COMMISSION STAFF WORKING DOCUMENT Assessment of the 2012 national reform programme and stability programme for PORTUGAL Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on Portugal's 2012 national reform programme and delivering a Council Opinion on Portugal's udpated stability programme for 2012-2016
Date: 2012-05-30
Institutions: European Commission
Subjects: Community loan, European Central Bank, European Union, Portugal, financial intervention, financial planning, public debt, short-term monetary support, stability programme

EUROPEAN COMMISSION 

Brussels, 30.5.2012  
SWD(2012) 324 final 

COMMISSION STAFF WORKING DOCUMENT 

Assessment of the 2012 national reform programme and stability programme for  
PORTUGAL 

Accompanying the document 

Recommendation for a  

COUNCIL RECOMMENDATION 

on Portugal's 2012 national reform programme and delivering a Council Opinion on 
Portugal's udpated stability programme for 2012-2016 

{COM(2012) 324 final} 

EN 

   EN 

 
 
 
 
  
 
 
CONTENTS 

Executive summary .................................................................................................................... 3 
1. 
Introduction ........................................................................................................................ 4 
2.  Economic situation and outlook......................................................................................... 5 
3.  Programme implementation ............................................................................................... 5 
4.  Conclusion........................................................................................................................ 13 
5.  Annex ............................................................................................................................... 14 

2 2

 
 
 
EXECUTIVE SUMMARY 

In  2012,  Portugal's  economic  activity  is  expected  to  contract  by  3.3%  in  2012  before 
regaining  some  momentum  in  2013  with  a  prevision  of  0.3%.    The  labour  market  situation 
worsened significantly. The unemployment rate reached 15% in February 2012 and is set to 
increase further this year. 

Portugal is making progress on a number of fronts. The government is undertaking a number 
of  reforms  to  improve  fiscal  management  and  expenditure  control,  and  is  pursuing  its 
privatisation plans. A major reform of the labour market has been submitted for Parliament's 
approval,  and  measures  are  underway  to  improve  activation  and  other  active  labour  market 
policies. Portugal recently launched a Youth Strategy aiming at addressing the high share of 
youth  unemployment  (34%).  A  strategic  re-programming  of  the  Structural  Funds  is  also 
underway,  with  a  focus  on  support  to  youth  employment  and  competitiveness,  in  particular 
SMEs. 

Portugal  nevertheless  continues  to  face  significant  challenges.  Achieving  the  fiscal  targets 
remains  essential  for  the  government  to  regain  full  market  access  within  the  Programme 
period. To limit the risks to the 2012 fiscal targets a rapid and determined implementation of 
the  structural-fiscal  measures  of  the  Programme  is  paramount.  At  the  same  time,  the 
government needs to focus on reforms that address Portugal's competitiveness challenges. The 
2012 budget does not pursue earlier plans of a 'fiscal devaluation'. This makes it all the more 
important  to  adopt  rapidly  structural  reforms  in  labour  and  product  markets  with  a  view  to 
reducing labour cost, increasing flexibility, lowering entry barriers and tackling rent-seeking.  

3 3

 
 
1. 

INTRODUCTION 

Following a request by Portugal on 7 April 2011, the Troika consisting of the European 
Commission,  the  ECB  and  the  IMF  negotiated  with  the  Portuguese  authorities  an 
Economic  Adjustment  Programme  which  was  agreed  by  the  European  Council  on  30 
May 2011 and by the IMF board on 20 May. The programme covers the period 2011-2014. 
Its financial package comprises up to EUR 78 billion for possible fiscal-financing needs and 
support  to  the  banking  system.  One  third  (up  to  EUR  26  billion)  will  be  financed  by  the 
European  Union  under  the  European  Financial  Stabilisation  Mechanism  (EFSM),  another 
third by the European Financial Stability Facility (EFSF) and the final third by the IMF under 
an Extended Fund Facility. 

The  programme  seeks  to  restore  confidence,  make  public  finances  again  sustainable, 
enable  the  economy  to  return  to  balanced  growth  and  safeguard  financial  stability  in 
Portugal,  the  euro  area  and  the  EU.  To  this  end,  the  programme  provides  for 
comprehensive action on three fronts: 

(1) 

(2) 

(3) 

A credible and balanced  fiscal-consolidation strategy, supported by structural fiscal 
measures and better fiscal control over Public-Private-Partnerships (PPPs) and state-
owned  enterprises (SOEs), designed to  put the gross public debt-to-GDP  ratio  on  a 
firm downward path in the medium term. The authorities are committed to reducing 
the deficit to 3 % of GDP by 2013. 

Efforts to safeguard the financial sector through market-based mechanisms supported 
by  back-up  facilities.  Central  aspects  here  are  measures  to  foster  a  gradual  and 
orderly  deleveraging,  strengthened  capitalisation  of  banks  and  reinforced  banking 
supervision. 

Thorough  frontloaded  structural  reforms  to  boost  potential  growth,  create  jobs,  and 
improve  competitiveness.  In  particular,  the  Programme  contains  reforms  of  the 
labour market, the judicial system,  network industries and the housing and services 
sectors 
improve 
competitiveness and facilitate economic adjustment. 

the  economy’s  growth  potential, 

to  strengthen 

in  order 

An important feature of the programme is the emphasis on mitigating negative social impacts, 
while  addressing  fiscal,  banking  and  structural  imbalances.  In  particular,  tax  increases  and 
benefit reforms are designed to minimise the impact on the lowest-income groups. 

As for all Member States benefiting from a financial-assistance programme, progress in 
implementing the accompanying policy programme is monitored in a dedicated, regular 
and specific manner, in line with the provisions of the Memorandum of Understanding. 
Given the reporting requirements under financial-assistance programmes, as well as the much 
more  extensive  monitoring  and  enforcement  involved,  programme  countries  have  been 
exempted  from  the  obligation  to  submit  national  reform  programmes  and  stability  or 
convergence  programmes  in  2012.  Nonetheless,  Portugal  submitted  updated  programmes  in 
May  2012.  The  Staff  Working  Document  under  the  2012  European  Semester  provides  a 
summary of the recent progress on implementation. More details can be found in the reports 
on  the  state  of  implementation  that  the  European  Commission  publishes  following  each 
review mission1. 

1  These  reports,  along  with  other  information  related  to  the  financial  assistance  programme,  can  be  found  on 
http://ec.europa.eu/economy_finance/eu_borrower/portugal/index_en.htm. 

4 4

 
 
                                                 
2. 

ECONOMIC SITUATION AND OUTLOOK 

The  contraction  of  economic  activity  in  2012  is  likely  to  be  more  pronounced  than 
anticipated  in  the  Programme,  outweighing  the  better  performance  of  the  economy  in 
2011.  The  decline  in  output  in  2011  was  less  marked  than  forecast,  as  exports  and 
consumption  performed  better  than  foreseen.  However,  the  economic  mood  worsened 
markedly  in  the  fourth  quarter  of  2011  on  the  back  of  weak  external  trade,  a  sharp  rise  in 
unemployment and business confidence reaching record lows. As the slowdown in exports is 
expected to worsen, the outlook for 2012 has deteriorated and GDP is now projected to fall by 
3¼  per  cent,  i.e.  a  quarter  percentage  point  more  than  forecast  in  the  autumn.  With  the 
turnaround of the economy somewhat delayed, growth in 2013 will also be more limited than 
originally  expected.  While  the  external  adjustment  has  so  far  been  remarkably  fast,  with 
Portuguese exports gaining market shares outside the EU and imports falling considerably, its 
persistence  is  still  uncertain.  Given  the  large  external  debt  Portugal  has  accumulated,  very 
substantial further adjustment of a structural nature is required. 

3. 

PROGRAMME IMPLEMENTATION 

The Programme's 2011 target for the general government deficit of 5.9 per cent of GDP 
has  been  overachieved  by  resorting  to  a  transfer  of  banks'  pension  funds  to  the  state 
amounting to 3½ per cent of GDP. Primary expenditure overruns in the first half of 2011 
were almost reversed in the second half of the year, but non-recurrent factors kept the deficit 
1½  per  cent  of  GDP  above  target.  The  pension  funds  transfer  was  used  to  close  this  gap, 
lowering  the  headline  deficit  to  an  estimated  4  per  cent  of  GDP.  Despite  this  one-off 
operation,  the  structural  consolidation  in  2011  was  large  and  amounted  to  3½  per  cent  of 
GDP, when measured as the change in the cyclically adjusted primary balance net of one-off 
measures. In December 2011, payment arrears in the general government sector showed for 
the first time a decline, but performance in the next few months will have to be monitored to 
confirm that arrears have been brought on a downward trend.  

The 2012 budget targets a general government deficit of 4.5 per cent of GDP, in line with 
the  Programme.  It  contains  bold  consolidation  measures,  totalling  6  per  cent  of  GDP,  of 
which two thirds are on the expenditure side. Key measures include significant cuts in public-
sector  wages  and  pension  entitlements  and  the  application  of  higher  VAT  rates  to  a  large 
number of goods and services. The cuts in wages and entitlements are being implemented in a 
socially  compatible  way,  with  lower  incomes  being  less  or  not  affected.  The  measures  are 
appropriate  in  view  of  the  need  to  switch  from  a  consumption-based  to  a  more  export-led 
growth model. While the budgetary yield of the measures has been correctly assessed by the 
government  there  is  nevertheless  a  risk  that  the  target  will  not  be  achieved,  in  particular 
because of the economic outlook and the fiscal risks associated with the performance of state-
owned  enterprises  (SOEs)  and  regional  and  local  governments.  This  calls  for  determined 
implementation  of  the  budget  as  well  as  flanking  structural  measures  to  improve  budgetary 
control over entities in the wider public sector. 

In terms of the structural balance, the fiscal structural adjustment is expected to be over 7pps. 
of  GDP  in  2011-2012.  The  MTO  of  -0.5%  adequately  reflects  the  requirements  of  the 
Stability and Growth Pact. As regards public debt, it is expected to peak at 115.7% of GDP in 
2013 and gradually decline thereafter. 

The government is undertaking a number of reforms to improve fiscal management and 
expenditure  control,  including  improved  reporting  at  all  levels  of  government,  and  is 
committed  to  a  thorough  restructuring  of  SOEs.  In  particular,  efforts  are  underway  to 
improve  the  fiscal  framework  through  the  introduction  of  a  medium-term  fiscal  strategy, 
strengthened commitment controls and regular and comprehensive reporting on arrears. The 

5 5

 
 
government has also prepared a strategic plan on SOEs which specifies how to enhance the 
efficiency  of  the  sector,  restore  its  financial  sustainability  and  re-focus  its  activities  on  core 
public-policy  objectives.  In  view  of  the  substantial  fiscal  risks  posed  by  this  sector, 
particularly  with  regard  to  its  high  and  rapidly  rising  level  of  indebtedness,  swift 
implementation of the strategy should ensure that by the end of 2012 these companies are not 
running at a loss. This needs to be urgently complemented by a plan spelling out options for 
reducing  the  high  level  of  arrears,  especially  in  the  hospital  sector  where  the  problem  is 
particularly severe. The government has also prepared a report on the fiscal risks stemming 
from Public-Private Partnerships (PPPs) and is launching, slightly later than planned, a study 
assessing whether and how the projected high spending pressures from PPPs in coming years 
can be alleviated. 

A revision of the fiscal frameworks for regional and local governments is in preparation. 
Measures  limiting  the  indebtedness  of  local  governments  have  been  included  in  the  budget 
plan for 2012. But a more profound revision, possibly benefiting from technical assistance, of 
legislation governing the finances of local and regional governments is necessary with a view 
to  enhancing  accountability.  Recent  developments  in  the  Autonomous  Region  of  Madeira 
have  dramatically  demonstrated  the  fiscal  risks  engendered  by  a  lack  of  transparency  and 
budgetary  control.  The  region  is  put  under  tight  control  through  an  adjustment  programme 
agreed between the Central Government and the Region. 

The  government  is  pursuing  its  privatisation  plans.  The  sale  of  Energias  de  Portugal 
(EDP)  was  finalised  in  January.  Two  bidders  for  Rede  Eléctrica  Nacional  (REN)  were 
selected in December and the declarations of intent for the sale of stakes to each of them were 
signed  in  February.  The  Programme  frontloads  estimated  total  proceeds  of  some  EUR  5 
billion,  with  estimated  revenues  of  EUR  600  million  in  2011  and  EUR  4  billion  in  2012. 
Other  privatisation  projects  mainly  in  the  transport  sector  are  expected  to  take  shape  in  the 
course  of  2012.  The  government  is  also  considering  winding  down  Parpublica,  the  public 
holding company, but net revenues will be small, if any, as the proceeds from the sale of its 
assets will be balanced by substantial liabilities held by the company. 

While deleveraging is ongoing, Portugal’s banks face fresh challenges to strengthen their 
capital  positions.  The  deleveraging  process  of  Portuguese  banks  has  been  facilitated  by  a 
reduction  in  their  foreign  activities.  In  the  future,  it  will  be  important  that  the  pace  and 
composition of deleveraging allows banks to address their funding imbalances so as to reduce 
their  high  dependence  on  the  liquidity  of  the  Eurosystem,  while  continuing  to  provide 
adequate credit to the productive sectors of the economy. 

Banks are on track to meet the capital requirements under the Programme by the end of 
the  year  but  capital  positions  have  to  improve  further  in  2012  in  line  with  Programme 
requirements  and  as  a  result  of  the  European  Banking  Authority’s  requirement  to  cater  for 
sovereign  exposures,  the  special  on-site  inspection  programme  and  the  planned  transfer  of 
banks’ private pension plans. Additional capital will be first sought from private sources but if 
this proves insufficient banks will be able to use the bank-solvency support facility included 
in the financing envelope of the Programme. To this effect, the authorities are finalising the 
legislation governing the provision to banks of capital from public sources. 

The success of the Programme depends crucially on the implementation of a wide range 
of  structural  reforms  that  will  remove  the  rigidities  and  bottlenecks  that  underlie  the 
economy’s  decade-long  stagnation.  In  order  to  improve  cost  competitiveness,  the 
Programme  envisages  reforms  in  the  labour  market,  product  and  services  markets,  the 
judiciary, network industries and the housing and services sectors. 

A  major  reform  of  the  labour  market  has  been  submitted  for  Parliament’s  approval. 
The reform will substantially reduce labour market rigidities and is the result of a Tripartite 
Agreement between the government and the social partners. The new legal framework aligns 

6 6

 
is  eased,  working 

the  severance  payments  of  existing  employees  with  those  of  new  recruits,  the  definition  of 
the 
individual  fair  dismissals 
unemployment insurance benefits system is being revised to reduce unemployment traps. In 
addition, a set of measures are being taken to increase the active population and improve other 
active labour market policies. The draft law is in broad compliance with the Memorandum of 
Understanding even though the maximum duration of unemployment benefits is still too long 
and the scope of the extension mechanism is not fully clear. The reform is expected to enter 
into force by July/August 2012.  

time  flexibility 

increased  and 

is 

Measures are being taken to improve activation and other active labour market policies 
(ALMP)  and  the  development  of  a  monitoring  tool  to  evaluate  education  outcomes  is 
progressing as planned. A hiring incentives programme- Estímulo 2012- entered into force 
on  14  February  2012.  The  Government  estimates  that  more  than  56  000  unemployed  will 
benefit from this measure. In the area of education, the monitoring tool will be operational by 
September  2012.  In  addition,  the  authorities  presented  broad  action  plans  for  improving  the 
quality  of  secondary  education  and  vocational  training.  The  preparation  of  detailed  action 
plans is underway.   

Reforms in the judicial sector are, in principle, on schedule. The target of eliminating the 
case backlog within two years appears well on track. The Portuguese government has made 
significant progress in strengthening alternative dispute resolution (ADR) to facilitate out-of-
court settlements. In addition, Portugal has taken the necessary legal and administrative steps 
to make arbitration operational by the deadline set for February 2012. The organisation of the 
court  system  is  becoming  more  efficient.  Specialised  courts  and  judges  on  competition 
matters and on intellectual property rights are set to become operational. 

Progress  has  been  made  in  liberalising  some  product  and  services  markets.  The 
transposition  of  the  Third  Energy  Package  is  advancing.  Decree-laws  to  phase  out  the 
remaining regulated tariffs for smaller and retail end-users of electricity and natural gas will 
enter into force by 1 January 2013. Further steps will be taken to strengthen the powers of the 
national regulator with respect to arbitration and the imposition of sanctions.  

Legislation implementing the Third Postal directive moves towards completion. The law 
transposing the Third Postal directive was adopted and published in the Official Gazette. This 
new  framework  now  legally  enacts  the  liberalisation  of  the  entire  sector  according  to  EU 
legislation,  and  strengthens  the  role  and  powers  of  the  regulator.  The  authorities  have  also 
taken  bold  steps  to  ensure  an  effective  competition-enforcement  regime  and  to  improve  the 
legal framework for public-procurement and award practices. They will submit a report in the 
first quarter of 2013 analysing the effectiveness and impact of the measures adopted. Finally, 
a  decree-law  amending  the  urban  rental  legislation  has  been  submitted  to  the  Parliament.  It 
paves the way for a much more flexible and dynamic rental market. 

Substantial  further  action  will  be  necessary  to  set  the  surging  debt  of  the  electricity 
system (tariff debt) on a sustainable path by correcting the excessive profits linked to the 
production  of  energy.  A  report  discussing  some  possible  measures  describes  only  limited 
action  so  far.  However,  the  authorities  have  reiterated  their  commitment  to  addressing  the 
problem  and  the  revised  Memorandum  of  Understanding  contains  some  specific  measures 
that, if properly implemented, would have a significant impact on the tariff debt. 

In  the  transport  field,  progress  has  been  made  in  terms  of  governance  and  structural 
reorganisation.  The  reform  of  the  port  sector  is  progressing.  The  separation  of  regulatory 
activities from port management and commercial activities is underway and  should be fully 
achieved  shortly.  However,  further  steps  are  needed  to  improve  the  governance  structure  of 
ports  to  ensure  stronger  commercial  orientation.  A  draft  law  revising  the  legal  framework 
governing  port  work  is  under  preparation.  An  effective  shipping  strategy  should  be  put  in 
place  to  avoid  the  decline  in  Portugal's  merchant  fleet.  The  Government  is  working  on  a 

7 7

 
strategy  to  integrate  ports  in  the  overall  logistics  and  transport  system.  On  air  transport,  the 
Government  is  assessing  possibilities  for  additional  airport  capacities  around  the  Lisbon 
region  to  complement  the  scarce  capacity  at  Portela.  On  railways,  a  regulator  has  been 
established but its independence and staffing must be reinforced. The legal independence of 
the State-owned railway operator CP has been reinforced. Plans for the rationalisation of the 
rail  network  and  the  infrastructure  manager  have  been  presented.  Revision  of  the  public 
service contracts has started and public tendering should start progressively. The connection 
between three key ports (Lisbon, Setúbal and Sines) and Madrid should be prioritised.   

More decisive action is needed to liberalise access to services and regulated professions. 
Although they have not been approved by the agreed deadlines, many of the sector-specific 
amendments  that  are  necessary  to  fully  implement  the  Services  Directive  and  to  liberalise 
regulated  professions  are  close  to  being  finalised.  In  the  construction  and  real-estate  sector, 
regulatory progress has been very limited and significant barriers to entry remain. In addition, 
there is only slow progress on opening-up the telecom market.  

The  Portuguese  Government  presented  a  strategic  plan  to  tackle  youth  unemployment 
and  SME  financing  problems  (Impulso  Jovem)  following  the  European  Council  of  30 
January  2012.  The  strategic  plan  addresses  youth  issues  through  internships,  training 
programmes,  wage  subsidies,  microcredit  and  the  reinforcement  of  mobility.  Another 
important objective is to facilitate further the access to financing for SMEs, either in terms of 
own capital, loans coupled with guarantees or grants to support investments.  The Portuguese 
authorities  will  implement  the  strategic  plan  with  resources  available  in  the  current 
operational  programmes  funded  by  the  Structural  Funds.  Concrete  measures  and  funding 
allocations  will  be  presented  in  the  reprogramming  proposal  (National  Strategic  Reference 
Framework) to be submitted by the Portuguese authorities to the European Commission by 30 
May. While this initiative is not part of the programme implementation it may contribute to 
meet some of its objectives. 

The  Euro  Plus  Pact  commitments  made  by  Portugal  reflect  the  major  priorities  of  the 
Economic Adjustment Programme. These commitments consist in a set of specific actions 
in various fields aimed at fostering competitiveness and employment, contributing further to 
the sustainability of public finances and reinforcing financial stability. 

The  economic  crisis  and  subsequent  austerity  measures  have  had  an  impact  on  the 
ability  of  Portugal  to  achieve  some  Europe  2020  goals.  In  particular,  employment  rate 
started  to  decline  after  having  peaked  in  2008  and  R&D  expenditure  slightly  ebbed  after  a 
steady  increase  until  2009.  On  the  contrary,  early  school  leaving  has  carried  on  declining 
during  the  years  of  the  crisis.  The  share  of  population  at  risk  of  poverty  remains  similar  to 
pre-crisis  levels.  On  the  environmental  side,  Portugal  has  continued  to  work  towards 
achieving the environmental goals of Europe 2020. It is expected that the steps forward made 
or  in  progress  in  structural  reforms,  particularly  those  in  the  labour  market,  justice,  some 
privatisations,  the  liberalisation  of  some  sheltered  sectors  and  professions  and  a  number  of 
measures to improve the business environment, boost competition, spur productivity, increase 
employment and reduce production costs, thus contributing to an increase in employment and 
limiting poverty and social exclusion in the medium term.  

8 8

 
 
R&D investment  
(% of GDP) 

Europe 2020 targets 

The current Europe 2020 
national target is to reach 
3 % by 2020. This target may 
be difficult to attain, given 
the ongoing process of fiscal 
consolidation and 
deleveraging of the economy 
and the relatively high share 
of the public sector in the 
current levels of expenditure 
in R&D.  

Development over the last 
year2 
The main measures are the 
adoption of the Strategic 
Programme for 
entrepreneurship and 
innovation, the 
implementation of the 
‘Digital Agenda 2015’ and 
actions aimed at 
strengthening the links 
between universities, 
research institutes and firms. 

Also noteworthy is the new 
strategic programme for 
entrepreneurship and 
innovation (Programa 
Estratégico para o 
Empreendedorismo e a 
Inovação E+I), taking the 
form of internal reshaping of 
the Operational programmes 
and the use of structural 
funds (funding of EUR 
190 m for a total of EUR 
300 m, launched in February 
2012 to last until 2015). 

Current situation 

In 2010, R&D investment in 
Portugal amounted to 1.59 % 
of GDP, reflecting a steady 
and strong upward trend 
until 2009 when it reached 
1.64 %. It is still 
significantly below the EU 
average, with public 
spending accounting for a 
high share of the total 
(43.7 %) compared to the EU 
average of 33.9 %. 

The main problems faced by 
Portugal in the field of 
research and innovation 
include (i) the low density 
and limited scope of the 
linkages established between 
participants (businesses, 
universities and research and 
technological institutes) in 
the national research and 
innovation system, (ii) the 
partial mismatch between 
economic needs and 
university qualifications 
despite recent progress on 
PhD training and (iii) the 
general weak knowledge-
absorption capacity of firms, 
which reflects the low share 
of research-intensive sectors 
in the total value added.. 

2 Based on the 2012 national reform programme for Portugal 

9 9

 
 
 
 
                                                 
Current situation 

Employment rate (%) 

70.5 % in 2010. 

Europe 2020 targets 

75 % 

Development over the last 
year2 
The employment rate peaked 
in 2008 at 73.1 % and then 
started to decline. In 2010, it 
attained historically low 
levels not observed since 
1996. The quarterly data 
available for 2011 show that 
a rapid decline is occurring 
in the context of a sharp 
deterioration of the labour 
market. Accordingly, 
achieving an employment 
rate of 75 % by 2020 might 
well prove too ambitious in a 
‘no policy change’ scenario 
and sustained efforts are 
therefore needed over the 
coming years in order to 
achieve it. 

In terms of policy measures, 
on 18 January 2012 the 
government and main social 
partners concluded a 
tripartite agreement which 
reforms the Labour Code 
and substantially reduces 
rigidities by lowering 
severance pay, redefining 
fair dismissals, making 
working hours more flexible, 
facilitating collective 
agreements at company level 
and reducing unemployment 
traps. A programme to 
encourage new recruitment 
was also put in place. This 
major labour-market reform 
has been submitted for 
Parliament’s approval. 

In addition, a hiring 
incentives programme - 
Estímulo 2012 - entered into 
force on 14 February 2012 
and an Action Plan to 
improve the effectiveness of 
active labour market policies 
is in preparation. 

10 10

 
 
 
 
Early school leaving (%) 

Current situation 

28.7 % in 2010. 
Early school leaving rates 
have been gradually 
declining over the last 
decade from a rate of 45 % 
in 2002. However, the rate 
of early school leaving 
remains among the highest 
in the EU and more than 
double the EU average 
(14.1 %). 

Development over the last 
year2 

Europe 2020 targets 

10 % 

Council 

and 
urge 

Decision 
The 
the 
2011/344/EU 
the 
Programme 
Portuguese  authorities 
to 
address  early  school  leaving 
and to improve the quality of 
secondary 
and 
vocational  education  and 
training,  with  a  view 
to 
raising  the  quality  of  human 
capital 
facilitating 
and 
labour market matching. 

education 

action 

to 
plans 
Broad 
improve 
the  quality  of 
secondary  education  and  the 
quality  and  attractiveness  of 
education  and  vocational 
presented. 
training  were 
Plans 
Detailed 
including 
for 
implementation  were  also 
recently submitted. 

Action 
road  maps 

Tertiary education 
attainment (%) 

40 % 

23.5 % in 2010. 
There has been remarkable 
progress from rates of about 
11 % at beginning of the last 
decade. However, tertiary 
education attainment 
remains significantly below 
the EU average. 
In addition, there are very 
significant parts of society 
with low levels of education. 
More than 7 out of 10 
Portuguese citizens have a 
low level of education 
attainment which is almost 
triple the EU average 
(28.1 %). 

The implementation of the 
Confidence Contract 
adopted in 2010 is aimed at 
providing the labour market 
with an additional 100 000 
graduates over the next four 
years and extending 
compulsory education to the 
age of 18. Preliminary data 
on enrolment rates seem to 
indicate that the socio-
economic situation may have 
an adverse effect in the 
attainment of Portugal’s 
national target.  

11 11

 
 
 
 
Reduction of the number of 
people at risk of poverty or 
exclusion 

Current situation 

More  than  one  out  of  four 
Portuguese  citizens  was  at-
risk  of  poverty  or  exclusion 
at the end of 2009. This rate 
(25.3 %)  is  above  the  EU 
average  (23.4 %).  Even  after 
social  transfers,  the  risk  of 
poverty  is  over  17 %.  More 
than  9 %  of  the  population 
faces 
material 
deprivation. 

severe 

Development over the last 
year2 

erall, the Economic 

Europe 2020 targets 

The  NRP  2011  envisages 
the  number  of 
reducing 
persons 
in  or  at  risk  of 
poverty  and  social  exclusion 
by 200 000 persons in 2020. 

Adjustment Programme 
has been implemented 
taking into account the 
vulnerable position of 
groups with the highest 
risk of poverty. For 
instance: (i) measures to 
reduce the duality of the 
labour market will 
benefit the socially 
disadvantaged holders of 
fixed-term contracts, (ii) 
the minimum wage was 
not reduced, (iii) pension 
cuts and public wage 
cuts were implemented 
in a progressive way (i.e. 
there were either no cuts 
or proportionately lower 
cuts in the lower 
categories), (iv) the 
minimum period of 
employment necessary 
to be eligible for 
unemployment benefits 
was shortened, (v) the 
housing market reform 
includes an important 
social component by 
containing reinforced 
guarantees for low-
income and elderly 
tenants, (vi) taxes on 
profits and interest 
income have been 
increased and a 
solidarity surtax on 
individual income 
introduced. This 
solidarity surcharge is 
levied at a rate of 3.5 % 
on all aggregated 
categories of income 
subject to individual 
income tax and applies 
only to income gained in 
2011. Furthermore, in 
2012 and 2013 a surtax 
of 2.5 % will be applied 
to the highest income 
bracket. 

Energy efficiency — 
reduction in primary energy 
consumption by 2020 in 
million tonnes of oil 
equivalent (Mtoe) 

The method of assessing 
national progress in energy 
efficiency is currently under 
discussion between the 
institutions in the context of 
the proposed Energy 
Efficiency Directive. 

12 12

2011  commitment  of  6.0 
Mtoe reduction 

 
 
 
 
 
 
 
 
Greenhouse-gas emission 
reduction in sectors not 
covered by the Emission 
Trading System (compared 
to 2005 levels) 

Current situation 

Greenhouse-gas emissions in 
non-ETS sectors reduced by 
3.3 % (compared to 2005) by 
2009. 

Renewable energy (% of 
total energy use) 

The  share  of 
renewable 
energy sources in gross final 
energy 
is 
significantly  high  (24.5 %  in 
2009), more than double the 
EU average (11.7 %).  

consumption 

Development over the last 
year2 
The measures adopted to 
reach the objectives linked 
to climate change are related 
to the implementation of the 
National Programme to 
Combat Climate Change and 
to promoting eco-innovation 
in a wide range of sectors 
through initiatives in key 
sectors such as transport or 
housing. 
The 
renewable 
energies  has  witnessed  a 
steady  upward  trend  since 
2000. 

share  of 

the  area  of  energy, 
In 
Portugal 
currently 
is 
implementing  a  National 
Strategy  for  Energy  2020 
and  a  specific  Action  Plan 
for Renewable Energies. 

Europe 2020 targets 

Portugal  also  undertook  not 
to increase emissions outside 
ETS (building, road transport 
and  agriculture)  by  more 
than  1 %  by  2020  compared 
in 
to 
2005. 

level  observed 

the 

Portugal  has  committed  to 
reaching  a  share  of  31 %  of 
renewable  energies  in  total 
final  consumption  of  energy 
by 2020. 

4. 

CONCLUSION 

Overall,  Portugal  has  made  good  progress  on  a  number  of  fronts  but  significant 
challenges  remain.  Achieving  the  fiscal  targets  remains  essential  if  the  government  is  to 
regain full market access within the Programme period. To limit the risks to the 2012 fiscal 
targets,  rapid  and  determined  implementation  of  the  structural-fiscal  measures  of  the 
Programme is paramount. At the same time, the government needs to focus on reforms that 
address  Portugal’s  competitiveness  shortcomings.  The  2012  budget  does  not  pursue  earlier 
plans  for  a  ‘fiscal  devaluation’.  This  makes  it  all  the  more  important  to  rapidly  adopt 
structural  reforms  in  labour  and  product  markets  with  a  view  to  reducing  labour  cost, 
increasing  flexibility,  lowering  entry  barriers  and  tackling  profiteering.  Perseverance  and 
resolve will be required if the government is to overcome strong vested interests that stand in 
the way of reforms. A strategic re-programming of the Structural Funds is underway, with a 
focus on support to youth employment and competitiveness (in particular SME's).  

The breadth and scope of the reform programme is testing the administrative capacity 
of  the  public  sector.  Technical  assistance  has  already  been  provided  in  a  number  of  areas. 
The recently set up Support Group steps up the Commission’s involvement in this regard. The 
Support Group will complement ongoing technical assistance in the fiscal domain by focusing 
on structural policies and the use of EU structural funds. 

The  next  review  is  scheduled  for  the  end  of  May  2012.  If  the  assessment  of  progress  is 
positive, disbursement of the next tranche of EUR 2.6 billion will follow. 

13 13

 
 
 
 
 
 
 
5. 

ANNEX 

Table I. Macro economic indicators 

Core indicators
GDP growth rate
Output gap 1
HICP (annual % change)
Domestic demand (annual % change) 2
Unemployment rate (% of labour force) 3
Gross fixed capital formation (% of GDP)
Gross national saving (% of GDP)
General Government (%  of GDP)
Net lending (+) or net borrowing (-)
Gross debt
Net financial assets 
Total revenue 
Total expenditure
  of which: Interest
Corporations (%  of GDP)
Net lending (+) or net borrowing (-)

1995-
1999

2000-
2004

2005-
2008

2009

2010

2011

2012

2013

3.9
0.7
2.6
4.8
6.3
25.3
20.2

-4.2
54.3
-30.1
37.6
41.8
4.0

1.5
1.3
3.3
1.2
5.9
25.4
16.9

-3.8
53.3
-39.1
39.7
43.5
2.8

1.1
-0.2
2.6
1.3
8.7
22.5
12.2

-4.5
66.5
-51.0
40.7
45.2
2.8

-2.9
-2.8
-0.9
-3.3
10.6
20.6
9.4

-10.2
83.1
-64.5
39.6
49.7
2.8

1.4
-1.5
1.4
0.8
12.0
19.8
9.9

-9.8
93.3
-63.7
41.4
51.2
2.9

-1.6
-2.7
3.6
-5.7
12.9
18.1
10.8

-4.2
107.8
-54.0
44.7
48.9
3.9

-3.3
-4.6
3.0
-6.6
15.5
16.6
12.3

-4.7
113.9
n.a
43.0
47.7
4.8

0.3
-4.0
1.1
-0.8
15.1
16.8
13.5

-3.1
117.1
n.a
43.1
46.1
4.9

-1.4

-5.5

-7.0

-4.3

-3.1

-5.0

-1.0

-1.9

n.a
n.a
9.8
20.7

-130.6
-9.6
13.3
20.6

-167.6
-0.5
10.2
21.1

-136.7
-8.0
14.0
20.8

-164.0
-1.3
11.3
21.1

-164.2
-4.5
12.4
20.8

-146.2
-7.7
14.0
20.5

2.2
131.7
39.2
5.9
21.2
7.4

1.9
153.3
38.8
7.0
19.8
8.2

4.8
125.4
39.5
6.0
25.6
7.9

1.9
123.7
38.6
6.8
22.9
5.7

4.6
125.2
38.9
6.6
25.5
7.5

4.2
122.3
38.5
7.5
26.0
7.1

Net financial assets; non-financial corporations
Net financial assets; financial corporations
Gross capital formation
Gross operating surplus
Households and NPISH (%  of GDP)
Net lending (+) or net borrowing (-)
Net financial assets
Gross wages and salaries
Net property income
Current transfers received
Gross saving
Rest of the world (%  of GDP)
Net lending (+) or net borrowing (-)
Net financial assets
Net exports of goods and services
Net primary income from the rest of the world
Net capital transactions 
Tradable sector
Non tradable sector
  of which: Building and construction sector
Real effective exchange rate (index, 2000=100)
Terms of trade goods and services (index, 2000=100)
Market performance of exports (index, 2000=100)
Notes:
1 The output gap constitutes the gap between the actual and potential gross domestic product at 2000 market prices.
2 The indicator on domestic demand includes stocks.
3  Unemployed persons are all persons who were not employed, had actively sought work and were ready to begin working immediately or within two 
weeks. The labour force is the total number of people employed and unemployed. The unemployment rate covers the age group 15-74.

-8.3
111.9
-7.2
-3.3
1.3
41.0
46.5
5.8
110.4
103.0
97.3

-5.1
109.0
-3.9
-3.6
1.5
41.6
45.6
5.5
109.1
100.6
101.4

-9.6
114.0
-7.4
-4.1
1.2
41.1
47.2
5.9
113.4
103.6
98.3

-7.2
56.2
-8.9
-1.6
1.8
43.3
44.1
7.0
105.0
101.2
99.4

-9.7
85.3
-9.0
-2.8
1.3
40.9
45.5
6.3
112.0
100.3
93.6

-3.7
21.9
-8.3
-0.4
2.4
46.4
41.2
6.6
99.3
100.5
108.0

-2.2
n.a
-0.5
-3.9
1.5
n.a
n.a
n.a
103.2
100.1
104.6

3.7
n.a
37.0
6.0
26.0
5.9

n.a
n.a
10.7
21.3

3.8
n.a
36.2
6.1
25.5
5.9

-1.4
n.a
0.7
-4.3
1.5
n.a
n.a
n.a
101.8
100.3
106.7

Source :
Commission services' spring 2012 forecast

14 14

 
 
 
Table II. Comparison of macroeconomic developments and forecasts 

Real GDP (% change)
Private consumption (% change)
Gross fixed capital formation (% change)
Exports of goods and services (% change)
Imports of goods and services (% change)
Contributions to real GDP growth:
- Final domestic demand
- Change in inventories
- Net exports
Output gap1
Employment (% change)
Unemployment rate (%)
Labour productivity (% change)
HICP inflation (%)
GDP deflator (% change)
Comp. of employees (per head, % change)
Net lending/borrowing vis-à-vis the rest of the 
world (% of GDP)

2011
COM SP
-1.6
-1.6
-3.9
-3.9
-11.4
-11.4
7.4
7.4
-5.5
-5.5

2012
COM SP
-3.0
-3.3
-6.3
-6.1
-9.8
-11.8
3.4
2.5
-6.4
-6.9

2013
COM SP
0.6
-0.7
-0.6
5.6
1.6

0.3
-1.0
0.7
4.7
1.9

-5.6
-0.5
4.4
-2.7
-1.5
12.9
-0.1
3.6
0.7
-0.8
-5.1

-6.1
-0.5
4.4
-3.2
-2.8
12.7
1.2
3.6
0.7
0.5
-5.1

-6.8
-0.1
3.6
-4.6
-3.3
15.5
0.0
3.0
0.7
-3.1
-2.2

-6.7
-0.1
3.7
-5.1
-2.5
14.5
-0.5
3.2
0.9
-3.0
-2.5

-1.0
0.2
1.1
-4.0
0.2
15.1
0.0
1.1
1.3
-0.6
-1.4

-1.0
0.1
1.5
-4.5
0.6
14.1
0.0
1.3
1.5
0.7
-0.4

2014
SP
2.0
0.5
3.1
6.4
2.6

0.4
0.0
1.6
-3.1
1.5
13.2
0.5
1.1
1.3
0.9
1.3

2015
SP
2.4
1.0
3.7
6.8
3.6

0.9
0.0
1.4
-1.6
1.1
12.7
1.2
1.2
1.6
1.3
3.1

Note:
1In percent of potential GDP, with potential GDP growth according to the programme as recalculated by Commission services.

Source :

Commission services’ spring 2012 forecasts (COM); Stability programme (SP).

15 15

 
 
 
Table III. Composition of the budgetary adjustment 

(% of GDP)

2011

2012

2013

2014

2015

Change: 
2011-2015

Revenue
of which:
- Taxes on production and imports
- Current taxes on income, wealth, etc.
- Social contributions
- Other (residual)
Expenditure
of which:
- Primary expenditure

of which:

COM
44.7

COM
43.0

13.6
9.9
12.3
8.8
48.9

14.8
9.8
11.9
6.5
47.7

SP
42.9

14.8
9.9
12.0
6.2
47.5

COM
43.1

14.9
9.8
11.9
6.4
46.1

SP
42.9

14.8
9.9
11.9
6.3
45.9

SP
42.8

14.8
10.0
11.8
6.2
44.6

SP
42.7

14.8
10.1
11.6
6.2
43.8

45.0

42.8

42.8

41.2

41.3

39.9

39.0

SP
-2.0

1.2
0.2
-0.7
-2.6
-5.1

-6.0

3

1.1

-1.0

-4.5

-0.4

-2.2

-3.1

-5.1

-2.6

-4.6

-2.3

-2.7

-3.0

-1.3

-4.0

-0.3

-1.6

-6.2

-2.6
3.6

-3.0
3.1

-1.3
1.8

-2.3
-0.6
-1.2
0.2
-1.3
-0.8
0.9
3.2
4.1
-3.2
6.4

9.5
4.3
21.9
0.8
1.8
2.8
4.9
-3.1
1.9
0.0
-3.1

9.0
4.0
20.9
0.9
1.3
2.9
4.8
-1.0
3.7
0.0
-1.0

9.7
4.1
21.6
1.0
1.6
3.3
4.6
-3.0
1.6
0.0
-3.0

9.2
4.1
21.2
0.9
1.4
3.1
4.7
-1.8
2.9
0.0
-1.8

10.0
4.6
22.3
0.8
2.0
3.1
4.8
-4.7
0.1
0.4
-5.1

10.1
4.5
21.8
1.0
2.1
3.3
4.7
-4.5
0.2
0.4
-4.9

11.3
4.6
22.1
0.7
2.6
3.7
3.9
-4.2
-0.4
3.2
-7.4

Compensation of employees
Intermediate consumption
Social payments
Subsidies
Gross fixed capital formation
Other (residual)
- Interest expenditure
General government balance (GGB)
Primary balance
One-off and other temporary measures
GGB excl. one-offs
Output gap2
Cyclically-adjusted balance2
Structural balance
Change in structural balance
Structural primary balance3
Change in structural primary balance
Expenditure benchmark
Public expenditure growth4 (real)
Reference rate5,6
Lower reference rate5,7
Deviation in % GDP 
   against applicable reference rate
Two-year average deviation in % GDP 
   against applicable reference rate
Notes:
1On a no-policy-change basis.
2Output gap (in % of potential GDP) and cyclically-adjusted balance according to the programme as recalculated by Commission services on 
the basis of the information in the programme.
3Structural (primary) balance = cyclically-adjusted (primary) balance excluding one-off and other temporary measures.
4M odified expenditure aggregate used for the expenditure benchmark, growth rates net of non-discretionary changes in unemployment benefit 
and of discretionary measures.
5The reference rates applicable to 2014 onwards will be available from mid-2012. For illustrative purposes, the current reference rates have 
also been applied to the years 2014 onwards.
6The (standard) reference rate applies starting in the year following which the country has reached its M TO.
7The lower reference rate applies as long as the country is adjusting towards its M TO, including the year in which it reaches the M TO.

-1.09
-0.54

-1.09
-0.26

-1.09
-0.58

-1.09
-1.63

-1.09
-0.97

-1.09
-1.03

-0.4
0.5

-1.0
1.6

-0.3
0.1

2.1
4.4

4.3
0.6

4.5
0.2

1.8
4.1

3.7
1.9

3.6
1.5

-0.76

-0.40

-0.56

-1.33

-4.83

-2.40

-2.32

-0.77

-3.33

-3.27

0.10

0.10

0.10

0.10

0.10

0.10

n.a.

n.a.

5.9

6.8

2.7

-
-

-

-

-

Source :
Stability programme (SP); Commission services’ spring 2012 forecasts (COM); Commission services’ calculations.

16 16

 
 
 
average 
2006-10
76.0
6.2

2011

107.8
14.4

2012

2013

COM
113.9
6.1

SP
113.1
5.3

COM
117.1
3.2

SP
115.7
2.6

2014
SP
113.4
-2.3

2015
SP
109.5
-3.9

3.4
1.4

2.9
-0.3
-1.2
1.4

0.4
4.8

3.9
1.5
-0.6
9.3

-0.1
7.7

4.8
3.6
-0.7
-1.4

-0.2
7.0

4.7
3.3
-1.0
-1.5

-1.5
2.4

-1.9
3.2

4.9
-0.3
-1.4
1.8

-1.6
2.3

4.6
-0.7
-1.7
1.9

1.8
0.6

-2.9
1.0

4.7
-2.2
-1.4
-0.4

-0.3
0.0

-3.7
0.4

4.7
-2.6
-1.7
-0.5

-0.6
0.0

Table IV. Debt dynamics 

(% of GDP)

Gross debt ratio1
Change in the ratio
Contributions 2 :

1. Primary balance
2. “Snow-ball” effect

Of which:
Interest expenditure
Growth effect
Inflation effect

3. Stock-flow adjustment

Of which:
Cash/accruals diff.
Acc. financial assets

Privatisation

Val. effect & residual
Gap to the debt benchmark3,4

Structural adjustment5

To be compared to:
Required adjustment6

Notes:
1End of period.
2The snow-ball effect captures the impact of interest expenditure on accumulated debt, as well as the impact of real GDP growth 
and inflation on the debt ratio (through the denominator). The stock-flow adjustment includes differences in cash and accrual 
accounting, accumulation of financial assets and valuation and other residual effects. 

3 Not relevant during EDP that were ongoing in November 2011 and in the three years following the correction of the excessive 
deficit.

4Shows the difference between the debt-to-GDP ratio and the debt benchmark. If positive, projected gross debt-to-GDP ratio does 
not comply with the debt reduction benchmark.
5Applicable only during the transition period of three years from the correction of the excessive deficit for EDP that were ongoing 
in November 2011.
6Defines the remaining annual structural adjustment over the transition period which ensures that - if followed – Member State 
will comply with the debt reduction benchmark at the end of the transition period, assuming that COM (SP) budgetary projections 
are achieved.
Source :
Stability programme (SP); Commission services’ spring 2012 forecasts (COM); Commission services’ calculations.

17 17

 
 
 
Table V. Long-term debt sustainability indicators 

PT

EU27

no-policy 
change 
scenario 

Programme 
(SP) 
scenario

no-policy 
change 
scenario 

Programme 
(SP) 
scenario

S2
of which:

Initial budgetary position (IBP)
Long-term change in the primary balance (LTC)
 of which:
Pension
Care (HC and LTC)
Others

S1 (required adjustment)*

Debt,  % of GDP (2011)
Age-related expenditure, % of GDP (2011)
Figure. Medium-term debt projection 

-1.2

-1.3
0.1

-0.4
1.5
-1.0
1.3

-2.4

-2.5
0.1

-0.3
1.4
-1.1
-0.3

2.9

0.7
2.3

1.1
1.5
-0.3
2.2

0.7

-1.6
2.4

1.2
1.5
-0.3
-0.1

107.8
25.8

82.8
25.8

(% of 

200

Gross  debt as  %  of GDP  - PT - Medium term debt projections

0

0
9
9
1

2
9
9
1

4
9
9
1

6
9
9
1

4
0
0
COM no-policy change scenario
2

6
0
0
2

8
9
9
1

0
0
0
2

2
0
0
2

8
0
0
2

0
1
0
2

2
1
0
2

4
1
0
2

6
1
0
2

8
1
0
2

0
2
0
2

2
2
0
2

4
2
0
2

6
2
0
2

8
2
0
2

0
3
0
2

COM + Shock ( -1p.p. in the short-term/long-term interest rate on
maturing and new debt from 2014)

18 18

 
 
 
 
 
 
 
Table VI. Taxation 

Total tax revenues (incl. actual compulsory social contributions, % of GDP)
Breakdown by economic function (% of GDP)1
     Consumption

              of which:

              - VAT

             - excise duties on tobacco and alcohol

             - energy

             - other (residual)

     Labour employed

     Labour non-employed

     Capital and business income

     Stocks of capital/wealth
     p.m.  Environmental taxes 2
3
VAT efficiency
     Actual VAT revenues as % of theoretical revenues at standard rate

2001

30.9

2005

31.5

2007

32.8

2008

32.8

2009

31.0

2010

31.5

11.7

12.9

12.6

12.2

10.9

11.7

7.5

1.0

1.8

1.4

8.5

1.0

2.0

1.4

8.5

0.8

2.0

1.3

8.4

0.9

1.9

1.1

7.1

0.8

1.9

1.1

7.8

1.0

1.8

1.1

11.3

11.3

11.6

11.7

12.1

12.0

0.6

5.2

2.2

2.9

0.7

4.4

2.3

3.0

0.9

5.2

2.6

2.8

0.9

5.5

2.5

2.6

1.0

4.6

2.4

2.5

0.9

4.5

2.4

2.5

58.4

51.8

52.6

53.4

44.4

46.8

Note: 
1 T ax revenues are broken down by economic function, i.e. according to whether taxes are raised on consumption, labour or capital. See European Commission (2012), 

T axation trends in the European Union, for a more detailed explanation.

2 T his category comprises taxes on energy, transport and pollution and resources included in taxes on consumption and capital.

3 T he VAT  efficiency is measured via the VAT  revenue ratio. T he VAT  revenue ratio is defined as the ratio between the actual VAT  revenue collected and the revenue 

that would theoretically be raised if VAT  was applied at the standard rate to all final consumption. A low ratio can indicate a reduction of the tax base due to large 

exemptions or the application of reduced rates to a wide range of goods and services ('policy gap') or a failure to collect all tax due to e.g. fraud ('collection gap'). See 

European Commission (2011), T ax reforms in EU Member States, European Economy 5/2011, for a more detailed explanation.

Source: Commission

19 19

 
 
 
Table VII. Financial market indicators 

Total assets of the banking sector (% of GDP)
Share of assets of the five largest banks (% of total assets)
Foreign ownership of banking system (% of total assets)
Financial soundness indicators:
              - non-performing loans (% of total loans) 1)
              - capital adequacy ratio (%) 1), 2)
              - return on equity (%) 1)
Bank loans to the private sector (year-on-year % change)
Lending for house purchase (year-on-year % change)
Loan to deposit ratio
CB liquidity as % of liabilities
Banks' exposure to countries receiving official financial assistance  (% of GDP)4)
Private debt (% of GDP)
Gross external debt (% of GDP) 4)
            - Public
            - Private
Long term interest rates spread versus Bund (basis points)*
Credit default swap spreads for sovereign securities (5-year)*
Notes:
1) Latest avaiable June 2011.
2) The capital adequacy ratio is defined as total capital divided by risk weighted assets.   

3) Covered countries are IE, EL, PT, RO, LV and HU.
4) Latest data 2011Q3.
* M easured in basis points.
Source :

2007

2008

2009

2010

2011

259.7
67.8
23.6

1.4
10.4

18.7

12.0
10.1
141.4
0.6
5.1
164.3

46.9
37.8
20.8
…

280.3
69.1
22.7

1.8
9.4

5.6

8.2
4.3
137.4
2.3
10.3
177.5

54.2
40.3
53.5
65.4

308.7
70.1
23.1

2.8
10.5

7.3

3.1
4.2
133.3
3.5
12.5
187.3

57.1
41.6
98.9
80.1

323.8
70.8
…

2.9
10.4

7.5

1.7
3.5
123.8
8.1
14.7
184.4

55.0
39.8
265.3
291.9

334.0
…
…

3.6
10.1

3.8

-3.4
-0.5
116.2
8.8
11.9
181.2

56.0
42.1
763.3
852.1

Bank for International Settlements and Eurostat (exposure to macro-financially vulnerable countries), IMF (financial soundness indicators), 
Commission (long-term interest rates), World Bank (gross external debt) and ECB (all other indicators).

20 20

 
 
 
Table VIII. Labour market and social indicators 

Labour market indicators
Employment rate 
(% of population aged 20-64)
Employment growth 
(% change from previous year)
Employment rate of women 
(% of female population aged 20-64)
Employment rate of men 
(% of male population aged 20-64)
Employment rate of older workers 
(% of population aged 55-64)
Part-time employment 
(% of total employment)
Part-time employment of women  
(% of women employment)
Part-time employment of men  
(% of men employment)
Fixed term employment 
(% of employees with a fixed term contract)
Unemployment rate1 (% of labour force)
Long-term unemployment2  (% of labour force)
Youth unemployment rate 
(% of youth labour force aged 15-24)

2006

2007

2008

2009

2010

2011

72.7

72.6

73.1

71.2

70.5

69.1

0.7

0.2

0.5

-2.8

-1.5

-100.0

66.3

66.3

67.0

66.1

65.6

64.8

79.2

79.1

79.4

76.5

75.4

73.4

50.1

50.9

50.8

49.7

49.2

47.9

12.1

12.9

12.7

12.4

12.4

14.1

16.8

18.1

18.3

17.4

16.5

17.1

8.0

8.6

7.9

8.0

8.8

20.6

22.4

22.8

8.6

4.3

8.9

4.2

8.5

4.0

20.1

20.4

20.2

22.0

10.6

4.7

24.8

23.0

12.0

6.3

27.7

Youth NEET3 rate (% of population aged 15-24)

10.6

11.2

10.3

11.2

11.5

Early leavers from education and training (% of 
pop. 18-24 with at most lower sec. educ. and not 
in further education or training)
Tertiary educational attainment (% of population 
30-34 having successfully completed tertiary 
education)
Labour productivity per person employed 
(annual % change )
Hours worked per person employed  (annual % 
change)
Labour productivity per hour worked (annual % 
change; constant prices)
Compensation per employee (annual % change; 
constant prices)
Nominal unit labour cost growth (annual % 
change)

39.1

36.9

35.4

31.2

28.7

20.0

21.4

23.2

23.3

24.8

0.9

-0.5

1.4

-0.9

0.9

2.4

0.7

1.7

0.7

1.1

-0.5

-0.7

0.2

1.4

3.5

1.9

-0.3

-0.2

-0.2

1.9

3.1

2.2

3.0

0.9

2.1

0.3

-1.5

-2.6

Real unit labour cost growth (annual % change)

-1.8

-1.6

Notes:

1 According to ILO definition, age group 15-74)
2 Share of persons in the labour force who have been unemployed for at least 12 months.
3 NEET are persons that are neither in employment nor in any education or training.

Sources: 
Commission (EU Labour Force Survey and European National Accounts) 

21 21

11.5

0.0

12.9

6.2

30.1

:

:

:

-0.1

-0.5

0.5

-0.6

-0.8

-1.4

 
 
 
Expenditure on social protection 
benefits (% of GDP) 
Sickness/Health care 
Invalidity 
Old age and survivors 
Family/Children 
Unemployment 
Housing and Social exclusion n.e.c. 
Total 
of which:  Means tested benefits 
Social inclusion indicators 
Risk-of-poverty or exclusion1 (% of total 
population) 

Risk-of-poverty or exclusion of children (% of 
people aged 0-17) 
Risk-of-poverty or exclusion of elderly (% of 
people aged 65+) 
At-risk-of-poverty rate2 (% of total 
population) 
Value of relative poverty threshold (single 
household per year) - in PPS 
Severe material deprivation3  (% of total 
population) 

Share of people living in low work intensity 
households4 (% of people aged 0-59 not 
student) 

In-work at-risk-of poverty rate (% of persons 
employed) 

Notes: 

2005 

2006 

2007 

2008 

2009 

6.93 
2.26 
9.47 
1.18 
1.33 
0.00 
24.6 
2.51 

6.73 
2.29 
9.73 
1.18 
1.27 
0.00 
24.6 
2.13 

6.40 
2.26 
9.69 
1.19 
1.15 
0.00 
23.9 
2.09 

2006 

2007 

2008 

6.48 
2.14 
10.25 
1.28 
1.05 
0.00 
24.3 
2.29 

2009 

7.27 
2.16 
11.15 
1.49 
1.36 
0.00 
26.9 
2.74 

2010 

25.1 

25.0 

26.0 

24.9 

25.3 

25.6 

27.0 

29.5 

28.7 

28.7 

32.7 

29.9 

27.7 

26.0 

26.1 

18.5 

18.1 

18.5 

17.9 

17.9 

5157 

5349 

5702 

5644 

5838 

9.1 

9.6 

9.7 

9.1 

9.0 

6.6 

7.3 

6.3 

6.9 

8.6 

11.3 

9.7 

11.8 

10.3 

9.7 

1 People at risk of poverty or social exclusion (AROPE): individuals who are at risk of poverty (AROP) 
and/or suffering from severe material deprivation (SMD) and/or living in households with zero or very low 
work intensity (LWI). 

2 At-risk-of poverty rate: share of people with an equivalised disposable income below 60% of the national 
equivalised median income.  

3 Share of people who experience at least 4 out of 9 deprivations: people cannot afford to i) pay their rent or 
utility bills, ii) keep their home adequately warm, iii) face unexpected expenses, iv) eat meat, fish, or a 
protein equivalent every second day, v) enjoy a week of holiday away from home once a year, vi) have a 
car, vii) have a washing machine, viii) have a colour TV, or ix) have a telephone. 

4 People living in households with very low work intensity: share of people aged 0-59 living in households 
where the adults work less than 20% of their total work-time potential during the previous 12 months. 

Sources:  
For expenditure on social protection benefits ESSPROS; for social inclusion EU-SILC. 

22 22

 
 
 
Table IX. Product market performance and policy indicators 

2002-
2006

0.7

2.1

5.4

-2.0

0.4

2002-
2006

n.a.

n.a.
0.8

Performance indicators

Labour productivity1 total economy (annual 
growth in %)
Labour productivity1 in manufacturing (annual 
growth in %)
Labour productivity1 in electricity, gas, water 
(annual growth in %)
Labour productivity1 in the construction sector 
(annual growth in %)
Patent intensity in manufacturing2 (patents of the 
EPO divided by gross value added of the sector)

Policy indicators

Enforcing contracts 3 (days)
Time to start a business 3 (days)
R&D expenditure (% of GDP)
Tertiary educational attainment 
(% of 30-34 years old population)
Total public expenditure on education 
(% of GDP)

Product market regulation4, Overall
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Retail
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Network Industries 5
(Index; 0=not regulated; 6=most regulated)

2007

2008

2009

2010

2011

2.5

4.5

2.0

1.1

0.6

-0.5

0.1

2.9

-0.8

0.6

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

-2.5

-4.8

-0.4

n.a.

n.a.

n.a.

n.a.

n.a.

2007

2008

2009

2010

2011

577

7
1.2

577

6
1.5

547

6
1.6

547

6
1.6

16.1

19.8

21.6

21.1

23.5

547

5
n.a.

n.a.

5.4

5.3

4.9

n.a.

n.a.

n.a.

2005

2006

2008

2009

2010

2011

n.a.

n.a.

n.a.

n.a.

1.4

3.0

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

2.7

2.6

2.4*

n.a.

n.a.

n.a.

Notes:
1Labour productivity is defined as gross value added (in constant prices) divided by the number of persons employed.
2 Patent data refer to applications to the European Patent Office (EPO). They are counted according to the year in which 
they were filed at the EPO. They are broken down according to the inventor's place of residence, using fractional counting if 
multiple inventors or IPC classes are provided to avoid double counting. 
3 The methodologies, including the assumptions, for this indicator are presented in detail on the website 
http://www.doingbusiness.org/methodology. 
4 The methodologies for the product market regulation indicators are presented in detail on the website 
http://www.oecd.org/document/1/0,3746,en_2649_34323_2367297_1_1_1_1,00.html. The latest available product market 
regulation indicators refer to 2003 and 2008, except for Network Industries.

5 Aggregate ET CR.

*figure for 2007.

Source :

Commission, World Bank - Doing Business  (for enforcing contracts and time to start a business) and OECD (for the 
product market regulation indicators). 

23 23

 
 
 
Table X. Indicators on green growth 

Portugal

Green Growth performance

Macroeconomic
Energy intensity 
Carbon intensity 
Resource intensity (reciprocal of resource productivity)
Waste intensity 
Energy balance of trade 
Energy weight in HICP
Difference between change energy price and inflation 
Environmental taxes over labour taxes
Environmental taxes over total taxes

Sectoral 

Industry energy intensity 
Share of energy-intensive industries in the economy
Electricity prices for medium-sized industrial users 
Public R&D for energy 
Public R&D for the environment
Recycling rate of municipal waste
Share of GHG emissions covered by ETS
Transport energy intensity
Transport carbon intensity
Change in the ratio of passenger transport and GDP

Security of energy supply
Energy import dependency
Diversification of oil import sources 
Diversification of energy mix
Share of renewable energy in energy mix

kgoe / €
kg / €
kg / €
kg / €
% GDP
%
%
ratio
ratio

kgoe / € 
% GDP
€ / kWh
% GDP
% GDP
ratio
%
kgoe / €
kg / €
%

%
HHI
HHI
%

2001-
2005

0.20
0.64
1.43
n.a.
-2.9%
8
0.46
24.7%
9.5%

0.25
8.4
0.07
n.a.
n.a.
34.0%
n.a.
0.84
2.38
2.0%

85.3%
n.a.
0.41
14.6%

2006

2007

2008

2009

2010

0.19
0.60
1.57
0.26
-3.9%
9
1.2
23.2%
8.9%

0.23
8.8
0.08
0.01%
0.02%
35.8%
40.7%
0.77
2.11
-0.8%

83.0%
0.08
0.36
16.4%

0.19
0.57
1.58
0.26
-3.7%
9
1.2
22.5%
8.6%

0.22
8.9
0.09
0.01%
0.03%
36.2%
39.5%
0.72
1.88
-0.9%

82.0%
0.09
0.36
17.1%

0.18
0.57
1.67
0.26
-4.7%
10
1.8
20.2%
7.8%

0.22
n.a.
0.08
0.01%
0.02%
35.5%
38.4%
0.72
1.85
0.7%

82.8%
0.11
0.34
17.2%

0.19
0.56
1.53
n.a.
-2.9%
11
1.3
19.2%
8.1%

0.21
n.a.
0.09
0.02%
0.03%
39.2%
37.9%
0.72
1.84
n.a.

80.9%
0.10
0.33
19.0%

0.18
n.a.
n.a.
n.a.
-3.4%
12
4.5
n.a.
n.a.

n.a.

n.a.
0.09
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

Country-specific notes: 
The year 2011 is not included in the table due to lack of data.
General explanation of the table items:
Source: Eurostat unless indicated otherwise; ECFIN explanations given below
All macro intensity indicators are expressed as a ratio of a physical quantity to GDP (in 2000 prices)
          Energy intensity: gross inland energy consumption (in kgoe) divided by GDP (in EUR)
          Carbon intensity: Greenhouse gas emissions (in kg CO2 equivalents) divided by GDP (in EUR)
          Resource intensity: Domestic M aterial Consumption (in kg) divided by GDP (in EUR)
          Waste intensity: waste (in kg) divided by GDP (in EUR)
Energy balance of trade: the balance of energy exports and imports, expressed as % of GDP  
Energy weight in HICP: the share of the "energy" items in the consumption basket used in the construction of the HICP
Difference between energy price change and inflation: energy component of HICP, and total HICP inflation (annual %-change)
Environmental taxes over labour or total taxes: from DG TAXUD's database "Taxation trends in the European Union"
Industry energy intensity: final energy consumption of industry (in kgoe) divided by gross value added of industry (in EUR) 
Share of energy-intensive industries in the economy: share of gross value added of the energy-intensive industries in GDP
Recycling rate of municipal waste: ratio of municipal waste recycled over total municipal waste
Public R&D for energy or for the environment: government spending on R&D (GBAORD) for these categories as % of GDP
Share of GHG emissions covered by ETS: based on greenhouse gas emissions as reported by M ember States to EEA (excl LULUCF)
Transport energy intensity: final energy consumption of transport (in kgoe) divided by gross value added of industry (in EUR) 
Transport carbon intensity:  greenhouse gas emissions in transport divided by gross value added of the transport sector
Passenger transport growth : measured in %-change in passenger kilometres
Energy import dependency: net energy imports divided by gross inland energy consumption incl. of international bunkers
Diversification of oil import sources: Herfindahl index (HHI), calculated as the sum of the squared market shares of countries of origin 

Diversification of the energy mix: Herfindahl Index over natural gas, total petrol products, nuclear heat, renewable energies and solid fuels

Share of renewable energy in energy mix: percentage-share in  gross inland energy consumption, expressed in tonne oil equivalents

24 24