Portugal faces a “most critical economic and social crisis” the International Labour Organisation has warned, because of massive job losses there.
The ILO said one in seven jobs has disappeared in Portugal since the start of the global economic crisis five years ago.
It linked the deterioration to the start of Portugal’s bailout programme two years ago, with two thirds of those job losses coming during that time.
Unemployment in Portugal reached a historic peak of over 17 percent earlier this year, though it has stabilised recently. It is up from four percent in 2000.
Youth unemployment is close to 38 percent and young workers and families with small children have been disproportionately affected the ILO said, with cuts in wages and welfare programmes, combined with tax increases, eroding family incomes and domestic demand
The ILO said that the unprecedented level of unemployment is coupled with a drastic decline of productive investment, and small and medium-sized enterprises are struggling to find credit which is also have a negative effect on job growth.
It warns a future economic recovery is likely to be too weak to make a significant dent in the jobless figures.
As a result it is advising Portugal to find “a new, job-centred approach to the crisis”.
Up to now it has focused on reducing its deficits and improving competitiveness under the 78 billion euro bailout programme agreed with the EU, International Monetary Fund and European Central Bank.