January 10, 2013 Leave a comment
By LUIS MIRANDA | THE REAL AGENDA | JANUARY 10, 2013
Portuguese Prime Minister Pedro Passos Coelho warned a month ago: The Portuguese, that bears a progressive and growing cut in services for the last year and a half, intends to save another 4,000 million euros a year starting now. For ideas on where to do it, the Portuguese Executive requested a report to the International Monetary Fund (IMF). The report was released on Thursday and immediately sparked controversy (and fear) in the Portuguese population, as cuts and adjustments will be constant and repetitive in the months to come.
Technicians at the Washington-based institution advised Portugal to, among other measures, fire workers, increase working hours for government employees, reduce (more) unemployment benefits and cut (even more) pensions. Only then, they say, will the country reach 4,000 million euros in savings that the Liberal government of Passos Coelho considers necessary to reform the state so that, in his opinion, the Portuguese nation becomes efficient and competitive.
To begin, the IMF experts say the Portuguese system of social protection “is directed disproportionately towards the wealthier and the older.” It adds that the system “pushes out younger workers while keeping the older inside.” To solve that problem, the IMF suggests that unemployment insurance, which now provides subsidies for 26 months and that has already been cut, should be cut even further, and that once it gets to ten months, it is reduced further to become simply a payment of social allowance of just over 400 euros.
The IMF also recommends reducing the wages of civil servants in an amount which can range between 3% and 7%, and get rid of up to 120,000 public employees (from 10% to 20%), focusing mainly on teachers , health professionals and low-skilled employees. In addition, Fund staff recommend ending the discrimination suffered by other employees, who work 40 hours a week, with respect to staff, whose working week is 35.
According to the IMF, the payment for doctor visits (already implemented in Portugal) could be increased up to a third of the expense involved in supplying such service. Right now, going to the emergency room in a hospital in Lisbon costs 20 euros. If the government accepted the IMF’s recommendation, the same visit would cost 50 euros. A mammogram can cost 15 euros and a GP consultation would cost around ten euros.
Pensioners, whose payments have been greatly cut, will experience even more cuts. According to the IMF, for starters, Portugal should raise the retirement age from 65 to 66 years, reduce the amount received by pensioners by 20% so that all payments are equally low.
The report has raised considerable media dust. The left accuses the government of Passos Coelho of thoroughly dismantling the country piece by piece, and establishing a process that will cost more than a mere private insurance scheme. Portuguese State Secretary, Carlos Moedas, has clarified that the report is “very good” and that it will be considered by the Government.
The Portuguese government plans to present in February its own savings plan, which is why it requested the report from the IMF. Now, Portugal plans to include almost all of the recommendations in the report as its own since the IMF itself has now called for such measures.
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