Analysis: Did austerity help at least anyone? Let us look at Portugal...
It is hard to overestimate effect of austerity measures over Portugal. On the one hand, many economists, including authorities, are saying the worst is over. On the other, social workers and representatives of almost all aid organizations believe that at the very least the social effects of the crisis will worsen considerably.
The authorities keep bringing up its early repayment of a portion of the bailout
loans and record low interest rates for the issuance of government
bonds, as well as the relatively low official unemployment rate of 14
percent. However, Joao
de Sousa of AMI, a charity, says the numbers should be met with skepticism, as the unemployment statistics in
Portugal are kept down by training courses that serve no other purpose,
while many jobseekers, in their despair, have simply not signed up with
the employment agencies.
The largest Portuguese trade union federation,
the CGTP, thus estimates real unemployment at over 25 percent, added to
which are numerous ostensibly self-employed people who earn next to
nothing. More than 100,000 each year have turned their backs on their homeland
since the crisis began, emigrating to Britain, France or Germany. This
is especially true of those with higher education such as engineers and
economists, but also skilled workers and nurses, leading to understaffed hospitals and clinics
The employed also experience tough times. The statutory minimum wage of around 430 euros per month is the exception rather than the rule. According to the latest figures from the national statistics office, the number of poor has risen to 19 percent of the country's population. About 2 million of 10 million Portuguese are forced to get by on less than 60 percent of the average wage, says Deutsche Welle.
"The social problems that the austerity policies brought with them are far from being solved," economics professor Aurora Teixeira of the University of Porto said. The limits are reached, says Teixeira.
However, though Portugal lived beyond its means, the budget now shows surplus. And thus, austerity was a success. Professor also said what was missing were structural changes: Portugal had to increase the quantity and quality of its economic output to increase the flow of money into the country, and it should not concentrate only on services such as tourism. She did not say how this could be brought about.
Though social conditions were drastically worsened, it was exactly these austerity measures that regained the market's confidence in Portugal, Teixeira said. The country was therefore now able to borrow money at low interest rates of just over 2 percent and even repay a portion of its bailout debt ahead of schedule.
There are emerging signs that austerity will end soon: The government has rolled back some wage cuts, and other measures are likely to follow.
