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Portuguese court rules against austerity plan

Court order says government's latest austerity programme with plan to slash public jobs is unconstitutional.

Last Modified: 30 Aug 2013 10:20
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Portugal's Prime Minister Pedro Passos Coelho planned to cut 30,000 jobs as part of austerity measures [EPA]

Portugal's Constitutional Court has struck down a key provision of the government's latest austerity programme, once again throwing the country's EU-IMF bailout into confusion.

Court President Joaquim Sousa Ribeiro on Thursday told a government plan that could lead to job losses for civil servants was against the country's "job safety guarantee" and therefore unconstitutional.

The plan is part of the latest round of austerity introduced by the government of Pedro Passos Coelho and is designed to cut 30,000 public jobs from a pool of 500,000, saving 4.7 billion euros by the end of next year.

But conservative President Anibal Cavaco Silva asked the court to decide wether a requalification push within that programme was in fact legal.

The programme in question offers civil servants up for requalification 63 percent of their salary for the first six months of looking for a new position and 50 percent for the second six months. If they have not found a new post by then, they risk losing their jobs.

The decision is the second time the court has inflicted a blow to the government's efforts to meet its bailout requirements.

In April, the court struck down several measures in the government's 2013 budget, including a controversial slashing of salary bonuses for civil servants and pensioners.

Bailed out by the International Monetary Fund and European Union in May 2011, Portugal has had to enact a series of austerity reforms to get its finances in check before its 78-billion-euro ($104bn) debt-rescue programme ends in June next year.

In July, the Coelho government narrowly survived a political crisis when key ministers resigned over widespread public resistance to further austerity measures as part of the bailout.

But earlier this month, Portugal said recovery was nearing as GDP grew 1.1 percent in the second quarter, capping more than two years of recession.

However, the eurozone member is still forecast to contract by 2.3 percent for the whole of 2013. Unemployment, now at 16.4 percent, is expected to break 18 percent.

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