The latest data from Eurostat is disappointing for Portugal: last year, almost a quarter of self-employed workers in the European Union were at risk of poverty or social exclusion. In Portugal they are third. Only Romania looks worse in the picture. “At the national level, in 2021, Romania, Portugal and Estonia had the highest proportion of self-employed workers at risk of poverty and social exclusion (70.8%, 32.4% and 32.2%),” reported the European Statistical Office , revealing the unreliability of working with green receipts and without a contract in the country. On average across EU countries, the situation has also deteriorated, but not as much. According to published data, compared to 2020 and in the analysis of the categories “unemployed”, “pensioners”, “employed” and “independent workers”, the latter was the only one in which the worsening of the poverty situation was recorded, from 22.6% to 23. 6%. By contrast, self-employment poverty improved in 11 countries, with Ireland and Hungary recording the largest declines between 2020 and 2021 (-3.2 and -3.7 percentage points, respectively).
For Enrique Tomé, an analyst at XTB, the data “reflects the volatile state of the labor market in Portugal,” he says, explaining that for companies “hiring new contract workers is becoming too expensive, especially for SMEs, leading many companies to use green slips as a alternatives.” And he adds: “However, conditions for the worker are not the best, because he is too exposed to the prevailing economic conditions and has less support in the event of dismissal.”
So the analyst heard Sunrise has no doubt: “This scenario is serious and should be taken seriously because if economic conditions worsen, the labor market will naturally suffer and could create a delicate situation.”
To reverse this trend, several things can be done, says Enrique Tome. “We need to create conditions to protect the self-employed, and also support companies so that they feel motivated to hire new contract workers – the alternative could be to reduce the costs that companies have to insure.”
However, it must be taken into account that these Eurostat data refer to 2021. And yet they are not very encouraging, as they already show a deterioration compared to 2020. How will the balance of this year and next? “It is possible that the next few years will certainly be difficult for all economies, given that economic forecasts indicate a possible slowdown in economic activity, which could cause periods of deep recession in the most vulnerable economies, such as Portugal,” the analyst replies. XTB.
Risk? Portugal takes root at the tail of Europe. “This possible scenario further exacerbates the difference between the largest and most fragile economies,” warns Enrique Tome, adding that despite “the European Commission’s initial projections that Portugal would be the eurozone country with the highest growth rate in terms of GDP, the truth is that the country continues to grow at a very modest pace, and the rate of growth has actually slowed down over the past few years.”
Looking at the worst-case scenario, namely a recession, “Portuguese’s economy is likely to be hit hard as economic activity remains far below expectations and the country has very high debt compared to what it produces (GDP) and at this point more the issue of the pandemic has become more acute,” the analyst warns.
When asked about the consequences of these Eurostat data, the specialist has no doubts: “We may again witness periods of greater austerity in the country if a recession scenario is realized in Portugal”, but so far “not everyone is in red flags have been raised, but at the same time, we cannot rule out such a possibility.”
It is true, continues Enrique Tomé, that the Portuguese economy is “mired in debt and inflation remains high, which should affect economic activity and could cause periods of economic downturn (recession)”.
And it’s also important to keep in mind that these figures from the European Statistical Office on poverty are not unexpected news. Eurostat has already warned that the pandemic has lifted Portugal from 13th to 8th place in the list of European countries at increased risk of poverty or social exclusion.
It is clear to the analyst that the country “suffers from a big problem – it does not pay enough attention to the private sector, which creates wealth.” But not only that. “This does not create the necessary conditions for the growth of the private sector and contributes to instability in some sectors, which leads to many highly skilled workers choosing to emigrate.”
On the other hand, he argues, “a high tax burden also discourages investment from many companies and does not contribute to the growth of the business structure at all.” These, in his opinion, are “two factors that have not been given due attention in recent years, but which are necessary for the national economy to start growing at an attractive pace.”
According to Eurostat, in absolute terms, there are 2.312 million Portuguese people on the verge of poverty in 2021, an increase of 256,000 compared to 2020. You have to go back to 2017 to find a higher figure. As the eighth poorest country in the EU, Portugal has dropped five places in risk of poverty or social exclusion compared to 2020.
And with rising food and energy prices, the situation tends to worsen. Portugal’s European Anti-Poverty Network (EAPN) recently said that the government’s anti-inflation support measures are “not the ideal answer”, although it is “important” that the executive has “taken over”. “I imagine and feel that this is not a perfect answer. We are a poor country and we need to know how to deal with our limitations,” he said. Lusa President of EAPN Portugal Father Jardim Moreira.