Portugal’s government has defied the skeptics and made a success of its uneasy alliance of left-wing parties. But not everyone has benefited.
Just a few years ago, Portugal was mired in its deepest economic recession since 1975. When I moved to Lisbon in 2011, the country was down on its knees, its people drowning in unemployment and suffering tax hikes in exchange for a €78 billion bailout.
But in 2015 an unlikely parliament-only alliance between the Socialist Party (PS) and left wing-parties, referred to as a geringonça (which translates to something like a “contraption”) turned the country into a success story. Socialist Prime Minister António Costa became the poster boy of the European left and opinion polls indicate that it is likely he will be re-elected in October.
While countries like Italy shift toward far-right populism, it doesn’t seem to stand a chance in Portugal. The new Basta! (“Enough!”) party, whose leader once opted to skip a debate with other candidates on national television to comment on football on another channel, has no seats in parliament. A conference of far-right groups held in Lisbon earlier this month saw only 65 people attend and instead sparked a protest that attracted hundreds of people who marched down streets in the city center slamming the government for allowing such an event to take place.
The government has benefitted from improved economic indicators and falling unemployment. Also, the country’s political landscape is different from most of Europe. “Euroskepticism, immigration, and sovereignty are themes that are not present in Portugal,” António Costa Pinto, a political analyst, pointed out to Berlin Policy Journal.
Despite widespread initial skepticism, the Socialist government has been praised by Brussels for turning around the economy, cutting the deficit, halving unemployment to 6.4 percent, reversing cuts to wages, and offering businesses incentives. Portugal’s economic recovery and the rise of the left has been portrayed as a success story, with the Standard & Poor rating agency lifting the country’s status from junk to investment grade.
Too Little to Live On
But might Portugal’s success story be overrated? The International Labor Organization said in a recent report that while Portugal had “demonstrated that taking steps to foster employment-oriented policies and safeguard social cohesion helped to speed up its recovery, it was too soon for it to ‘rest on its laurels.’” The report went on: “There are still a significantly higher number of precarious workers than prior to the crisis, and the young and the long-term unemployed continue to face particular challenges in their integration into the labor market. The country’s external debt remains high.”
Costa’s Socialist Party had come to power in November 2015 after an inconclusive general election, by forging an unexpected “anti-austerity alliance” with the far-left Left Bloc and Communist Party. They ousted the center-right bloc led by Passos Coelho, which had been in power since 2011 and had imposed harsh austerity in exchange for a three-year €78 billion bailout program. The geringonça operated by vowing to overturn austerity, which Costa referred to as “tearing down the last remains of a Berlin Wall,” while promising to comply with EU rules.
After seeing her salary frozen over several years, Paula Fernandes, 50, initially had high hopes in the new government. She was among state workers demanding a retroactive salary hike to recover the income she had lost. Today, her living standards have improved, but not as much as she had hoped. “My salary has increased a little bit, but so have my taxes and the cost of living,” Fernandes explained.
Portugal’s minimum wage currently is €600 per month, up from €530 euros in 2016. According to a study by Lisbon’s ISEG university, €1,000 a month is the minimum amount one needs to pay for housing, food, and other basic living expenses.
“That idea [that the economy is growing] is a propagandistic vision of the government,” Raquel Varela, a historian, researcher, and university professor at Nova University Lisbon, said. “There was a drop in the real value of wages and an increase in taxes. There is less unemployment, but the number of people earning the national minimum wage tripled,” Varela added.
Fuel-tanker drivers are among workers fighting to have their salaries raised, from €650 per month to €1,000 by 2025. They recently held a strike that led the government to declare a state of crisis and to issue a decree ensuring they would deliver enough fuel during the peak of its tourism season. This followed the country’s worst labor unrest in years in April when 40 percent of petrol stations were left without fuel.
“A responsible government has to be ready for the worst,” Prime Minister Costa said at the end of an emergency meeting over the strike, which took place just two months before the general elections on October 6. The government’s move to issue a civil order divided the government’s parliamentary base, with Left Bloc leader Catarina Martins complaining that “issuing a civil requisition at the request of employers is a mistake and a restriction of the right to strike.”
Portugal has undoubtedly made headway since having to seek the bailout back in 2011, when it was forced to commit to a set of measures. Yet some of those measures are contributing to the rise in inequality. One of those was a new rental law that liberalized the housing market and led to a rapid escalation of house prices, which soared by 18 percent in 2017 alone. Now previous residents are being evicted in droves.
Lisbon’s Alfama neighborhood, where I live, and which is featured in Wim Wenders’ movie Lisbon Story is bustling with tuk-tuks, and the nearby new port terminal is bringing in a record number of tourists. It has gone from being a “slum by the sea,” or a “ghetto with a view” as it was described by the New York Times in 1988, to a tourism hot spot. My next door neighbor recently mentioned that there were just a handful of long-term residents still living on our street.
The geringonça is now taking steps to curb social inequality and discontent, with a new law aiming to treat housing as a citizen’s right amid complaints that tourism has become unsustainable. So not all is rosy in Portugal, despite Lisbon’s gleaming, newly renovated historical buildings and a city center, once abandoned, now bustling with life. And not everyone is benefiting from the country’s newfound success. •