The end of austerity: the 35-hour CGD – Observer

“contraption” promised. The “contraption” meets. The end of austerity is just to be achieved, even if only for some and for some time. Two cases under review: the 35 hour work week for civil servants and the new administration – with more directors and higher salaries – the Caixa Geral de Depósitos. Neither of the two measures make sense in the context of a country that is still in a severe economic and financial situation, but both make sense in the light of short-term political objectives of the “contraption”.

The return to the past with 35 hours for the public servants mark the reversal of a process of convergence with the private sector that had begun to be followed, albeit incompletely, following the bankruptcy and subsequent application of external rescue 2011. the violation of the principle equality seems striking even in the light of the current constitutional framework in Portugal, that little or nothing to forecast with regard to any declaration of unconstitutionality.

in what concerns the budget impact, the forecast it is much easier to do: the implementation of 35 hours for civil servants obviously imply an increase in government expenditure (immediately, if not only, to pay more overtime), possibly combined with a degradation of some services. It would be otherwise if the majority of the affected services do not produce anything at all in five hours in question.

Mario Centeno, honor upon him, recognized this when he recently argued outside the country that the application costs time of 35 hours for civil servants require savings in other sectors. Unfortunately, as in other similar occasions, they were by explaining where and how will be obtained those “savings” compensatory more a measure entails an obvious increase in spending.

The austerity seems to have come to an end also for CGD. Being a bank owned by the state and its size, CGD is perceived by many depositors as a lower risk of the institution in the national banking system. Considering the political economy of the banking system, it is a reasonable perception but should be considered in conjunction with one another: for its size and for being a bank owned by the state, CGD is also the increased risk of bank to the national financial system, the state budget and, ultimately, to the fragile Portuguese economy.

a painful series of capital injections in the case by the state over the years there is to prove, as well as impairment charges which go hand in hand with the politicization of bank management. In this context, it is particularly unfortunate recent government announcement that the CGD will have more elements and the elimination of their salary caps.

In addition to end austerity (for some), the “contraption” is operating real political miracles along the extreme left Portuguese: so, given the announced for CGD, the left Block is limited to “surprise” the salary increase of managers and, despite the more substantial increase in pre-announcement capital by the state, PCP and bE have declared flatly against any parliamentary committee of inquiry into the management of the case.

what is important however to stress is something that goes far beyond the glaring inconsistencies of the parties support the current government:. the staging of end of austerity that we are witnessing may even be effective to meet clienteles policies but by way of rollbacks without criteria and measures without sustainability it brings, will be very expensive to the country
professor at the Institute of Political Studies of the Portuguese Catholic University