Coelho added that the seven percentage point increase will also be applied to state-sector workers.

Among the new austerity measures for next  year is the cut in one of public servants months’ bonus which was recently declared illegal by the Constitutional Court. The prime minister also told the other bonus (Portuguese workers customarily received 14 salaries), would be paid on a monthly basis rather than as a lump sum once a year.

The government was searching for alternatives to the cuts in state-sector workers’ and pensioners’ Christmas and holiday bonuses the Constitutional Court declared illegal and therefore could not be applied next year.

However, pensioners will not get their two bonus months back, despite the Constitutional Court ruling, Passos Coelho said.

The new measures will be included in the 2013 state budget and are meant to meet deficit targets, said the prime minister, adding that the fight against unemployment is one the government’s main concerns.

The prime minister made no mention of this year’s budget.

In order to fulfil its commitments with the international troika, after signing a €78bn bailout programme with the European Central Bank, European Commission and International Monetary Fund in 2011, Portugal must reach a 3% budget deficit in 2013 after a 4.5% deficit expected this year.

with PDV