ECONOMY-PORTUGAL: EU Funds Feed Rich-Poor Gap

By Mario de Queiroz Reprint | | Print |

Mario de Queiroz

LISBON, Sep 16 2003 (IPS) - The funds Portugal has received since its entry into the European Union in 1986 helped the country’s economy grow, but at the same time contributed to increased wage disparities and to a sharp imbalance between its rich and poor regions, say experts.

In recent years the development of Portugal’s Atlantic coastal zones and of major metropolitan areas has intensified, to the detriment of the inland areas, says a study published by the northern University of Minho.

In other words, "the overall growth of the Portuguese economy in recent decades was able to promote a convergence of national economic indicators with the EU average," but at the same time, the inequalities between the coast and inland regions deepened, said Paulo Reis Mourao, coordinator of the study.

The greatest concentration of wealth is found in the metropolitan areas of Lisbon and Oporto, in the north, and in other cities along the Atlantic seaboard.

Mourao concludes "without a shadow of a doubt" that the structural and development moneys that the EU has provided Portugal served to increase "the gap between rich and poor regions."

The mayors of cities and towns in less developed zones agree. They accuse the government of always giving "the lion’s share" of development funds to the metropolitan and coastal regions.

The municipal leaders in the poorer areas point to the cases of Spain, Greece and Ireland, which in 1986 were considered less developed than Portugal. A decade and a half after entering the EU they have surpassed this Iberian country, with advances that have been more equitable and better planned, say the mayors.

"In Portugal we have spent the EU’s money on astronomical salaries for public administrators, on cars, on vacation homes, discotheques, trips to tourist paradises overseas and other luxuries, relegating the country’s development to second place," professor and economist René Afonso said in comments to IPS.

Already in the 1990s there were biting comments on this phenomenon coming from Miguel Sousa Tavares, whose columns in the Lisbon daily Público are noted for their acidic criticisms of the various governments that have run Portugal in the past 15 years.

Sousa Tavares confessed he is pessimistic about the possibility of reverting the disparities between the business class and the agrarian class in Portugal, reflected in his articles compiled in a book published this year.

For the lagging agricultural sector, "the major landowners in the northern region of Alentejo consider it beneath them to drive a Toyota, so they have bought expensive Land Rovers," said the analyst.

"In the context of vehicle acquisition in the textile industries of the north, the preference is for Ferraris. And in the countryside, secular backwardness persists," he said.

The University of Minho study acknowledges that Portugal reached the end of the 20th century with improvements in "indicators related to education, life expectancy and services like potable water, sewerage and electricity, but it has been insufficient for altering the concentration of wealth."

In Portugal’s development in recent years, "one detects symptoms (similar to those) of Latin America, especially in the way it advanced towards a process of urban and industrial employment," says opposition lawmaker Elisa Ferreira, who served as environment minister 1995 to 2002 under a socialist government.

"During the administrations (of conservative prime minister Anibal) Cavaco e Silva (1985-1995), the issue of inequalities on the domestic front was postponed," she says.

Meanwhile, Miguel Braga da Cruz, former economy minister under Cavaco e Silva, recognises that the EU integration process "affected the productive profile of some regions" in the Portuguese interior, where "the skills of the labour force are very low and entrepreneurial initiative is asleep."

Portugal’s integration into the EU set in motion a development model of low wages and little added value, which explains the low gross domestic capita (GDP) per capita of 13,500 dollars a year, compared to Germany, where it is more than twice that sum.

José Luis de Almeida e Silva, author of an economic study on the relationship between companies and workers, predicts that most of Portugal’s traditional firms will disappear, "and the survival of others will occur in the form of automation, with human labour reduced to the bare minimum."

The only chance for survival for many of these businesses "is to create a network of small factories specialising in high-quality products," says Almeida e Silva.

The enormous disparities are not only apparent between regions, but also in the population’s income.

The national accounting office warned this month about the detrimental effects of the extremely high wages of some of the top officials in the government – 25,000 euros a month (27,500 dollars) – when the legal minimum salary for public employees is just 356 euros.

Of the 15 members of the EU, Portugal has the greatest disparity in public sector wages.

In the private sector and in companies that are under majority state control, the gap is even bigger, with the minimum salary the same as for public employees, but with the maximum reaching 90,000 euros (95,000 dollars) a month, including benefits.

One extreme case is the state-run television network, where one of the "star journalists" of the main news programme earns three times more than his colleague on Italy’s RAI network. Italy is a much wealthier country than Portugal and its cost of living much higher.

"Who are the ones who are richer, more ‘European’ now?" asks Portuguese bricklayer Carlos Antunes, who says he would rather his country were not a member of the EU.

"It isn’t us. The rich ones are the executives, the managers. But the rest of the Portuguese people are worse off now," he told IPS.

Antunes said it does not matter that he earns more than he did 17 years ago, "because before everything was much cheaper. It is not important whether I am in favour or against the EU, what is important is that now I eat less fish, beef and chicken."

The problem in Portugal, says the bricklayer, "is that we have to pay European prices with our Third World salaries."