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PORTUGAL: Economic Woes Could Spur New Boom in Emigration

Mario de Queiroz

LISBON, Jul 14 2005 (IPS) - Cheap textiles from China and India are flooding Portugal, while multinational textile firms are moving their Portuguese operations to countries like Romania, Bulgaria and Morocco to boost profit margins – a combination that is triggering a new wave of emigration.

The impact of factory closures on the economy, particularly in northern Portugal, has forced a growing number of people to move abroad, a practice that had almost disappeared over the last three decades.

In the Ave and Cavado valleys of northern Portugal, the heart of the country&#39s textile industry, a average of 88 people a day sign off from unemployment insurance because they are about to emigrate.

The National Institute of Statistics (INE) reports that in this region alone, 39,000 people in 2004 and another 10,000 so far this year stopped collecting unemployment insurance after deciding to leave the country.

In Portugal, workers can receive unemployment insurance benefits for up to 18 months after losing their jobs. At the end of this period, those whose earnings place them below the poverty line are eligible for ongoing financial aid in the form of a "guaranteed minimum income."

But a growing number of laid-off workers are choosing to make a new start in wealthier European Union (EU) countries, and for the government, this is doubly advantageous: they no longer need to pay out benefits to these people, and the unemployment rate drops.

Low salaries, the absence of labour standards and legal protection for workers, limited or non-existent vacation time and the ability to lay off employees at will are among the "advantages" that attract transnational corporations to move their operations outside of the EU, to countries like Romania, Bulgaria and even China, India and Southeast Asia.

These "nomadic" corporations – so-called because of their practice of breaking camp and moving to another country practically overnight, without giving prior notification to their workers – were initially drawn to Portugal by the low cost of living and the incentives offered by the EU to help raise the country&#39s economy to the level of its fellow EU member nations.

But times have changed, and while Portugal once had one of the lowest costs of living in the EU, it now has one of the highest, particularly in terms of fixed expenses like electricity, water, natural gas and other fuels.

To confirm this fact, there is no need to go as far as Bulgaria or Romania. In neighbouring Spain, for example, natural gas and water rates are one half of what they are in Portugal, gasoline costs 20 percent less, and the prices for basic consumer products are an average of 16 percent lower.

Moreover, these calculations were made by local economic analysts before Jul. 1, when a hike in Portugal&#39s sales tax from 19 to 21 percent made it one of the highest in all of Europe, comparable only to those of the Nordic countries. Spain&#39s sales tax remains at 16 percent.

At the same time, Portugal, which has traditionally been a world leader in the textile, garment and footwear industry, has been hard hit by what business owners in this sector refer to as unfair competition from China and India.

The consequences are clearly visible: Portugal&#39s unemployment rate today stands at 7.8 percent, up from 3.4 percent in the late 1990s, when this country had the lowest rate in all of the EU, matched only by Luxembourg.

Not surprisingly, for the first time since 1974, Portugal is once again witnessing large-scale emigration.

Britain, already home to 250,000 Portuguese immigrants, and Northern Ireland, with 25,000, are the two most popular destinations for Portuguese workers today, according to INE statistics.

Another major destination is Switzerland, which received 135,000 Portuguese immigrants between 1998 and 2002. The total number of Portuguese immigrants was estimated to have reached 160,000 last year.

Emigration from Portugal reached its peak between 1965 and 1973. By the end of this period, there were a total of five million Portuguese living in other countries around the world, an extraordinarily high number given the fact that the population of Portugal totals 10.2 million.

Of the total, two million emigrated to other countries in Europe, 1.3 million to Brazil, 600,000 to South Africa, 400,000 to Venezuela, and 300,000 to the United States.

In 1974, the so-called Carnation Revolution – an essentially bloodless left-wing military coup that toppled the dictatorship installed in Portugal in 1926 – brought an end to the mass exodus.

By 1992, when national borders within the EU were thrown open, Portuguese emigration had reached an extremely low level, and practically no statistics were compiled from that point onwards, since citizens of any EU member country are free to work anywhere within the bloc.

Nevertheless, growing economic problems and low salaries have led increasingly large numbers of people to leave the country in recent years, a decision that has also been encouraged by the rise in the standard of living since Portugal entered the EU in 1986.

Many Portuguese are reluctant to take on low-paying, unskilled work, and leave these jobs to the country&#39s 600,000 immigrants, particularly those from Portuguese-speaking former colonies like Angola, Brazil, Cape Verde, Guinea-Bissau, Mozambique, Sao Tome and Principe and East Timor, or eastern European countries like Ukraine, Moldavia, Russia, Romania and Bulgaria.

Because of the free movement of workers within the EU, taking up residence in another country in the bloc is an easy task. The motive for doing so is overwhelmingly economic.

Portuguese workers can earn three times as much doing the same job in Germany, Belgium, France and the Netherlands, where prices for basic consumer goods are roughly the same as in Portugal. In Spain, where food and utilities are significantly less expensive, they can earn twice as much.

While France and Germany were formerly the primary destinations for Portuguese emigrants, their preference appears to have shifted to Britain, given the almost non-existent rate of unemployment and the fact that it is the most expensive country in the EU, translating into higher salaries relative to the countries of origin of foreign workers.

Since the EU was enlarged from 15 to 25 countries in May 2004, employment opportunities for Portuguese workers have diminished. "The Polish won&#39t work for less, but they speak better English," noted Domingos Cabeças, the owner of an agency specialising in job placements in Britain.

 
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