Consequences of EU and national economic and social policy: Portugal

2. Welcometo the 4th conference of Alliancestofightpoverty

4. All documents youwillfind on alliancestofightpoverty.wordpress.com

5. The consequences of the EU and national economic and social policy Greece George Dassis Economic and Social Commitee EU

6. The consequences of the EU and national economic and social policy Portugal Maria José Domingos EAPN

7. A torn Europe? Europe on two tracksFor a economic and social policy based on solidarityDubin, 10 May 2012 Maria José Domingos

8. Objectives • The social inequalities in Portugal • The consequences/social impact of the crisis on people experiencing poverty and the effectiveness of governments exit strategies/influence of the EU. www.eapn.pt

9. Socialinequalities • Portugal is 3rd country of the OECD where social inequalities are bigger • The amount earned by 20% of the population with the higher income, is about 7 times bigger then the one of the 20% of the population with lowest income • This inequality is even greater when we find that 10% of the wealthiest population earns 9,2 times the income of poorest www.eapn.pt

10. Socialinequalities • Inequalities in the income distribution aggraveted by na unfair fiscal system • Indebtedness of the families • Closing and relocation of factories and industries and “emigration” of investments to other countries with cheaper and qualified labour markets • Fixed quotas in agriculture and fishing • Demographic changing: the decrease of the active population • The balance of the use of the Structural Funds is doubtful • Weak democratic culture, lack of mobilization of the civil society around the causes of national interest www.eapn.pt

11. Socialinequalities Distribution of workers for monthly earns In: Farinha Rodrigues, Carlos, Desigualdades em Portugal www.eapn.pt

12. Socialinequalities Atriskofpoverty rate - 2009 • Before social transfers 43,4% • After social transfersrelative to pensions 26,4% • After social transfers 17,9% • Employed 10% www.eapn.pt

13. Socialinequalities At -risk-of-poverty rate after social transfers according to sex and age group, Portugal, 2010 INE – SurveyonIncomeandLivingConditions 2004-2009 (ICOR;EU-SILC) www.eapn.pt

14. Socialinequalities Indicators Europe 2020 www.eapn.pt

15. Background Context - Timeline March 2011 - Portuguese Government presents NRP Portugal 2020 22 March 2011 - Prime Minister resigns after parliament rejection of austerity measures 7 April 2011 - Formal request for financial assistance made on by the Portuguese authorities 17 May 2011 – “PORTUGAL: MEMORANDUM OF UNDERSTANDING ON SPECIFIC ECONOMIC POLICY CONDITIONALITY” signed between the European Commission and Portugal 5 June 2011 – Legislative Elections; Coalition Government formed afterwards 7 June 2011 - EC Country Specific Recommendations for Portugal – “…apply the policies defined in the Memorandum” (Recommendation approved by the Council of the European Union in 12 July 2011) 01 July 2011 – Government Program Approved 05 August 2011 – The Minister of Solidarity and Social Security presents the Social Emergency Programm (SEP) www.eapn.pt

16. Consequences/Social Impact of the Crisis • Economy • Decreasing GDP:the GDP recorded a year-on-yearchange rate of-2.8% in volume in the4th quarterof 2011 (-1.9% in the3rd quarter); • DecreasingPrivateConsumption:estimetedvalue for 2012 -7.3%; • Decreasingexports:from 7.4% in 2011 to 2.7% (Banco de Portugal Spring 2012) • Inflation rate in 2012: 3.2% www.eapn.pt

17. Consequences/Social Impact of the Crisis • Labour Market • Unemployment • In the 1st quarterof 2012, theunemployment rate was 14.4%; • 49.8 % oftheunemployed are oflongterm; • 35.4 % isthe rate ofyouthunemployment (15-24 yearsold). (INE) • More flexibility in labourrelations: decreasingofemployee’s social protectionandrights: • reducedcompensations for contracttermination; • minimumcompensationabolishedandmaximumcompensationintroduced. www.eapn.pt

18. Consequences/Social Impact of the Crisis • Decreasing Income : • Special tax on Christmas Subsidy in 2011(almost 50%, for wages above the NMW). • Income Tax Increased, by reviewing the income brackets and the tax percentages associated • Pension Taxes increased (pensions above 1.500 €) • Reduction of the unemployment benefit and other social rights and extreme concern with the inspection of the Social Insertion Income • Freezing of wages in the public sector, that has consequences in the private sector • Suspension of the Christmas and holidays subsidy for all the public sector since 2012 • Since August 2010 there are changes in the conditions/requirements to access social protection benefits such as: the Parental social benefit, Family benefit for children and young persons, the scholarships, etc www.eapn.pt

19. Consequences/Social Impact of the Crisis • Rising Costs: • Consumer Tax: Maximum VAT tax: 23%; • Goods and services with reduced and intermediary tax were reviewed: changes from reduced to intermediary tax and intermediary tax to maximum tax are expected, in some goods and services; • Utilities: VAT increased to the maximum tax in Electricity and Distributed Gas; social tariff was created for lower income families; • Rising costs with Public Transports: since August 2011, tickets and passes are more expensive, 15% in average and in some cases 20% or more; the Social Tariff was created for people with lower income (problems in accessing the benefit), in January 2012 there was again an increasing; • Access to health costs increased: doctor’s appointments and medicines are more expensive. www.eapn.pt

20. Consequences/Social Impact of the Crisis • Loans, Credit and Debt • Housingmortgagescostincreasing: In July 2011, theinterest rate andaveragerepaymentsonhousingloansmaintainupwardtrend (INE); • House and consumer credit: increasing difficulty for businesses and families to pay their loans - in March 2012 credit hard to recover from businesses was 8.29 million € and for families, the value was 4.89 million € (Banco de Portugal); • Access to Credit: the total values of loans from banks, to companies or families, are decreasing; • Increasing overindebtedness:from January to April 2012, DECO (“Consumer Defense Association”) received 6.800 help requests (more 55% than in 2011); • From January to March, 27822 is the number of families that couldn’t pay their credits (306 new cases per day – in 2011 was 95 cases) www.eapn.pt

21. Consequences/Social Impact of the Crisis Emigration According to OECD, Portugal registers a share of 20% of country nationals with university education living in another OECD country. www.eapn.pt

22. Government Strategies • Social EmergencyProgram (SEP) • 5 MainGuidelines • Support for families in poverty, unemployment, overindebtedness, etc, with particular focus on children; • b) Support for the elderly with lower incomes and high health costs; • c) Inclusion of people with disabilities; • d) Recognition, incentives and promotion of volunteer work; • e) Focus on social economy and the contractualization of responses. www.eapn.pt

23. Government Strategies • a) Support for families in poverty, unemployment, overindebtedness, etc, with particular focus on children • Some Measures • Increase of unemployment benefit for unemployed couples with children • Nacional Micro-Credit Program • Active and Solidarity Work – for persons with 45 years and above • Incentives for Social Necessary Work –for beneficiaries of SII, for example • Distribution of meals for the people who can’t afford it - increase the response to hunger situations • Donation and distribution of food and meals - combat waste in the primary sector and the distribution sector www.eapn.pt

24. Government Strategies • a) Support for families in poverty, unemployment, overindebtedness, etc, with particular focus on children (cont.) • Some Measures • Financial Literacy Program • Reinforcement of TEIP Programs (for schools located in problematic neighbourhoods) • Free Manuals for young people in training • Social tariff in Transports • Social Tariff in Electricity and Distributed Gas www.eapn.pt

25. Government Strategies • b) Support for the elderly with lower incomes and high health costs • Some Measures • Sustaining minimum, rural and social pension acquisitive capacity • Medicine Banks – fighting the waste of medicine that never entered the market • Pharmaceutical Bank – gathering and distribution of medicines • Home Support – increase and broaden the response www.eapn.pt

26. Government Strategies • c) Inclusion of people with disabilities • Some Measures • Professional Inclusion programs • Incentives for the creation of self-employment • Employability of the disabled people www.eapn.pt

27. Government Strategies • d) Recognition, incentives and promotion of volunteer work • Some Measures • Change the Volunteer Law • Inclusion of volunteer time in school certificates • Incentives to Young Volunteering www.eapn.pt

28. Government Strategies • e) Focus on social economy and the contractualization of responses • Measures • Simplify the legislation for Day Nurseries and Elderly Care Homes • Simplify the rules for food safety and hygiene applied to the kitchens of NGO’s (CHAC or 4Cs Methodology, instead of HACCP) • Increase the QREN funding rate from 75% to 85% in the convergence regions • Training de Leaderships of NGO’s • Transfer of State Social Facilities to NGO’s www.eapn.pt

29. In a short term, whatwe are facing • An economic recession • The increasing of the unemployement • The increasing of the poverty rate and social inequalities • Some steps back in the social policies www.eapn.pt

30. Thank you for your attention Rua de Costa Cabral, 2368 | 4200-218 Porto Telf: 225420800 Fax. 225403250 e.mail: lisboa@eapn.pt Aveiro Beja Braga Bragança Castelo Branco Coimbra Évora Faro Guarda Leiria Lisboa Portalegre Porto Santarém Setúbal Viana do Castelo Vila Real Viseu www.eapn.pt

31. The consequences of the EU and national economic and social policy UK Peter Kelly The Poverty Alliance

32. The Impact of Economic and Social Policy in the UK ACW/MOC/Focus Ireland/EZA Seminar Dublin,10 May 2012

33. Economic & Social Policy Impact in UK • Poverty and Employment in the UK: recent developments • Current Economic and Social Policy priorities in the UK • Challenging the orthodoxy: campaigning against austerity

34. Poverty Alliance: Who we are • Poverty Alliance is the anti-poverty network in Scotland • More than 180 members, core funded by Scottish Government, 9 members of staff • Key concerns are around low incomes, services to address poverty, participation of people in poverty in policy development and attitudes to poverty • Currently support the Scottish Living Wage Campaign, Scottish Campaign on Welfare Reform, Stick Your Labels stigma campaign • Also active in UK networks and campaigns, as well as with EAPN.

35. Recent Trends in Unemployment • UK back in recession, unemployment has risen to 8.3% • Unemployment amongst women is at a 23 year high, and the rate continues to increase faster than for men • Youth unemployment continues to rise. More than half of young black men unemployed • Around one third of unemployed have been for at least one year, and is increasing

36. Recent Trends in Employment • Employment rate now stands at 70.4% in Jan 2012, a slight increase but down on the year • Full time employment continues to fall (27K) with growth in p-t work (80K) • High levels of 'forced' part-time workers, 1.4 million in Jan 2012, more than double the pre-recession figure • Ratio of vacancies to jobseekers has fallen to 5.6, although there is significant regional variation

37. Employment and In-work Poverty • In 2010 26 % of women and 14% of male employees in the UK were paid less than £7.50 an hour. Down by 11% and 3% respectively since 2000. Most of the fall came up to 2006 • Around 5.1 million people were low paid in 2010, with around 46% in wholesale and retail. 45% of part-time workers were low paid • Still significant ‘churn’ in the labour market. ½ of all men and 1/3 of all women making a new claim for JSA were claiming less than 6 months before

38. Predictions for Poverty in the UK • Median incomes are expected to fall by 7% between 2009-1013 • Relative child poverty is predicted to increase by 400,000 between 2010-15, to more than 22% • Relative poverty amongst adults without children is expected to increase from 15% to 17.5% in 2020, 4.9M. This will be the largest single group in poverty • Around 8.5 million people expected to be in fuel poverty by 2016

39. UK Priorities for Economic Policy • UK economic policy remains focused ‘strong, sustainable growth’. Continued emphasis on export led growth and ‘rebalancing the economy’ in favour of private sector growth • Continued emphasis on fiscal consolidation, with significant cuts to public spending over the next three years. • Administrations placing emphasis on infrastructure investment to help create jobs, but delivered through private sector investment

40. Changes in Taxation Policy • Changes to taxation policy designed to both reward effort and remove lowest paid from • Controversial decision to cut the top rate of income tax to 45% from 50% • Moves to increase collection rates and crack-down on avoidance • Level of income that low earners pay tax has been increased, taking more out of the tax system

41. Changes in Welfare Policy • Previous budgets in 2010 & 11 made cuts in welfare of £18bn. Additional £10bn to be cut by 2016 • Most significant development is the Passing of Welfare Reform Act in March 2012 • Main element is the scrapping of several benefits & tax credits, to be replaced with a single Universal Credit (Oct 2013). Aim is to ease the transition to employment • New system will introduce tougher conditionality, with a greater emphasis on employment activity • Numerous changes already in place: changes to benefit increases, restrictions on housing benefit, reducing access to disability benefits

42. A new approach to Social Justice Policy? • UK Govt published Social Justice Strategy in March 2012 • Emphasis is on 120,000 'troubled families'. Presented in terms of early intervention, local solutions and moving beyond simply income transfers • Strategy seems to miss the scale of the problem – with unemployment at over 2.6m, and under-employment and in-work poverty key issues, then incentives to return to work is not sufficient • There is no mention of the role of housing as part of the strategy, another serious omission • The focus on 'troubled families' also raises the potential for the stigmatisation of those on low incomes

43. Impact of Policy • Cuts in Local Authority grants is leading to closure or curtailment of 100s of organisations. Cuts have had a bigger impact in low income local authorities • Disabled people especially effected by welfare reform. Estimated that 3.5 million disabled people will lose £9.5bn by 2015 • Noted increase in use of stereotyping and discrimination against people on low incomes, particularly disabled people • Introduction of a maximum for benefits will lead to further ghettoisation and entrench geographical inequalities

44. Responding to Austerity • Key elements in UK policy have now been driven through: Welfare Reform Act passed, Housing Benefit changes, changes in higher education funding, personal taxation, pensions. Cuts are now being made through local authorities • Opposition to austerity measure by social NGOs, trade unions and others remains strong. Potential signs of public opposition to austerity may also be growing (recent local election results) • Campaigning against cuts continues, but is less visible – big street demonstrations have not taken place in the last 6 months • Many social NGOs, especially those involved in welfare issues, now focused on mitigation rather than opposition to austerity

45. Responding to Austerity • There is a need to actively engage with current policy agenda's around community empowerment (Big Society), preventative spending and early intervention • Defeats have been made in some policy areas around welfare reform at national and regional levels (e.g. revering 10% cut in Council tax benefit in Scotland) • More potential to focus action directly on employers as a source of inequality. Successes of living wage campaigns, tax avoidance campaigns provide an example • Key challenge for social NGOs is to maintain viability or organisations and independence as campaigners for social justice

46. Conclusions • It is likely that UK policy will be driven by fiscal consolidation for the foreseeable future – both main parties support • However, there remain opportunities within even this policy debate to press for alternatives, particularly in relation to inequality (e.g. in relation to executive pay) • There is also a need to articulate demands within the context of early intervention and prevention • We should remain engaged with policy processes such as EU2020 and domestic equivalents, but social NGOs and campaigners need to retain their independence. • There is also a need to strengthen networks, collaborative work, coalition building, and to involve grass roots organisations

47. Contact: Peter Kelly Director, the Poverty Alliance peter.kelly@povertyalliance.org www.povertyalliance.org @PovertyAlliance www.facebook.com/povertyalliance

48. The consequences of the EU and national economic and social policy UK Jonathan Butterworth Just Fair

49. Social and Economic Rights in England

50. National economic and social policy: Pre ‘Austerity’ • ‘Welfare’ state • Benefits and entitlements • Health, housing, social security, education, employment • Not human rights or duties • Conditionality of benefits • Good behaviour e.g. Attendance at Job Centres • Sanctions e.g. Freeze job seekers allowance • Citizenship e.g. Access to non-emergency health care • Economic and Social Rights as aspirational values