‘Scenario is serious and should be taken seriously’

'Scenario is serious and should be taken seriously'

The latest figures from Eurostat are hard on Portugal: last year nearly a quarter of self-employed workers in the European Union were at risk of poverty or social exclusion. In Portugal they are a third. And only Romania looks worse in the picture. “At the national level, Romania, Portugal and Estonia registered the highest percentage of self-employed people at risk of poverty and social exclusion in 2021 (70.8%, 32.4% and 32.2%),” the European Statistical Office revealed. uncertainty of work to green receipts and without a contract in the country. On average, the situation in the EU countries has also deteriorated, but not so much. According to the released data, compared to 2020 and an analysis of the categories ‘unemployed’, ‘retired’, ’employed’ and ‘self-employed’, the latter was the only one to record a worsening poverty situation, going from 22.6% to 23. .6%. In contrast, the poverty situation of self-employed people improved in 11 countries, with Ireland and Hungary recording the largest decrease in these figures from 2020 to 2021 (-3.2 and -3.7 percentage points, respectively).

For Henrique Tomé, an analyst at XTB, this data reflects “the precarious state of the labor market in Portugal”, he says, explaining that for companies “hiring new contract workers is becoming too expensive, especially for SMEs, leaving many companies are being influenced to use green vouchers as an alternative.” And he adds: “However, the conditions are not the best for the employee because he is too exposed to the current economic conditions and with less support in the event of layoffs”.

Therefore, the analyst heard by the sunrise has no doubts: “This scenario is serious and should be taken seriously, because if economic conditions deteriorate, the labor market will of course be harmed and could create a delicate situation”.

Several things can be done to change this trend, says Henrique Tomé. “It is necessary to create conditions to protect the self-employed, but also to support companies so that they feel motivated to hire new contract workers – an alternative would be to reduce the costs that companies have to insure”.

However, it is necessary to take into account that these Eurostat data refer to 2021. Still, they are not very encouraging, as they already show a deterioration compared to 2020. What will the balance of this year and the next be like? ? “The coming years will certainly be challenging for all economies, as economic projections point to a possible slowdown in economic activity and that could lead to periods of deep recession for the most vulnerable economies, such as Portugal,” the analyst replies. from XTB.

The risk? Portugal is rooted in the tail of Europe. «This possible scenario further widens the gap between the largest and most vulnerable economies», Henrique Tomé warns, adding that, despite «the European Commission’s first forecasts, which state that Portugal is the country of the eurozone with the highest growth rate in GDP, the truth is that the country continues to grow at a very modest pace and the growth rate has actually slowed down in recent years».

Looking at the worst-case scenario of recession, the Portuguese economy is likely to be hit hard, as economic activity remains well below expectations and the country has a very high debt compared to what it produces (GDP), and at that moment was compounded by the issue of the pandemic,” the analyst warns.

Asked about the consequences this Eurostat data could have, the specialist has no doubts: “We could again experience periods of greater austerity in the country, if the recession scenario in Portugal becomes a reality”, but for the time being “not quite. red flags have been raised, but at the same time we cannot rule out that possibility».

It is true, continues Henrique Tomé, that the Portuguese economy is “heavily indebted and with the continued high inflation rate, economic activity should be affected and could cause periods of economic contraction (recession)”.

And it is also necessary to bear in mind that these data from the European Statistical Office on Poverty are not unexpected news. Eurostat had already warned that the pandemic has pushed Portugal from 13th to 8th place on the list of European countries at greater risk of poverty or social exclusion.

It is clear to the analyst that the country “suffers from a major problem – it pays insufficient attention to the private sector, which creates wealth”. But not only that. “It does not create the necessary conditions for private sector growth and promotes uncertainty in several sectors, leading many highly skilled workers to choose to emigrate.”

On the other hand, he says, “the high tax burden also drives out investments from many companies and does not promote the growth of the corporate fabric at all”. These are, in his view, “two factors that have been neglected in recent years, but which are essential for the national economy to grow at an attractive pace”.

Become poorer?

According to Eurostat data, in absolute figures we are talking about 2.312 million Portuguese at risk of poverty in 2021, 256 thousand more than in 2020. To find a higher percentage, we have to go back to 2017. Portugal, now the eighth poorest country in the world. the EU, fell five positions in the risk of poverty or social exclusion compared to 2020.

And with food and energy prices growing, the situation threatens to worsen. Recently, the European Anti-Poverty Network (EAPN) defended Portugal that the support measures presented by the government to alleviate the effects of inflation “are not the ideal answer”, although it is “important” that the executive “has assumed that their functions”. “I imagine and feel that this is not an ideal answer. We are a poor country and we need to know how to deal with our limitations,” he said lusa the President of EAPN Portugal, Father Jardim Moreira.