Portugal to enforce stricter unemployment benefits

Big cutbacks in the benefit entitlements of Portugal's army of unemployed are among austerity measures that Prime Minister Jose Socrates vowed yesterday to accelerate as a signal to financial markets that his government is serious about tackling the nation's debt.

Reactions in Lisbon were divided. The state's generosity to the unemployed has long been a target for callers to radio phone-ins. But others blamed it on political mismanagement. "First the politicians should cut out the expense accounts and top-of-the-line cars for themselves before they start cutting the dole," said Antonio Mendes. Mendes is one of the country's 700,000 civil servants and does not believe Portugal will go insolvent, or indeed that his job should be jeopardised by the worsening crisis.

Yet the excessive number of civil servants is blamed for the parlous situation of the economy. The public sector pay bill plus health, education and social security spending are considered high set against Portugal's productivity. Last year alone, Portugal's budget deficit rose to 9.4 per cent of GDP. Under EU rules, it should not exceed 3 per cent.

Carla Oliveira, the owner of a small restaurant in Lisbon, agrees with the government's decision to get tough on the unemployed, or the subsidy-addicted, as she calls them. Ms Oliveira needed staff last year, but, she said, benefits are so high nobody wants to work. "I was looking to hire employees for three months and could only get Brazilians. The unemployed would rather spend their day sitting on the esplanade. The government did well to crack down and they should go further." But Ana Moreira, who works for a private insurance company, disagreed. "They are attacking weak people who live on less than 500 euros a month. The cuts shouldn't affect them, it is unfair."