LISBON (Reuters) - Portuguese Prime Minister Antonio Costa threatened to resign on Friday after his leftist allies abandoned the government in a preliminary parliamentary vote that could undermine efforts to balance the budget by raising teachers’ salaries retroactively.
Late on Thursday, a broad alliance of lawmakers sitting on a parliamentary committee voted to grant teachers salary increases held back over several years since 2005.
A key concern by the government is that paying such retroactive salary hikes to teachers could lead to other civil servants asking for the same thing, leading to growing pressure on the budget.
Costa called an emergency government meeting on Friday, after which he met President Marcelo Rebelo de Sousa for an hour and informed him that he would resign if parliament gives its full approval to the measure.
“Under these conditions, I thought it was my duty to inform the president and the head of parliament that the final approval of this initiative will force the government to submit its resignation,” Costa said in a televised address to the nation.
“We cannot be accomplices to spoiling everything that cost Portuguese so much hard work,” Costa said, arguing that the measure would compromise the path of budget consolidation that helped Portugal win back investor confidence and leave its 2011-14 debt crisis behind.
Parliament is due to hold a full vote on the measure in a session on May 15. The measure, estimated by the Finance Ministry to cost 800 million euros (£680.28 million) a year, would not impact this year’s budget.
Losing the support of the Communists and Left Bloc in parliament would make it hard for the Socialists, who rule in a minority, to approve laws in what remains of the legislature. Portugal is due to hold a national election in October.
Opinion polls suggest the Socialists, whose management of the economic turnaround has been a hallmark of their four years in office, are likely to win the election but may be just short of a majority, meaning they would again need allies.
“We are six months from a general election and there is no clear benefit for the Socialists from moving it closer,” said political scientist Antonio Costa Pinto. “This resignation is still far from certain.”
The Communist Party was quick to rule out any compromise.
“This pressure is unacceptable and rooted in pure electoral calculation” by the government, Communist leader Jeronimo de Sousa told reporters, saying the government was “trying to be holier than the pope on reducing the budget deficit”.
Left Bloc leader Catarina Martins was more moderate and said the sudden political crisis was “unnecessary”. “This makes no sense. Why precipitate the end months before the end of tenure?”
Should the flare-up develop into a full-blown crisis, the president could also intervene - exploring various options including having the Socialists withdraw their original pay proposal covering less than three years of frozen hikes on which parliament based its motion.
Wages for all of the country’s civil servants, including teachers, were frozen during the country’s debt crisis.
After several years of solid economic growth, the government has faced a wave of strikes and protests from teachers, nurses, police and prison guards in the past few months to press demands for pay hikes and better working conditions.
“There was some (pay) recovery, but still not enough,” said former history teacher Joaquim Rodrigues, calling the measure proposed by parliament fair.
The government presented a plan last month to swing to a budget surplus from 2020 following a deficit of 0.2 percent of GDP this year. The target could be affected by the additional payout that would kick in from 2020, particularly as economic growth is expected to slow down this year and possibly next.
Additional reporting by Andrei Khalip; Writing by Axel Bugge and Andrei Khalip; Editing by Alison Williams