London - DW
In an effort to combat its debt problem, Portugal announced new austerity measures. Portugal accepted an international bailout in 2011 and has struggled to balance necessary cuts with the needs of a struggling economy. Prime Minister Pedro Passos Coelho announced the latest round of cuts late on Friday. Private sector employees' social security contributions are set to increase from 11 to 18 percent, while employers' contributions are to sink from 23.75 to 18 percent. The latter measure is an effort to get companies to hire more workers. "Unemployment has reached an intolerable scale," Passos Coelho said in a speech to the nation." [The cut for businesses] will considerably reduce labor costs... and we will do so at a time when the financial situation of our businesses is very fragile." Currently in Portugal, unemployment is over 15 percent. Passos Coelho's announcement came as international monitors from the troika of the European Union, the International Monetary Fund, and the European Central Bank were in Portugal reviewing the reforms the country has taken on as part of the conditions for international loans. Portugal received a 78-billion-euro ($98 billion) bailout in 2011 and agreed to spending cuts in return. However, it is likely that Portugal will fall short of its next debt targets tied to the loans, which would mean further spending cuts or tax hikes to make up the difference. The country had been aiming for a deficit target of 4.5 percent of gross domestic product (GDP), but an economic recession has likely put this target out of reach.