World Bulletin/News Desk
In an about-face, Portugal's government has agreed to negotiate alternative solutions to a social security tax hike that sparked the worst backlash to austerity since last year's EU/IMF bailout, an official statement said on Saturday.
After an eight-hour meeting of the presidential state council that was besieged by protesters and ended long after midnight on Saturday, the council said the negotiations would now proceed between the government, unions and employers.
On Friday, Prime Minister Pedro Passos Coelho promised to "listen to the country" after huge street protests last weekend and criticism of the plan by unions and business leaders alike. He had previously only agreed to "calibrate" the measure.
The plan to raise the contributions in 2013 to 18 percent form 11 percent has undermined a reluctant acceptance of austerity in Portugal, increasing pressure on the government as it strives to meet the strict conditions of the bailout.
"The council was informed of the government's readiness to study, within the framework of the social bargaining process, alternatives to changes in the social security rate," the statement said after the council meeting.
* It also said that "difficulties that could affect the solidity of the ruling coalition have been overcome", confirming earlier statements by the two centre-right coalition partners that they remained committed to the bailout's targets. Junior coalition partner CDS-PP is traditionally against tax hikes.
Thousands of protesters gathered next to the presidential palace where President Anibal Cavaco Silva's met with his council -- the consultative body made up of senior political figures, including Prime Minister Pedro Passos Coelho.
They demanded the government's resignation and chanted: "Thieves, thieves!". Over a hundred stayed until the end of the meeting and booed the council members as they left.
Expresso weekly newspaper said in its weekend edition the premier had decided to abandon the measure, which had irritated workers because it simultaneously reduced social security contributions by companies, but was preparing a new cut in holiday subsidies for workers instead to meet tough fiscal goals of the bailout.
Some analysts say the badly-devised attempt to hike the social security levy will make additional austerity measures harder to swallow now despite the government's retreat and strife is likely to grow especially since Portugal's economic recession is now expected to continue next year.
Portugal has entered its worst recession since the 1970s as it labours under sweeping tax increases and spending cuts, with the centre-right government's popularity slumping to an all-time low after it announced the tax changes.
Exit would cost average monthly salary for each household, Organization for Economic Cooperation and Development says
Firms to see deterioration in credit metrics as low oil prices impact cash flows
OPEC exporters as well as other non-OPEC producers, including Russia, fail to agree on oil output freeze
Moody's has upgraded Argentina's credit rating after a US appeals court ruling this week cleared the way for Buenos Aires to proceed with the biggest debt issue by an emerging market country in 20 years.
Ahead of Doha meeting, OPEC says 'hurdles prevail as oversupply persists and inventories remain high'
Kuwaiti OPEC head says Russia and OPEC are likely to agree on oil output freeze
'The good news is that the recovery continues; we have growth; we are not in crisis,' Christine Lagarde says
The meeting is a 'follow-up' to last month's talks between Qatar, Russia, Saudi Arabia and Venezuela when they proposed an accord to freeze oil output at January levels
'They are not trimming output, only keeping it at the same levels...this is the same unchanged policy,' one expert says
Iran joining Venezuela, Saudi Arabia, Qatar and Russia in freezing oil output levels
According to the ratings agency Moody’s, Iran is fiscally and structurally well placed to come back into the global economic scene
PM Davutoglu meets the heads of the world's largest companies as he promotes Turkish economic interests at World Economic Forum
Fund cuts global growth forecasts for both 2016 and 2017 by 0.2 percentage points
'Runaway inequality has created a world where 62 people own as much wealth as the poorest half of the world’s population'