Portugal Looks Back On 1 Year Since Its Bailout

In Portugal, austerity has meant up to a 30 percent pay cut for civil servants. Unemployment is at more than 15 percent, and the economy continues to shrink. The European Union recently warned the Portuguese people may have to sacrifice even more.

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STEVE INSKEEP, HOST:

Uncertainty in Greece tends to get investors thinking nervously about other weak European economies - like say Portugal - which we'll discuss next.

Today, is the first anniversary of the more than $100 billion bailout that Portugal received from the European Union and International Monetary Fund. Portugal, of course, also faces austerity measures.

Lauren Frayer reports on the results one year later.

LAUREN FRAYER, BYLINE: In Portugal, austerity has meant up to a 30 percent pay cut for civil servants like doctors and teachers, higher fees for medical care and labor reforms that let companies fire workers more easily. The government just cut four public holidays from the calendar to save money.

The Fitch ratings agency says Portugal has made a promising start at fixing its economy. And there's little sign of any anti-austerity revolt, says economist Pedro Pita Barros, at Lisbon's Nova School of Business.

PEDRO PITA BARROS: There are a few voices from the leftist parties mainly, claiming that we should revise things, but no real alternative. Most people don't feel that they want the same road that Greece is going.

FRAYER: But Portugal may be at the mercy of Greece, and the markets' reaction to uncertainty there. An editorial in Portugal's main business daily says shockwaves from a possible Greek exit from the euro could hit Portugal violently. And if that happens, Portugal could need more help to stay afloat, says another economist, Pedro Lains, at the University of Lisbon.

PEDRO LAINS: The probability is above 50 percent now. So we're much closer to a second bailout now than we were six months ago.

FRAYER: Portuguese leaders deny that, but unemployment is more than 15 percent, and the economy continues to shrink. Portugal didn't have a housing boom and bust, but it's always had relatively low productivity. Now its industries are struggling against a flood of Asian imports. The Portuguese people are paying higher taxes and have reduced consumption. They're willing to sacrifice. But the EU recently warned they may now have to do even more.

For NPR News, I'm Lauren Frayer.

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