Portugal paralysed as workers protest austerity measures

A general strike against austerity measures grounded flights and paralysed public transport in Portugal Thursday as workers protested a tough 2012 budget aimed at helping the country pay its debt.

Authorities cancelled nearly all flights in and out of the nation’s main airports, the Lisbon metro came to a standstill and ferries across the capital’s Tagus River functioned only intermittently in what unions said was a necessary bitter pill.

“The strike is a sacrifice for the good of the country,” said Manuel Carvalho da Silva, secretary general of the CGTP union, which along with Portugal’s other main union the UGT had called the strike action.

“It is a red card to the government for its actions that are driving the country to poverty,” da Silva said as he stood in front of a billboard listing cancelled flights at Lisbon’s airport.

Amid the disruption, the Fitch agency praised the contested budget, saying it was well-designed and contained significant expenditure reductions, but cut its rating of the bailed-out country by one notch to ‘BB+’ because of high debt levels and weak economic outlook.

The national TAP airline cancelled 86 percent of its scheduled flights, a company official said, adding that air traffic controllers were planning to ensure only the bare minimum coverage.

Other public services like education, health and the judiciary were also affected and some 30 demonstrations were planned for around the country.

“Everything seems to indicate that participation will be stronger than during the last general strike” on November 24, 2010, said Joao Proenca, a senior official with the UGT union.

Around three million people had turned out for the November 2010 strike, protesting against austerity measures proposed by the then Socialist cabinet.

The current centre-right government led by Prime Minister Passos Coelho has submitted a tough 2012 budget to help reduce the nation’s huge debt.

After Greece and Ireland in 2010, Portugal became the third eurozone member state needing a bailout in May when it could no longer raise fresh funds at sustainable rates on the financial markets.

Among other measures, the budget provides for the suspension of 13th and 14th month salary payments for civil servants and pensioners who earn more than 1,000 euros a month.

Employees in the private sector will see their working day increased by 30 minutes while health and education spending will be slashed, topping off a series of measures already adopted in efforts to reduce the deficit.

Coelho has conceded that the austerity measures are even tougher than those required under the EU-IMF bailout terms but says they are necessary to ensure its targets are met in the face of difficult economic conditions.

The Fitch ratings agency cited the high level of debt on Thursday as it cut its rating of the bailed-out country by one notch to ‘BB+’ because of its debt levels and weak economic outlook.

Fitch said the rating had a negative outlook, meaning it could be lowered again, citing Portugal’s “large fiscal imbalances, high indebtedness across all sectors and adverse macroeconomic outlook” for the downgrade.

It said the government’s commitment to the reforms laid down in the bailout programme was strong and that the 2012 budget was “well-designed,” based on reasonable assumptions and contained “significant expenditure reductions.”

Portugal needs to reduce its public deficit from 9.8 percent of gross domestic product in 2010 to 5.9 percent by the end of 2011 but it stood at 8.3 percent earlier this year, putting that objective in doubt.

The forecast for 2012 looks no better, after the announcement by Finance Minister Viktor Gaspar Monday that its economy is expected to shrink by three percent in 2012.

Unemployment is also set to rise to a record rate of 13.4 percent.

Thursday’s strike follows protests earlier in the month by civil servants and soldiers and a public transport strike in Lisbon and Porto on November 8.