The economy of Portugal
- What caused crisis in Portugal?
- Abundance of labor force in public sector
- Government actions to end crisis
- Inflation rate
Portugal joined EU in the 1986 and since then has remodeled its economy in more than one way. Portugal's economy was mostly based on production of agricultural products, where about two thirds of the country was employed in this sector. After joining the EU Portugal has diversified its economy and its major industries now include: automotive components, tourism, textiles, footwear, wood products, metalworking, oil refining, chemicals, wine, pulp and paper. As a member of EU, Portuguese tertiary sector boomed, more precisely services. This has contributed to countries bureaucracy problem, which implies Portugal to have one of the most complicated and inefficient bureaucratic systems of the world.
Even though Portugal experienced some growth during the 1990's, it still remains a country with a GDP per capita well below European average. In 2007-2008 Portugal's GDP per capita was about 15.500, whereas the GDP per capita for 2011 was about 15.195. This shows that the EU crisis has had great effect on Portugal's economy, not only that the purchasing power of consumers was diminished, but also the overall level on economic activity slowed down. Portugal has been hit by European debt crises severely and over past few years has experienced great domestic budget imbalance, low productivity, slow or negative growth and great pressures from the EU and the rest of the world.
[...] This is the real challenge for the Portuguese economy. These governance problems must be solved to permit the economy to come back to its long-run growth path. REFERENCES Caldwell, A. (2012) Employment Law In Portugal And State Of Austerity Reforms, available at: http://www.crossborderemployer.com/post/2012/10/01/Employment-Law-In- Portugal-And-State-Of-Austerity-Reforms.aspx, viewed: 5 Jan 2013 Chan, S.P Debt crisis: as it happened, October The Telegraph, October viewed: 25 December 2012, http://www.telegraph.co.uk/finance/debt-crisis-live/9583150/Debt-crisis-as- it-happened-October-3-2012.html Duha?ek Gordon 2012, Mjere ?tednje guraju Portugal u bankrot, available at: http://www.tportal.hr/vijesti/svijet/178140/Mjere-stednje-guraju-Portugal-u- bankrot.html#.UOhx6G_AfWZ, viewed : 5 Jan 2013 Entral Intelligence Agency (CIA) 2012, The World Factbook- Portugal, viewed: 3 December 2012, https://www.cia.gov/library/publications/the-world- factbook/geos/po.html Evans-Pritchard, A Portugal to need 'debt haircut' as economy tips into Grecian downward spiral, The Telegraph, January viewed: December http://www.telegraph.co.uk/finance/financialcrisis/9026144/Portugal-to-need- debt-haircut-as-economy-tips-into-Grecian-downward-spiral.html http://observatorio-das- desigualdades.cies.iscte.pt/index.jsp?page=projects&id=115 viewed: 5 Jan 2013 IMF Survey: Portugal on Target to Reform Economy (2012) IMF Survey: Portugal on Target to Reform Economy, available at http://www.imf.org/external/pubs/ft/survey/so/2012/car071712a.htm , viewed on: 5 Jan 2013 Observatorio-das-desigualdades.cies.iscte.pt (2010) Observatorio das Desigualdades: Estudos, available at: Portugaldailyview.com (2011) Bailout: Portugal will have interest rate reduced to Portugal Daily View, available at: http://www.portugaldailyview.com/whats-new/bailout-portugal-will-have- interest-rate-reduced-to-3-5, viewed: 5 Jan 2013 Roche, D Against the tide: Debt crisis Is Portugal the last domino?, Euromoney, June 2011, viewed: December http://www.euromoney.com/Article/2841504/Against-the-tide-Debt-crisisIs- Portugal-the-last-domino.html?copyrightInfo=true Sanati, C Why a Problematic Portugal Matters, CNNMoney, July viewed: December http://finance.fortune.cnn.com/2011/07/11/why-a-problematic-portugal- matters/ Sarmento, J.M., OECD, Journal on Budgeting 2010, Do Public-Private Partnerships Create Value for Money for the Public Sector? [...]
[...] Although there is no unanimous definition of public-private partnership OECD's definition of a PPP is as follows: . an agreement between the government and one or more private partners (which may include the operators and the financers) according to which the private partners deliver the service in such a manner that the service delivery objectives of the government are aligned with the profit objectives of the private partners and where the effectiveness of the alignment depends on a sufficient transfer of risk to the private partners (OECD p. [...]
[...] Fourthly, the amount of payment for overtime has been drastically reduced. Now, workers are 25% extra for the first hour of overtime extra for each following hour and 50% for each hour worked on a weekly rest day or public holiday. The Portuguese government is thinking about additional amendments to the Labor Code in order to recover the economy and reduce costs to employers. The Portuguese government is most likely to make a final decision regarding the additional measures in the year to come. [...]
[...] Austerity measures that Portugal was and still is facing brought it to the verge of fiscal cliff, as the taxes keep increasing. Economy is in a slow down because of constant strikes, workers are unsatisfied and turn to their unions, government is in inferable position and investments have decreased. The euro crisis exhibits certain patterns that are spilling from one country to another. After devastating effect the 2008 crisis has had on Greece, Portugal seems to be next. High government spending, low taxes and lack of competitiveness seem to bring more and more European countries to the verge of bankruptcy. [...]
[...] On the 24th November general strike took place in Portugal. CGTP, the country's largest trade union federation, represents 81 unions while UGT, represents 58 unions. This strike was strong on the public transports sector and affected the activity of schools, hospitals and garbage collection. The activity of airports was also reduced. Some big factories like Volkswagen/Autoeuropa also stopped production due to the strike. But on the retail and private services sector, where there is a high concentration of precarious and poorly paid workers, the strike went almost unnoticed. [...]