Portugal toughens austerity in bid to cut debt
Bailed-out Portugal is adding more austerity to family budgets as it struggles to cut its debt amid a recession.
Prime Minister Pedro Passos Coelho announced on Friday an increase in workers’ social security contributions to 18 per cent of their monthly salary from 11 per cent.
But he also said he is cutting companies’ welfare contributions to 18 per cent from 23.75 per cent to encourage hiring.
The government predicts an economic contraction of 3.3 per cent this year. Treasury figures indicate tax receipts will be 2 billion euro ($A2.44 billion) lower than forecast, while a record jobless rate of 15.7 per cent is draining state funds.
Portugal received a 78 billion euro rescue last year. It is aiming for a budget deficit of 4.5 per cent this year, but many analysts expect it will be more than 5 per cent.