IN PORTUGAL unravelling myths Attac Portugal ATTAC Norway - - PowerPoint PPT Presentation

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IN PORTUGAL unravelling myths Attac Portugal ATTAC Norway - - PowerPoint PPT Presentation

Jan 26, 2023 135 likes •519 views

CRISIS AND AUSTERITY POLICIES IN PORTUGAL unravelling myths Attac Portugal ATTAC Norway Conference Oslo, 21st 22nd October 2011 FROM FINANCIAL CRISIS TO A DEBT CRISIS Financial crisis Public deficits to reduce consequences 1%

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CRISIS AND AUSTERITY POLICIES IN PORTUGAL – unravelling myths Attac Portugal

ATTAC Norway Conference Oslo, 21st – 22nd October 2011

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SLIDE 2

Financial crisis Public deficits to reduce consequences

€2,2 Bn

Financial speculation promoted by European Central Bank

  • 1% to create jobs
  • 61% financial system
  • 36% enterprises

FROM FINANCIAL CRISIS TO A DEBT CRISIS 2009

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SLIDE 3

3,75 3,25 2,50 2,00 1,50 1,25 1,00 1,25 1,50

4,25 3,75 3,00 3,00 2,50 2,25 1,75 2,00 2,25

15 Out. 2008 12 Nov. 2008 10 Dec. 2008 21 Jan. 2009 11 Mar. 2009 8 Apr. 2009 13 May. 2009 13 Apr. 2011 13 Jul. 2011

ECB Interest Rates

Main refinancing operations Marginal lending facility

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SLIDE 4

Portugal Government 10y bond yield

www.tradingeconomics.com

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SLIDE 5

The neoliberal strategy ADJUSTMENT THROUGH LABOUR

  • Banks recapitalization
  • Restrain Government Deficit

But who is paying the adjustment, and how?

Income transfer: from labour to capital

  • Support higher interest rates
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SLIDE 6
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SLIDE 7
  • 1. WE HAVE BEEN LIVING ABOVE OUR POSSIBILITIES
  • 2. LOWER COMPETITIVENESS DUE TO WAGES GROWING

FASTER THAN PRODUTIVITY

  • 3. LABOUR MARKET FLEXIBILITY TO CREATE JOBS
  • 4. AUSTERITY IS THE ONLY WAY OUT

CRISIS MYTHS

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SLIDE 8
  • 1. DID WE LIVE ABOVE OUR POSSIBILITIES ?
  • 2. LOWER COMPETITIVENESS DUE TO WAGES GROWING FASTER THAN

PRODUTIVITY

  • 3. LABOUT MARKET FLEXIBILITY TO CREATE JOBS
  • 4. AUSTERITY IS THE ONLY WAY OUT

UNRAVELLING MYTHS

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SLIDE 9

DID WE LIVE ABOVE OUR POSSIBILITIES ?

Germany Greece Ireland Italy Portugal Spain

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SLIDE 10

DID WE LIVE ABOVE OUR POSSIBILITIES ?

Government Debt 2009 - % of GDP Government Deficit 2009 - % of GDP Source: Eurostat

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SLIDE 11

DID WE LIVE ABOVE OUR POSSIBILITIES ?

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SLIDE 12

DID WE LIVE ABOVE OUR POSSIBILITIES ?

Public spending (% GDP) GDP per capita (PPP)

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SLIDE 13
  • 1. DID WE LIVE ABOVE OUR POSSIBILITIES ?
  • 2. LOWER COMPETITIVENESS DUE TO WAGES

GROWING FASTER THAN PRODUTIVITY?

  • 3. LABOUT MARKET FLEXIBILITY TO CREATE JOBS
  • 4. AUSTERITY IS THE ONLY WAY OUT

UNRAVELLING MYTHS

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SLIDE 14

LOWER COMPETITIVENESS?

Germany Greece Ireland Italy Portugal Spain

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SLIDE 15

LOWER COMPETITIVENESS?

Germany Greece Ireland Italy Portugal Spain

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SLIDE 16

LOWER COMPETITIVENESS?

Germany Greece Ireland Portugal Spain

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SLIDE 17
  • Escudo overvalued 60%
  • No impact from wage evolution
  • Other structural factors 40%

LOWER COMPETITIVENESS?

  • 17,3%

1991 - 2006

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SLIDE 18
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SLIDE 19
  • 1. DID WE LIVE ABOVE OUR POSSIBILITIES ?
  • 2. LOWER COMPETITIVENESS DUE TO WAGES GROWING

FASTER THAN PRODUTIVITY

  • 1. LABOUT MARKET FLEXIBILITY TO CREATE JOBS
  • 2. AUSTERITY IS THE ONLY WAY OUT

UNRAVELLING MYTHS

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SLIDE 20

LABOUT MARKET FLEXIBILITY TO CREATE JOBS?

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SLIDE 21

Flexibility in Portugal

  • 619 thousand people unemployed

(12,3% - 4th highest in OECD countries)

  • 60% with no support
  • 1,9 M precarious workers
  • 9 in 10 new jobs are precarious jobs

LABOUR MARKET FLEXIBILITY TO CREATE JOBS?

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SLIDE 22
  • 1. DID WE LIVE ABOVE OUR POSSIBILITIES ?
  • 2. LOWER COMPETITIVENESS DUE TO WAGES GROWING

FASTER THAN PRODUTIVITY 3. LABOUT MARKET FLEXIBILITY TO CREATE JOBS

  • 4. IS AUSTERITY IS THE WAY OUT?

UNRAVELLING MYTHS

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SLIDE 23
  • Main policies in Portugal
  • Export our way out of the crisis?
  • The falacy of composition
  • Rising inequality
  • Interests burden and the snowball effect

IS AUSTERITY THE WAY OUT?

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SLIDE 24

Before the “rescue” plan:

Antecipated elimination of all anti crisis measures TAXES

  • VAT: + 3%
  • Wages: 1% - 1,5%
  • Corporate: 2.5% > €2M

WAGES

  • - 5% all public workers

PUBLIC INVESTMENT HALT AUSTERITY MEASURES

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SLIDE 25

SOCIAL SECURITY

  • Social Integration Income (- 20%)
  • Cuts in child support, students scholarships,

unemployment benefits, health services etc.

  • Bring in proofs – you have the right, but you need to

justify it DURING 2010

  • 460 000 families lost state support
  • 75 000 lost SIS

AUSTERITY MEASURES

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SLIDE 26

The “troika rescue” - not just cuts overall change

  • Privatization of water, electricity, transports, mail

services, …

  • Reduction of public health and education through

cuts and “rationalisation”

  • Radical labour market change

AUSTERITY MEASURES

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2012 – Will it ever be the same?

  • Lost of 14% of wage for all public workers
  • Increase of 30 mns/day on private sector working time
  • Loss of most fiscal benefits
  • Increased VAT tax especially in restaurants
  • Increased taxes on house property
  • Cuts especially on health and ensurance
  • Easier and cheaper worker dismissals

AUSTERITY MEASURES

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CAN WE EXPORT OUR WAY OUT OF THE CRISIS?

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THE FALACY OF COMPOSITION

145 150 155 160 165 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 GDP Constant Prices (€)

Source: IMF

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Households Government Companies

VAT Income tax Profits Tax Energy Tax Other Social Care Wages Interests Consumption Investment

Who pays the Bill? Expenses Revenue

RiSING iNEQUALITY

Source: Público Online

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Evolution of Public Debt (% of GDP) 2010 2011 2012 Debt stock (end of the year) 93,3 101,9 110,5 Debt variation (pp. Of GDP) 10,3 8,6 8,6 Weight of Primary Deficit 6,8 1,6

  • 0,7

Weight of Interests and GDP Snow ball effect 1,0 5,1 6,4 Weight of interests 3,0 4,3 5,2 Weight of nominal GDP Growth

  • 2,0

0,8 1,2 Other 2,6 1,9 2,9 Of which bank recapitalisation support mechanism

  • 1,6

4,7 Stock of debt without bank recepitalisation mechanism 93,3 100,3 105,8

INTERESTS AND SNOW BALL EFFECT

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SLIDE 32
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SLIDE 33

IS AUSTERITY THE WAY OUT?

Austerity “packs” Internactional Financing Programme

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SLIDE 34

GDP

MACROECONOMIC FORECASTS

INFLATION UNEMPLOYMENT

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CAN WE AFORD NOT TO GROW?

Germany Greece Norway Portugal Spain

Indicator 2007 2011 2007 2011 2007 2011 2007 2011 2007 2011

Population (millions) 82,18 81,44 11,11 11,19 4,72 4,96 10,60 10,66 44,48 46,14 CGD, current prices, Bn Dolars 3.328,59 3.628,62 311,24 312,04 387,58 479,30 232,08 241,92 1.444,02 1.536,48 GDP per capita (PPP) K dolars 35 38 29 28 52 53 23 23 30 31 Unemployment rate (%) 8,78 6,00 8,29 16,48 2,51 3,60 8,92 12,22 8,26 20,70

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SLIDE 36
  • No wage and social spending cuts
  • Public bank against speculation
  • Tax transfers to fiscal paradises
  • Financial system effective tax rate 25%
  • Public investment: urban requalification/renewal
  • Audit on Portuguese public debt

ALTERNATIVES

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SLIDE 37
  • Diferent rules for ECB: growth and employment
  • The end of Stability and Growth Pact – a new Pact

for employment and growth

  • Eurobonds and Stronger european budget
  • Financial system reform and control
  • Tax on financial transactions and elimination of

speculative products ALTERNATIVES

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SLIDE 38

EUROPEAN LEADERS MUST LISTEN TO THE PEOPLE!