Three times over the past year, the 13 judges of Portugal’s Constitutional Court have solemnly filed into a tall-ceilinged room in Lisbon’s 19th-century Palacio Ratton and slammed the brakes on key steps in the country’s attempts to overhaul its economy.
Dressed in full-length black robes, the judges ruled that the government’s plans to cut spending by more than 3 billion euros ($4 billion) were unconstitutional because they would infringe on workers’ rights, including equality and job security.
Since coming to power two years ago, the government hasn’t won a single economic argument with the court and has had to scramble to make up the budget shortfall, largely through higher taxes. Those increases have cost many people the equivalent of more than a month’s pay this year.
The rulings have tried the patience of Prime Minister Pedro Passos Coelho, who is desperately trying to conclude Portugal’s three-year bailout program. He has urged the judges to show “more common sense” and take into account the country’s economic plight. Portuguese government attorneys are now scouring law books, looking for a way through the constitutional minefield.
The repeated rebuffs highlight some of the difficulties encountered by debt-heavy southern European governments as they attempt to jettison costly entitlements and safeguards that were adopted last century.
For Portugal, which needed a 78 billion euros ($103 billion) rescue in 2011, the problem is becoming acute. Under the terms of the bailout agreement, it is supposed to get its finances back on a sustainable footing by the middle of next year. But that goal is increasingly in doubt as the center-right coalition government has missed deficit targets, and Portugal may need more help.
Though possessing one of the smallest economies among the 17 countries sharing the euro currency, its constitutional predicament could keep a fire under the bloc’s debt crisis.
The country’s unemployment rate stands at 16.5 percent, and the economy is expected to shrink 2.3 percent this year for a third straight year of recession. The government has fallen short of its initial budget deficit targets for the past two years.
The Portuguese Constitution was written almost 40 years ago following a 1974 military coup that ousted a dictatorship established by Antonio Salazar in the 1930s. After the so-called Carnation Revolution, the country lurched to the political left. Its new Constitution enshrined previously neglected workers’ rights.
Since then, amendments have stripped the Constitution of its more radical features, such as the pursuit of a “classless society” and the “socialization of the means of production.” But its preamble still speaks of “paving the way for a socialist society.” And working for the government has for years been prized in Portugal, as it offers shorter working hours, is commonly a job for life, and still provides a better pension than in the private sector — thanks to the constitutional guarantees.
Portugal’s bailout creditors — the country’s fellow euro members, the European Central Bank and the International Monetary Fund — insist the government employs too many people and pay and pensions are too generous. Their demand for cuts in the payroll of some 574,000 staff is a key plank of the bailout program.