Portugal pushes ahead with sweeping spending cuts

LISBON (AFP) - Portugal on Monday pushed ahead with deeply unpopular plans to slash 30,000 public sector jobs by launching talks with unions as part of a sweeping savings package to satisfy international creditors.

The new "medium-term programme", which also includes pushing back the full pension age for civil servants from 65 years to 66 years and extending their work-week to 40 hours, was announced on Friday.

The programme, hoped to be worth about 4.8 billion euros (S$7.75 billion) to the treasury by 2015, is intended to keep the small debt-hit euro zone member eligible for another 2.0-billion-euro slice of its bailout funding.

Portugal was granted its 78-billion-euro bailout loan in 2011.

Portugal's "troika" of international lenders - the European Union, the International Monetary Fund and the European Central Bank - need to approve the programme and will start evaluating it on Tuesday.

European Commission spokesman Simon O'Connor told a media briefing in Brussels: "The Commission welcomes the government's emphasis on consolidation through permanent reductions in expenditure rather than one-off measures or tax increases, which are as a rule less credible and more detrimental to growth.

Hundreds of people gathered outside the finance ministry on Monday to protest the moves as government officials met representatives of the country's two main unions, the CGTP and the UGT, to discuss the savings package.

Carrying banners reading "We're being robbed, but we're not silenced" and "If you've had enough: whistle", demonstrators sang, chanted and whistled against the government's belt-tightening.

The programme has also been fiercely attacked by both unions and government opposition groups.

"How can you accept this brutal attack on public sector workers' rights," said Ms Ana Avoila with the Public Administration Common Front.

The secretary-general of the Socialist Party, Antonio Jose Seguro, also rejected the plans, accusing the government of bringing Portugal to "the verge of social tragedy" with its austerity measures.

The Portuguese economy is expected to shrink by 2.3 per cent this year with the unemployment rate poised to breach a record 18 per cent.

With the cuts, however, Portugal's public deficit is expected to narrow to 5.5 per cent of gross domestic product this year, to 4.0 per cent in 2014 and finally to 2.5 per cent in 2015, under the EU's ceiling of 3.0 per cent.