The Economy Minister admits that there may be a new wave of redundancies during the autumn, despite measures created to prevent this. In an interview with TSF and Dinheiro Vivo, Pedro Siza Vieira also stated that “we cannot be optimistic” about the economy, but the worst is over.
As in October the ban on companies that joined the lay-off simplified the dismissal of workers, the minister hopes that there will not be many redundancies and that normality will arrive as soon as possible.
“We have to be prepared for everything. We have to prepare ourselves for the worst ”, said Siza Vieira, who hopes that measures such as support to companies and underutilization of labor rates will fill this gap. Normality may take time to arrive, but then “the role of the State is to provide this type of coverage against risk and uncertainty. “We are providing additional support so that they can keep going while the demand does not return.”
“The conviction is that when there is a normalization of the health situation, this consumption will recover. The trips will come back, people will spend again and the investment will start growing again ”, said the Minister of Economy hopefully.
Despite everything, the minister said that the country did well “in the face of the violence of the contraction of the economy”, since presenting “8.1% of unemployment rate is truly remarkable – we are at the level of 2017, which was a year very good. The number of employed persons rose in July and August compared to previous months. ”
The impact that the pandemic is having on the Portuguese economy is worrying, the effects of the crisis “will be tougher than we anticipated in May” and the minister does not hide that the bad times are not over yet, but they are close to improving. “We cannot be optimistic, because the drop in demand is very significant – consumption has fallen, exports have fallen, investment has fallen very significantly because economic agents are shrinking due to the uncertain health situation. But it is also true that the data we have month after month show what I said a few weeks ago and that was misinterpreted: the maximum contraction of the economy has already been left behind in Portugal, in the rest of Europe, in the rest of the world ” .
Austerity “is not at stake”. OE will be “expansionist”
With the State Budget (OE) approaching, the Minister of Economy admits the possibility of both the deficit and growth being revised. Siza Vieira pointed out that “we have more information than in May”, when the first revision to this year’s economic projections was made, and now “we can make a more rigorous projection”.
“When the Government presents the OE bill and the report, it will also have to present the projections for the economy this year and next, and they will probably undergo some adjustment. The forecast that was made was presented in March, then revised in the light of the measures that Parliament adopted regarding the direction of the deficit. It’s time to update it ”.
The Minister of Economy also rejected any idea of austerity, given the European Union’s guidelines for spending funds from the Recovery and Resilience Plan (PRR), ensuring that this “is not in question”. “In fact, we are going to have a budget that is countercyclical. If we were living in austerity, the OE would be to raise taxes, cut expenses, etc., accentuating the economic breakdown that results from the recession that we are experiencing. On the contrary, we are going to have an expansionist budget. It will seek to combat the negative impact on the economy because we do not have exports or consumption. ”
Regarding the increase in the National Minimum Wage, Siza Vieira reiterated the Government’s will to continue with the increase in minimum income, arguing that it is important to stimulate consumption. “Wages in Portugal are too low. Unfortunately, we still have many workers who live below the poverty line. We have to make a journey to support our companies in order to have a productivity growth that will ensure better jobs and better wages. And contrary to what others say, my conviction is that one thing does not precede the other: we cannot expect productivity to grow before raising wages, it is not a sustainable model. ”
About Novo Banco, Pedro Siza Vieira does not say whether the State will inject money into the bank or not, stating what alternatives are being sought. “We are evaluating whether there are conditions for, as before, the State to make a loan to the resolution fund. Right now, the political conditions for approving a rule in the State Budget (OE) that make a loan, as before, feasible are difficult. Therefore, we are evaluating alternatives. The financial sector supports the resolution fund and its expenses. It has done so with contributions that repay the State loan. Let’s see if it does it any other way ”.