In a televised interview with state-owned broadcaster RTP, Pedro Passos Coelho said everyone in the coalition was aware of the austerity measures announced earlier this week and had their full support, while admitting to negotiate tax hikes.
Portuguese Prime Minister Pedro Passos Coelho said in a televised interview with public broadcaster RTP the government would not back down in any of the austerity measures announced earlier this week, despite admitting to negotiate with the social partners. Passos Coelho reiterated the measures were both necessary and had the support of the coalition members, while hinting at further sacrifices.
The prime minister’s most significant statement was perhaps made near the end of the interview, when Passos Coelho said: “It is impossible to say we won’t ask for more sacrifices.”
However, the most contentious issue on the table was the increase in worker social security contributions and decrease in company contributions, with the prime minister opening the door to negotiations that would guarantee social justice:
It doesn’t mean we’re not open to negotiations and adjusting the measure to discriminate positively those with lower incomes”, said Passos Coelho.
According to the measures announced this week, employee social security contributions are to increase from 11% to 18%, while company contributions will decrease from just under 24% to 18%.
Nonetheless, Passos Coelho stressed the measures were necessary to ensure the fulfilment of the country’s €78bn bailout – agreed with the European Commission, the European Central Bank and the International Monetary Fund – while stating the measure had been proposed by the government to the international creditors.
It was presented by the prime minister, the minister of finance and the minister of social security”, said the chief of government, highlighting the support of junior coalition partner CDS-PP, whose Pedro Mota Soares is the minister of social security.
Questioned about the silence of coalition partner CDS-PP leader and Minister for Foreign Affairs Paulo Portas, the prime minister said it would make “no sense” for the government to negotiate such measures without the knowledge and acceptance of its partners.
Prices might decrease
Pedro Passos Coelho argued that while having a negative impact on consumption in the short-term, the changes to social security contributions will produce a lowering of prices in several sectors of the economy and prevent unemployment from advancing even further.
There are sectors where we can ensure a reduction of prices”, said the prime minister, pointing to state-owned companies such as CTT postal services, or through watchdogs in the communications and energy markets.
“Portugal could have an unemployment rate of 17%” next year without this measure, the prime minister insisted. The government forecasts an unemployment rate of 16% in 2013, from the record high 15% reached in this year’s second quarter.
Opposition against budget, might present no-confidence motion
The main opposition Socialist Party (PS) has been the strongest voice against the government’s new austerity drive, and party leader António José Seguro announced Thursday the PS would vote against the 2013 state budget proposal in parliament.
We won’t be accomplices of the government’s policies”, reiterated Seguro, hours after meeting with President Aníbal Cavaco Silva.
António José Seguro added that the PS will do “everything to stop the government from taking money from the workers to give it to companies”, hinting at a possible no-confidence motion.