Portugal jobless up, pays more to borrow

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Portugal jobless up, pays more to borrow

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Portugal’s unemployment has hit its highest in 30 years. It jumped to 12.4 percent of the workforce in the first quarter from 10.6 percent a year ago.

The weak jobs market underscores the Lisbon government’s difficulties in getting out of recession.

Portugal has just been approved for a 78 billion euro EU bailout as it is finding it increasingly difficult to sell its government bonds.

Euro zone finance ministers approved the rescue package on Monday, offering Lisbon relief from having to seek longer-term debt on markets at prohibitive rates.

The first 18 billion euro tranche of bailout money should be available at the end of May.

Despite that Portugal’s borrowing costs rose at a treasury bill auction on Wednesday, though it did manage to sell all the T-bills on offer.

Economists said the sharp rise in unemployment — to levels last seen in the early 1980s — showed that companies lacked confidence to hire in the period since Lisbon requested a bailout on April 7 and ahead of a snap general election in early June.

Portugal was the third indebted euro zone country to seek a bailout — following Greece and Ireland — after the Socialist government collapsed in a row over austerity measures, sending the country’s borrowing costs sharply higher.

The economy already contracted 0.7 percent in the first quarter, sending the country into its second recession in three years. The austerity measures in the bailout are expected to lead the economy to contract by two percent both this year and next.