Bailed-out Portugal's jobless rate hits new record

AP News
Posted: Feb 16, 2012 10:20 AM
Bailed-out Portugal's jobless rate hits new record

Portugal's jobless rate jumped to a record 14 percent at the end of last year, the national statistics agency reported Thursday in the latest grim sign of the bailed-out country's worsening economic problems.

The unemployment rate is the highest since authorities began compiling comprehensive national registers in 1950, and experts predict it will rise further as austerity measures and recession sap the economy's strength.

Debt-heavy Portugal last year followed other eurozone countries Greece and Ireland in taking a bailout. The euro78 billion ($101.4 billion) loan sought to avert looming bankruptcy after a decade of slender growth.

The emergency funding, however, has brought only temporary relief, with austerity measures blamed for worsening the downturn. That has raised fears Portugal may need another loan and more time to pay off its debts, further unnerving investors worried about the economic prospects of the 17 countries using the euro currency.

The Portuguese economy went into a double-dip recession last year. The government forecasts a further contraction of 3 percent this year when it reckons the recession will bottom out.

Many analysts doubt that prediction, however. Tax hikes and pay cuts have crunched domestic consumption while exports are expected to dwindle amid a wider European downturn. Some 75 percent of Portuguese exports go to other European countries.

The national association of bankruptcy lawyers has reported more than 10,000 company insolvencies last year _ a startling 60 percent jump from the previous year.

The government insists its recovery plans, including debt-reduction measures and long-delayed economic reforms, are on track and it won't need more financial aid.

The jobless rate rose from 12.4 percent in the third quarter, the National Statistics Agency said, with the number of unemployed rising to around 771,000 at the end of December. That was up by more than 80,000 from the previous quarter.

"These are certainly worrying numbers," Parliamentary Affairs Minister Miguel Relvas said after a regular Cabinet meeting.

He said the government, which came to office seven months ago, was pursuing policies that would start creating jobs in the medium term, though he declined to speculate how long the turnaround might take.

Trade unions have staged strikes and protests against austerity measures over the past year, though Portugal has witnessed none of the violent demonstrations seen in Greece. All three major political parties, representing 206 of the 230 seats in Parliament, have given their blessing to the bailout program.

An opinion poll published Thursday by the European Institute of Lisbon University's Law Faculty found that most people expressing an opinion don't think austerity is the best solution to Portugal's difficulties, however.

Asked whether they though austerity measures are the best way out of the crisis, 48.4 percent said no, according to the telephone poll by Lisbon company Eurosondagem.

The poll reported that 40.3 percent of respondents answered yes to that question, while 11.3 percent didn't know or didn't reply.

The survey was carried out Feb. 9-10 and based on 1,021 replies with a margin of error of 3.07 percent.