LISBON: Portugal’s fourth general strike in two years today will highlight the dilemma faced by the government, which imposed dramatic austerity measures to return to financial markets after a 2011 bailout only to see its bond yields soar this month.
While unlikely to be economically-crippling or violent, the planned strike and protests should send a loud reminder to the administration that the population blames an economic slump and record unemployment on its spending cuts and tax hikes.
Its argument that the sacrifices have made it possible for the country to resume financing via bonds and start paving the way out of the European Union and International Monetary Fund’s bailout programme by mid-2014 as planned, is wearing thin.
Bond yields have spiked across the periphery of Europe’s single currency zone since the US Federal Reserve said it would wind down injections of cheap money that investors used to buy risky bonds. Portugal’s yields have risen more than most.
“If we think about it, our future is a dark, living-under-the-bridge kind of future... But we don’t stop believing, fighting and demanding,” said Catarina Vieira, 24, who plans to take part in rallies and picket lines yesterday.
Analysts expect the one-day stoppage to close many public services, halt trains and the Lisbon metro and halve bus services in the capital, but involve little participation by the private sector or major utilities.
State-owned airline TAP has warned of possible disruption but not cancelled any flights.
Striking means losing a day’s pay and that is something many workers’ families now simply cannot afford in the third year of Portugal’s worst recession since the 1970s, and the unions’ demands for urgent moves to boost growth may fall on deaf ears.
“We’ll call for a new government, because this one is the death blow to the youth and to the country,” Vieira, who has been unemployed for over a year, one of the record 42 percent of Portuguese youth who are now jobless.
It will be the second time the two largest labour unions, with over one million members between then, have held a joint general strike against the government, which came to power right after Lisbon resorted to an international bailout in mid-2011.
Despite record low approval ratings, the centre-right coalition has a comfortable majority in parliament and is practically immune to the opposition’s calls to unseat it.
Portugal’s 10-year bond yield has soared from three-year lows of around five percent, reached in May when the country sold its first syndicated benchmark bond since the bailout, to almost seven percent now — its highest since December. Still, the yield is well below last year’s record of over 17 percent.
“Thank God Portugal got its 10-year bond sold, it wouldn’t stand a chance in hell to do that now,” said Nicholas Spiro, Managing Director at Spiro Sovereign Strategy in London.
On Tuesday, Finance Minister Vitor Gaspar downplayed the rise in the yield, telling parliament he expected to resume regular bond auctions this year.
Reuters
