Portuguese parties battle over labour costs

Article reported that a fiscal 'devaluation' included in Portugal’s €78bn 2011 bail-out package to cut labour costs has become one of the most disputed issues in the country’s election campaign.

The centre-right Social Democrats (PSD), the main opposition party, have embraced the measure to make companies more competitive by cutting social security contributions as part of their manifesto for the 5 June 2011 vote.

But the Socialists of José Sócrates, the caretaker prime minister, question how the reduction, and subsequent shortfall in public revenues, will be financed, estimating that it would need a three percentage point increase in the main value added tax rate to 26%.

ESO: Background information: Lisbon calls early poll as debt costs hit high http://www.europeansources.info/record/lisbon-calls-early-poll-as-debt-costs-hit-high/

ESO: Background information: Portugal reaches deal on €78bn bail-out http://www.europeansources.info/record/portugal-reaches-deal-on-e78bn-bail-out/

---