COVID-19 has revealed the cracks in Portuguese welfare
A month into a national lockdown, Portuguese healthcare has fared far better than the southern European democracy’s welfare net. The growth of COVID-19 cases has slowed down as it approaches the twenty thousand mark, even if it’s yet to plateau. Deaths have been held down to just over six hundred. The economy, on the other hand, is headed for a historic recession.
Portugal’s first case of COVID-19 came on the 2nd of March. By then, the public had been pushed into a paranoid frenzy by weeks of apocalyptic news-reports and daily suspected case counters. The sales of surgical masks increased by 1.829% year over year.
With uber-popular President Marcelo Rebelo de Sousa in self-imposed quarantine, the center-left Government, held by Partido Socialista (PS), pushed for a quick response to ease collective fear. Schools closed on the 12th. Portugal’s only land border, with Spain, was shut down on the 15th.
For the first time, a national emergency was declared in democratic Portugal. It was on the 18th of March. Within the month, airports, restaurants and sporting events would close for an unknown period. By Easter, citizens were mandated to stay within their home county.
We now know that the Portuguese GDP will fall by at least 8% in 2020, according to Finance Minister and Eurogroup President Mário Centeno. Nearly a million workers have had their contracts suspend and salary cut. Between March and early April, forty to eighty thousand people lost their jobs. Unemployment is set to double within the year, reaching 13,9%.
Under four months, Portugal went from its first surplus budget in decades to a financial crash rivaling that of 2011, which forced the country to call for an international bailout. National debt will revert to 2014’s value, at 135% of the GDP. The yearly deficit should come to 7,1%.
As hundreds of thousands of workers are losing income, both newspapers and regulators are unable to address the crisis. For twenty days, the only labor supervisor in the country, ACT, had its inspectors working from home. By its admission, it could not cope with an estimated increase of at least 50% in labor laws violations.
ACT has failed to operate as companies and workers alike attempt to navigate the murky simplified layoff process created to curb both job loss and business bankruptcies during the national lockdown. The new system allows companies to cut down on working hours, suspend benefits and reduce salaries, if they don’t fire a worker outright.
Most independent workers are still unable to ask for financial support, even though the law allows anyone with a dip over 40% to receive monthly payments. The digital submission form hasn’t been created yet. Physical offices are, naturally, closed.
Workers have been punished because the industry is shattered. Car production fell by 86,5%. Airports are ghost towns. Banks gave up on paying dividends. The biggest Portuguese airliner, TAP, has accrued so much debt that it might be renationalized half a decade after going private. Oil refineries are shutting down. Public transport passengers are down 75,6%.
For the working class, short term survival now comes at the cost of long-term financial stability. 19% of the Portuguese workforce has had its income temporarily or permanently slashed. In response, the Government has allowed them to drain personal retirement funds. Forced to stop working, they must now choose between present solvability or future income.
These funds have been made available with one particular need in mind: housing. Rent drains over half of all income in the Portuguese capital. By buying power, Lisbon is the sixth most expensive city in the world. As the country ground to a halt, house prices rose by 0,4%. It’s the smallest increase since January of 2019.
Evictions may have stopped, but rent will take its toll sooner or later
Shelter in place orders makes housing a public health necessity. To guarantee social distancing, all evictions and foreclosures have been suspended for as long as a national emergency is in place. At this time, that means no one will lose their home until the 1st of May.
If one doesn’t want to lose his house, rent is still mandatory, be it now or as a back payment. Renters can hold off on paying landlords up until a month after the national lockdown is lifted if they can show that their income was slashed in at least 20%. As an alternative, the State’s property arm, IHRU, is offering out loans to renters and landlords alike, to cover unpaid rent.
Non-essential retailers were forced to shut down in mid-March, to reduce social contact. These companies can hold off on paying rent until the month after the national lockdown is lifted, but they must cover all missed payments over the next year. That is if they are not renting their business space directly from the State. Lisbon has fully exempted businesses from paying rent in city-owned buildings until July.
Families living in social housing can also negotiate down their rents or get a temporary exemption. Renting from the public sector comes with benefits, which has caused an uproar amongst renter associations.
In the private sector, all options come at a price. If one chooses to delay rent payments, the debt must be fully paid back over 12 months. IHRU’s loans must be cleared within a year. There are no interest rates in either choice, but they’re still a risky trade-off.
The European economy, and, by extension, the Portuguese economy, will take years to fully recover from the SARS-CoV-2 pandemic. Even if the industry can piece itself back together relatively quickly, the eurozone will slip into a recession in 2020.
Families living pay-check to pay-check will either deplete savings or over-burden future income as the world faces its greatest economic challenge since the Great Depression. Even if they can push back rents, utilities are still being charged, and they can be cut, even if some regulators have pushed for leeway.
Crisis makes structural inequalities quite obvious. That’s particularly the case if we consider sheltering in place a privilege of the upper-middle class. Quarantining is a resource-heavy activity. Essential workers are largely low-income staff doing manual labor. Cleaners, waste collectors, and cashiers are all forced to work and to interact with the public regularly, many without personal protective equipment.
There’s still no effective aid for the homeless
The most extreme inability to social distance comes in the form of homelessness. How does one quarantine without a home? The central government has flailed in establishing a large-scale nationwide response, leaving the issue largely on the hands of local authorities and volunteer support networks.
The second biggest Portuguese city, Porto, boosted its available shelters early on, as it became the national COVID-19 hotspot. Lisbon has set up lodgings for those that test positive and transformed gyms into temporary housing centers, which still fail to cover the totality of the nearly four hundred homeless people in the city.
The Government’s loose grip allows isolated regions to push through measures of doubtful legality. Mandatory institutionalization has become the norm for the homeless in the Autonomous Region of the Azores, a remote Portuguese nine island cluster. Ponta Delgada now keeps its homeless population locked away under police custody in a converted scout center. Testing and shelter are mandatory for up to fifty people identified by the mayor’s office.
Curbing the individual freedoms of those living on the streets appears to be a direct response to a fear which the homeless barely had a chance to express. There’s no social distancing in a shelter. Institutions are overcrowded and under-staffed. The homeless are left to either stay on the streets or increase their risk of contracting a disease in which they have no resources to fight.
At least four thousand people in Portugal live on the streets. Between 2014 and 2017, that number grew by 157%. This population tends to have recurring respiratory ailments and nutrition issues, putting them into COVID-19’s at-risk groups.
Protection and diagnose are harder for the homeless and, again, the Government has so far failed to provide an effective response. Access to disinfectant or soap isn’t a given for those living on the street. Taking your temperature to check for a fever isn’t as easy when you don’t own a thermometer. NGOs must balance keeping volunteers safe with working effectively.
Day-to-day, the homeless must now contend with an even more dire financial situation. There’s no Government subsidy for those begging on now deserted cities. There are no tourists downtown to provide homeless and street artists alike even with a meager source of income. With no money, no home and no protection, the homeless sit within the eye of the storm, forgotten by a Government split between a public health emergency and an economic disaster. The finances of the homeless can, and are, getting worse.
After the current financial crash, homelessness data will show just how effective or ineffective the suspension of rent payments was. Will the number of people living on the streets increases, once again, once evictions are resumed by early summer? The answer is most likely yes. Economic downturns have, time and time again, pushed the poor off their precarious balance and onto a spiraling descent.
The patchwork answer to the homeless question is reminiscent of that adopted for the prison population. As overcrowded jails became an evident health hazard PS pulled on its left-leaning allies to give out pardons. The leftist Bloco de Esquerda (BE), the Marxist-Leninist Partido Comunista Português (PCP) and the eco-socialist Partido Ecologista “Os Verdes” (PEV) agreed on releasing 2446 prisoners on the final two years of their sentence.
President Marcelo Rebelo de Sousa will give out pardons to some prisoners over 65 years-old. The center party he once led, Partido Social Democrata, had voted against the bill which drew criticism for addressing a decades-long overcrowding issue with a one-off emergency measure.
Portugal’s didn’t make immigrants permanent citizens
Portugal made headlines for giving full citizenship rights to migrants and asylum seekers during the coronavirus pandemic. The move was meant to facilitate free access to public healthcare providers as testing and treatment ramped up during March.
Council of Europe Commissioner for Human Rights Dunja Mijatović praised the program, but the practical consequences of the measure are more nuanced than the political motivation that sparked it. By 2018, 480 thousand migrants lived in Portugal. Most came from Brazil, Cape Verde, and Romania.
Each year, the Portuguese immigration authority, SEF, handles thousands of citizenship and residency applications. This is a long, bureaucratic process, bottlenecked by a fragile institution, which had such extreme delays that it was forced to suspend all applications in August of 2019 to make up on its backlog. In 2018, it could take up to 10 months just to be able to schedule a mandatory authorization visa renewal.
March’s mass legalization process has two caveats: it only applies to those that already had a pending immigration process and it’s a temporary measure. Whilst undocumented migrants will have access to healthcare during the pandemic, they have no simplified path to citizenship.
Those who didn’t have an ongoing application by the 19th of March still won’t be able to resort to welfare, emergency habitation laws or labor protections. Some will be unable to have any financial support despite having a positive net tax gain for the Portuguese State.
Many undocumented migrants have been residing in Portugal for months or years, gathering documents and preparing themselves for the expensive path to citizenship. They are exactly where they were before the one-time measure: undocumented and unsupported. They may now face an even longer wait. SEF will not be processing any new applications at least until the 1st of July.
This measure is effective only because the current system allows migrants to pay taxes and contribute to Portugal’s collective wealth whilst not being granted a work visa. The most common way to apply for Portuguese citizenship is through a permanent work contract. As SEF struggles through its caseload, migrants have the same obligation of any citizen, but very few of the benefits.
If these undocumented migrants lose their jobs during the incoming financial crisis, they’re not eligible for unemployment benefits.
For the thousands now celebrating citizenship, hope may also be short-lived. Migrants and asylum seekers have been granted temporary citizenship. For now, they have access to healthcare and welfare. But the end of the pandemic will also be the end of their grace period.
They’ll all have to go back to SEF after the state of emergency and pick up where they left off, losing all benefits which have been granted to them during the national lockdown. At this time, the Ministry of Internal Administration is still unable to calculate how many migrants the measure impacts.
In the meantime, it’s not even clear how public entities will deal with these new citizens. A migrant’s SEF process serves as proof of citizenship, for now. But they don’t many of the documents required by the State to give out benefits, including the state-issued ID used to access many public services.
Minorities are disproportionally impacted
Roma communities sit at the cross-section of marginalization and poverty. Vilified by a surging far-right, centered around the populist Chega, perpetually impoverished, discriminated and politically under-represented, the Roma are now suffering at the hands of a national emergency.
In Portugal, a third of all Roma families live in tents, sheds, and motorhomes. Around three thousand of these families have no access to running water and reside in close quarters, where social distancing is impossible.
Some groups have been pushed back and forth between Portugal and Spain, lacking support on either side of the border. When they do get support, Governments have imposed quarantines and charged them for necessities.
There are thirty-seven thousand Roma in Portugal. Of those, 91% never reached high school. Sixteen percent got married before they were 14 years old.
The Roma are one of the poorest minorities in Portugal. Many bring money home as vendors in fair and markets. With those commercial gatherings shutdown, they have no source of income and frequently are not eligible for welfare.
Economic damage is pushing Portugal towards lifting the lockdown
Upon renewing the state of national emergency for its third two-week installment, President Marcelo Rebelo de Sousa gave his first official nod towards relaunching the Portuguese economy. With over 18 thousand cases and 600 deaths, the decree called for the easing of movement restrictions, based on citizen’s age and place of residence.
Rebelo de Sousa requested that businesses could reopen with reduced schedules and in a gradual manner. Pardons were suspended, as jails were found to now be sufficiently secure. Labour unions and business associations were again able to intervene in politics regarding labor laws. Once again, the president refused cell phone tracking of infection patterns.
In a concerted effort, Portuguese institutions are now trying to revive an economy that they made stop overnight. Health measures should be replaced by economic stimulus come June.
The Global Health Organization has been emphasizing a clear recommendation. Restrictions should only be lifted once countries are certain that they can hold back the second wave of COVID-19 cases without falling into another pandemic. The failure of one nation to control the virus may put an entire continent at risk.
But the political will to freeze the global economy is beginning to wane. As Lisbon pushes public transport providers to work towards normal service, and the central Government restores the right to strike, Italy has reopened bookshops and Denmark is about to resume classes.
In the coming months, the public focus will shift from daily death tolls to unemployment numbers. By summer, it’ll dawn on citizens what is already apparent to Governments all across the globe. We are now at arms with an economic recession the likes of which we have never endured.
As quarantine showed social inequality, the recession will once again expose the gap between rich and poor countries. Portugal, as it has during recent years, will suffer the consequences of its dependency on an export, tourism-dependent service industry.
Fortunately, this crash might be a short-lived one. Deficits and GDPs are expected to start recovering much faster than they did during the 2007 financial crisis. But the economic impact of two recessions in a decade will have a lasting effect on the lives of millions of working-class people.