After the general elections of January 2022, the Partido Socialista (PS) was able to solidify its dominance in the political landscape and govern with a parliamentary majority. As expected, the government has not only pursued the pro-capitalist policies of the last years but has proven to be a more stable partner for Portuguese and European capitalists in this time of deep international capitalist crisis and inflation. Anger at the decreasing living conditions is developing, together with workers’ struggle, but so far coordinated action is lacking to unite the working class in a mass struggle.
Social crisis
During most of 2022 the PS government and its leader Antonio Costa have refused to raise wages to allow workers to face inflation. As a result, by the end of the third trimester of 2022, the general inflation was 9.5% and the average real wage decrease was officially 4.7%. In fact, the sector with the highest average real wage decrease (7.8%) was the public administration, making the PS government the national champion of the race to the bottom of lower salaries.
To make matters worse, the biggest price hikes take place in essential goods: 27.6% for energy goods and 18.9% for food. This in a country where already by the end of 2020, 19.8% of the population was officially “under risk of poverty or social exclusion” and where housing and renting prices have been constantly increasing: between 2015 and 2021, they have increased 4 times more than wages. In the Lisbon metropolitan region alone, 130 thousand people live in houses considered “undignified”. One of the signs of the growing misery is the rapid increase of theft of essential goods in supermarkets. Public services have been suffering from chronic underfunding, with the degradation of the National Health Service (SNS) and its lack of workers being particularly noticeable. Many emergency rooms have been closing due to the incapacity of the SNS to hire and maintain workers with decent salaries and conditions. Meanwhile the private health sector’s profits keep growing, despite being financially inaccessible to about 60% of the population.
Profit rates in general are looking better than ever for the capitalists. Galp (Portuguese fuel company) has increased its profits by 86% to 608 million euro from January to September, in part due to fuel tax decreases by the government! Big companies in the distribution, energy and banking sectors are also seeing their profits increase significantly, sometimes doubling with respect to last year. The banking sector alone made 1.9 billion euro in profits in the first semester of 2022, in part due to the lay-offs and closing of agencies and the increasing housing prices and loan rates.
While Costa and the PS government clearly serve the interests of the ruling class, they have been able to an extent to mitigate the energy crisis for Portuguese households via the “Iberian mechanism” and the “regulated market”. The “Iberian mechanism” consists in the establishment of maximum prices from June 2022 in Portugal and the Spanish State (Iberian electricity market MIBEL) for electricity generated from gas, a mechanism most European governments have been refusing to implement. However, the price difference is compensated to the electricity producers by a subsidy, thus guaranteeing their profits with taxpayer money. The “regulated market” consists in the possibility for energy clients to buy directly from the distributing company (usually a private monopoly with a degree of shares belonging to the state) at regulated prices that vary slowly, rather than from commercial companies at variable prices in the liberal market. As a result, some energy companies haven’t significantly increased prices yet and many people in Portugal haven’t felt the most important increases of energy prices so far. However, these mechanisms don’t fully cover the energy price increases and may only postpone them. In fact, clients of some energy companies are already receiving energy bills at double the price, and a lot more are expected to have the same fate from January 2023 onwards. The average energy price variation from September to October alone was already 6.7%.
Crumbs for workers
Faced with the international economic crisis and the prospect of further social crisis and possible workers’ revolt, the government turns to propaganda and the offering of crumbs to soften the deep social anger. Costa and the PS try to blame the war in Ukraine for the inflation while simultaneously pointing to growth (Portuguese GDP is predicted to grow by 6.5% in 2022 and 1.3% in 2023) as a window for public debt reduction, while promising protection from the effects of the crisis and the reinforcement of workers’ revenues.
In September the government finally announced an anti-inflation program of assistance against the degradation of living conditions taking place in 2022. None of the measures amount to an effective control of prices, a real increase of revenues for working people, an answer to real problems or of making capitalists pay for the crisis.
Every adult has been “given” a one time subsidy of €125 from the public treasury, which corresponds to a wage increase below 2% for minimum wage earners (€705 gross/month or €627 net/month in 2022), which is far from compensating this year’s inflation. The consumer tax on electricity has been slightly decreased, which has almost no effect on prices but contributes to the profits of energy companies. Rent increases will be limited to 2% by subsidizing renters with taxpayer money to match a 5.43% rent increase.
Likewise, public transport prices will be frozen but the difference will be compensated, in every case making us pay for companies’ profits. Concerning pensions, the only revenues legally indexed to the previous year’s inflation, the PS government did even worse: half of the anticipated pension increase of 2023 was disbursed as a one-time extra-revenue in October 2022 and only half of the anticipated increase will be given in 2023, thus decreasing the base for the calculation of indexation in the following years. This actually constitutes a pension cut against the principle of the current indexation law.
In October, the PS government signed a “revenue agreement” for the next 4 years with the bosses and the UGT (PS-related trade union federation with a rightwing leadership) and has presented the budget for 2023, in conformity with that capitalist deal. This deal promises wage increases of 5% per year for the next 4 years, aiming to cut across workers’ struggles for the necessary wage increases. However, private companies are not obliged to follow that deal and the PS government itself will only increase wages in the public sector in 2023 on average by 3.6%, resulting in an average increase of 52€ per month. The increase of the national minimum wage by 7.8% to €760 gross/month or €676 net/month will be far from enough to improve the living conditions of those earning the minimum wage and are facing successive increases of food, energy and rent prices.
The inflation predictions for 2023 are already higher than 5%. Thus, the 2023 budget presents further impoverishment and austerity for the working class and a large part of the middle layers! The underfunding of public services is continued and contrasts with the 8.3% increase in Defense expenses to €2.6 billion, in accordance with NATO’s warmongering policy. This is combined with further gifts for big business: public subsidies to companies’ energy bills and tax benefits for banks!
The 2023 budget aims at Portuguese public debt cutbacks from 125.5% of GDP in 2021 to 115% in 2022 and 110.8% in 2023 through a clear transfer of means from workers to capital, showing the eagerness to satisfy the demands of the European Commission and international finance capital.
Cynically, the government is now talking of implementing a windfall tax on the “unexpectedly‘’ large profits of the energy and distribution sectors, but would use the revenues for foodbanks rather than any structural improvements in purchasing power.
Anger is simmering under the surface
Despite the omnipresent propaganda efforts of the PS government, working families can’t help but feel the horrendous effects of inflation and depressed wages on their living conditions!
As a result, some significant trade union activity is taking place and a lot more is to be expected. CGTP, the most important trade union federation, led by the Partido Comunista Português (PCP), has correctly stood against the conciliatory deal between the government, the bosses and the yellow trade unions and has denounced the proposed increases as being only crumbs that aggravate poverty and inequality. We should notice that, since the PCP and the Bloco de Esquerda (BE), former partners of the PS government (2015–2021 and 2015–2020 respectively), are now in the opposition, they show a particular interest in demonstrating that the PS majority is worse for the working class than the previous left-supported PS governments. Under these conditions and under pressure from the rank and file, the leaders of the workers’ movement are forced to do something or become irrelevant. The CGTP has announced several “months of action and struggle”: the month of June, September 15th till October 15th and November 15th till December 15th.
Need to unite and coordinate the struggle
Several strikes and protests have taken place in the last months, mostly for higher wages and mostly — but not exclusively — led by CGTP trade unions: in the public administration; in the social sector; in the Lisbon Metro; in the pharmacy sector; in the mailing company CTT; in the call-center sector; in schools, particularly by teachers; in the car parking company of Lisbon EMEL; in the aviation sector, in particular in the air company TAP and the airport company ANA; in the health sector; in the infrastructure sector; in the Volkswagen Autoeuropa factory. Others are expected for November and December.
On October 15th there were important CGTP demonstrations in Lisbon and Porto, gathering up to 10 thousand people combined. However, this number could have been much higher if the demonstrations had been prepared with real campaigns and mobilization drives in the workplaces and an active campaign oriented to the private sector. The CGTP’s call for a national public sector strike of November 18th was followed up very well in some specific departments. However, the CGTP leadership presents the strike as a symbolic action, or as they put it, “a day of demonstration of discontent”, and not as a display of workers’ power over the economy or as part of a plan to force a radical change in the government’s plans. In accordance with this attitude, there was barely any mobilization for the strike, there was no plan to link up the public and private sectors and strikers were not called to demonstrate on that day. Instead, a small demonstration was called for November 25th in the morning, the last day of voting of the state’s budget for 2023, not as a national day of strike action but rather another symbolic action.
In the last 6 years, when the PCP and the BE were backing the PS government in parliament, the CGTP has at times blocked workers struggles and tried to convince workers that using the parliament to negotiate with the government, and thus to help manage capitalism, was the best way to obtain concessions and defend workers’ interests. Now, with the reformist left in the opposition and in the context of a deeper crisis, trade union activity is reactivated, but the trade union leaderships maintain the defense of their role mainly as negotiators and don’t strive for broader workers’ involvement in the struggles. Still, workers’ struggles will go on. Despite all limitations, the way the November 18th call was taken up by public sector workers shows a desire for more decisive action. December 9th has been declared as a national day of struggle by the CGTP, leading to a Week of Struggle on companies and services from December 10th to 17th.
Real mobilization of unions and workers in the workplaces is necessary to organize the struggle for better living conditions. To win real victories over the government and the bosses, this Week of Struggle needs to be a stepping stone in an escalating action plan that maximally involves the public and private sectors alike. The amount of strikes and sectors in struggle shows the potential for a broader fightback! We need to start preparing a big strike all together against the attacks on workers and for decent living conditions. For that, the left must seize every opportunity to stimulate discussions by workers on the programme to fight the cost of living crisis and the methods to achieve victory. That includes organizing workers assemblies in every workplace to discuss our demands and methods of struggle, and then building strike committees to plan the struggle, unite the different sectors and mobilize more workers! The strike movement in the refineries in France shows the way for workers and all those who fight!
An urgent program against capitalist crisis and for socialist change
The workers’ movement needs to be equipped with an offensive program. The CGTP correctly demands collective contracts, the revocation of the precarity inducing labor laws, a 35 hour working week for everyone and 10% wage raises with a minimum raise of 100 euros per month. This should directly lead to the important demand of a sliding scale of wages, that shows the urgency of regularly updating wages above inflation. Moreover, workers’ and consumers’ commissions need to control the prices of essential goods, and minimum wages and pensions should be enough for living: at least €1000 net/month now!
Nevertheless, we don’t control what we don’t own! Nationalization under the democratic control of workers and regular consumers is needed for housing funds and the energy, distribution, food production and finance sectors, if we want to effectively control the prices of essential goods. Only then can the working class and society as a whole democratically decide what and how everything is produced and distributed. It is also a condition to assure that the working class has control over financial flows and that the available resources are invested in social needs: on public services, scientific research and on green and affordable energy.
Such a socialist program also guarantees full employment and gives an answer to other struggles, e.g. to young people involved in the climate struggle. By expropriating capitalists in the energy and transport sectors, workers can not only reduce our bills but also lay the foundations for a rapid energy transition, that the profit-driven capitalist system is unable to undergo. Such a transition would include higher wages and the offer of retraining and reallocation of workers to sustainable industries. Only the organized working class can play the leading role in this process!
The climate crisis, the energy crisis and the cost of living situation are closely linked: a united front of trade unions, left parties and activists is needed to mobilize workers and fight against the capitalist system, the common cause of these crises. The youth fighting against climate change must turn to the working class and show support for striking workers, showing that ecological demands need to stand on the side of workers, not against them. On its turn, the organized labor movement and left parties must seize ecological demands, acknowledging that there is no social justice without climate justice.
However, this socialist program for a democratically and ecologically planned economy that serves the needs of the millions and not the millionaires implies a direct confrontation with private property, capitalism and its state, and ultimately can only be won by a revolution that brings the working class to take economic and political power from the hands of the ruling class. To build the program and methods to guide workers to power, a revolutionary organization is needed, based on working class methods, with a mass influence and with the necessary internationalism to extend the revolution to the rest of the world.
