Portugal's public workers strike against wage, pension cuts

First joint general strike by two main unions in more than a decade
By Axel Bugge
|hrreporter.com|Last Updated: 12/16/2010

(Reuters) - Portugal's two biggest unions held their first joint general strike since 1988 on Nov. 23, hoping to weaken the Socialist government's resolve on implementing austerity measures meant to tackle a debt crisis.

The strike, the first by the country's two main unions (UGT and CGTP) since 1988, disrupted train, bus and ferry service, grounded planes and halted services from health care to banking in protest against wage cuts and rising unemployment in western Europe's poorest country.

Prime Minister Jose Socrates, whose government is struggling to quash speculation that Portugal will be the next in Europe to need a bailout after Ireland and Greece, has pledged to stay the course on wage cuts, pension freezes and tax hikes to cut the budget deficit.

"Maybe the strike will not provoke radical changes in the austerity course the government has chosen, but it does represent an additional element of uncertainty in the already unstable setting in the country," said Elisio Estanque, a sociology researcher at the University of Coimbra.

The unions hope to tap into the growing dissatisfaction with the minority Socialist government's austerity measures, which also include across the board spending cuts in public services.

"It's the workers who are paying for the crisis, not the bankers nor the shareholders of big companies," said Leandro Martins, a 65-year old pensioner.

"This is a strike against rightist policies, to demand new policies serving the Portuguese people," he said.

Portugal has suffered from years of low growth - unlike other weak euro economies such as Ireland and Spain that went from boom to bust - and waning competitiveness which economists say undermines its ability to ride out the debt crisis.

The country's risk premium - or spreads on its bonds over safer German Bunds - hit a euro lifetime high on Nov. 11 and was close to that level on Tuesday, ending at 450 basis points.

Even though the economy is growing this year, economists now fear it will slide back into recession next year as higher taxes and civil servant wage cuts of five per cent bite into consumption. Unemployment, already at its highest since the 1980s at 10.9 percent, could rise further.

Lisbon has been plastered with banners for weeks urging workers to join the industrial action, and national airline TAP, workers at Volkswagen's Autoeuropa plant, public train and bus drivers  all promised to participate.

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