HOW PORTUGAL IS HEADING TOWARDS FULL EMPLOYMENT... BY DOING THE OPPOSITE OF WHAT BRUSSELS DEMANDS

A rise in the minimum wage, a tax on high turnover, an increase in pensions… Lisbon is daring to go against the EU’s economic dogma. And much to the chagrin of the advocates of austerity, this policy is bearing fruit.

A left-wing government that has masterfully revived its country’s economy by boosting consumption and finally developing a sensible social-liberal policy certainly deserves praise! Well done!

Yes, yes, the turnover tax does make you jump... But it only kicks in at €35,000,000... so there’s still a tiny bit of leeway -;)

Indeed, we have seen for a long time now that austerity policies do nothing to revive the economy... quite the opposite... If anything, they merely subsidise an ever-growing number of MPs and politicians who divide up the pie amongst themselves whilst the people tighten their belts.

In Switzerland, we’re also under a certain form of austerity policy, since despite our ‘highest salaries in the world’, our overheads (also the highest in the world) leave us with nothing at the end of the financial year... So much for boosting consumption!

Let’s not even mention our unfortunate elderly, who, after a hard life of labour, will find themselves in poverty, on a drip of social security, waiting to die in their small flats where the landlord hasn’t carried out a single renovation in the last 50 years! The Swiss dream is a bit of a pipe dream in the end, isn’t it?

It is therefore time to take charge of and manage one’s savings, investments and pensions – and, by extension, one’s children’s future – because, unlike Europeans, who for the most part leave one or more properties to their children, in Switzerland we tend to bequeath debts instead...

Let’s invest wisely in income-generating property in emerging markets, such as Portugal, Thailand or Cambodia, rather than letting money sit idle and lose value day by day...

Alain Farrugia

Could there be a Portuguese counter-model to the famous German model?

Judging by the excellent figures Lisbon can boast, it would seem that the dogma of austerity, touted by the European Union (EU) as the only viable economic option, is being seriously called into question.

With an unemployment rate in steady decline since November 2015, Portugal – which was on the brink of economic collapse just a few years ago – is now doing more than just getting back on its feet: it can even look down on its neighbours, foremost among them France. Whilst the unemployment rate peaked at 17.5% in early 2013, it now stands at just 7.9% in early 2018, which is below the 8.9% recorded by France.

Have the Portuguese, as model European pupils, agreed to a wage freeze or cut in order to get back on the path to employment? Quite the contrary: the minimum wage was increased from €530 to €557 in 2017 and is set to rise to €600 in 2019. Has Lisbon, then, followed the French and German example by easing the tax burden on businesses? Again, not at all: the Portuguese government has, for example, introduced a tax for all companies with a turnover exceeding €35 million.

In reality, on many points, Portuguese economic policy takes the exact opposite tack to that recommended by Brussels and applied by Berlin or Paris for several years. Portugal’s 2018 budget thus provides for an increase in state pensions, a programme to enhance the civil service, and—far removed from the trickle-down theory—a tax cut for the middle classes. Whilst Brussels theorises and imposes a doctrine of austerity based notably on wage cuts and drastic reductions in social spending, Portugal thus appears to contradict all the European lessons on economic matters

Why Portugal’s success fails to impress Brussels

Antonio Costa’s left-wing government can boast of having successfully implemented an ambitious economic policy. Why, then, is the Portuguese model so little praised within the EU and so rarely featured in the press? No doubt because it demonstrates that stimulus policies – a concept that has become almost taboo in Europe – can indeed bear fruit. These policies are based on a simple idea: stimulating consumption by improving wages and thereby filling companies’ order books, with positive effects on investment and productivity.

Whilst many European governments committed to the liberal and austerity dogma are demanding sacrifices from their citizens, with the promised results slow to materialise, it is understandable why the political choices of António Costa’s government generate so little enthusiasm among the right-wing opposition, which supports Europe’s austerity policy. The Portuguese Prime Minister does not hesitate to directly challenge the line once followed by the right, in line with EU expectations: “The austerity policy pursued in recent years has led to an unprecedented rise in unemployment, with devastating social consequences for young people and the least-qualified citizens, as well as for families and the thousands of unemployed Portuguese: it has also been associated with a devaluation of the dignity of work and workers’ rights.”

    “The austerity policy has led to an unprecedented rise in unemployment with devastating social consequences”

This unorthodox policy is all the more irritating to the authorities in Brussels. The Commission also considers that Portugal’s 2018 budget does not meet the European requirements for reducing public spending, set at 0.6%, as it would only allow for a reduction of... 0.4%. The EU seems to be struggling to accept that Portugal is proving the Brussels mantra wrong – namely that only a reduction in public spending can reduce the budget deficit. By demonstrating that a demand-side policy is capable of triggering a virtuous circle leading to increased government revenue, Lisbon is calling into question the very foundations of an economic dogma that the EU stubbornly insists is set in stone – or is it perhaps part of its very DNA?

A very European paradox: the two most zealous defenders of Brussels’ economic doctrine, Berlin and Paris, are far from being the best placed to show the way. With growth slowing, consumption falling and lower investment in the first quarter of 2018, France and Germany might appear less confident. And yet, the German model still enjoys exceptional popularity across Europe, and Emmanuel Macron is more determined than ever to take the lead in an EU 2.0.

Nevertheless, in France, one of the parties most likely to applaud these policies – which run counter to European recommendations – puts this flattering record into perspective. For Charles-Henri Gallois, head of economic affairs at the UPR, taking into account the mass exodus of the working-age population is essential to understanding the dramatic fall in the number of unemployed.

Source: RT FRANCE