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					- PORTUGAL Helena Miranda António Caetano

Quarterly Update – 15th April of 2004
Note: This update was written on the basis of the information available on 15 th April

Table of contents

1. Brief macro-economic framework 2. Labour market performance 3. News

1. Brief macro-economic framework

According to the data published by the National Institute for Statistics (INE), Portuguese GDP decreased by 1.3% in 2003, which means a deterioration in the performance compared to the previous year.
Graph 1 – GDP growth rates

4 3 2 1,8 1 0,5 0 -1,3 -1 -2 2000
Source: INE

3,4

2001

2002

2003

This decline was mainly due to the drop in domestic demand (-2.9%). Investment registered a decline of 9.5%. Investment in construction declined most significantly by 12.2%. In 2003, exports grew by 3.9% and its contribution to GDP variation was 1.8 percentage points, stronger than in the year 2002 (1.1 percentage points). Imports declined by 1.0%. In March of 2004, inflation increased to 2.3% in relation to the same month of 2003, 0.2 percentage points higher than in the previous month. Regarding the last 12 months the inflation rate was 2.8% in March of 2004, keeping the declining trend initiated in August of 2003. In relation to the qualitative indicators, the economic climate indicator (which registers the activity in the industry, trade and construction sectors) showed a lower value in March than in February, -1.4 and –1.2, respectively. The consumer confidence index registered a slowdown in relation to the previous month as a consequence of the negative expectations regarding the evolution of unemployment and the potential for household savings.

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2. Labour market performance

Regarding the performance of the main labour market indicators, the National Institute for Statistics (INE) has recently published the data relating to the year 2003. According to the results of the Employment Survey, the activity rate in 2003 was 51.8%, the same value registered in 2002. In relation to the previous year, the female activity rate increased from 45.9% to 46.2%, meanwhile the male activity rate showed a negative variation from 58.2% to 57.7%. Compared to 2002, the number of employees decreased to 5064,2 thousands of individuals, which represents a negative variation of 0.8%. This variation was only significant among men (-1.5).
Graph 2 – Employed population

6000 5000 4000 3000 2000 1000 0
2002 2003 2796,2 2753,8 2310,3 2310,4

Male

Female

Source: INE, Employment Survey

Regarding the type of contract, in the year 2003, the proportion of fixed-term contracts diminished by 1.9% and the number of open ended contracts declined by –0.1% in relation to the year 2002. By sector of economic activity, the industrial sector registered the most significant decline in employment (-5.2%) while the service sector grew by 1.5%. In 2003, 344.5 thousand individuals were registered as unemployment, which means an increase of 26.5% in relation to the year 2002. Men were the most affected by the unemployment, having registered an increase of 32.6%.

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Graph 2 – Unemployed population

350,0 300,0 250,0 200,0 150,0 100,0 50,0 0,0 150,3

182,7

122,0

161,8

2002 Male

2003 Female

Source: INE, Employment Survey

By age groups, individuals aged between 25 and 34 registered the greatest increase in unemployment (+35.6%), followed by individuals aged between 35 and 44 (+29.3%). In 2003, the number of individuals who were looking for the first job increased by 17.0%, in relation to 2002, and those who were looking for a new job increased by 28.3%. Reflecting the increase in unemployment, its rate in 2003 was 6.4%, 1.3 percentage points higher than in the year 2002. In relation to 2002, the female unemployment rate increased from 6.1% to 7.3% in 2003, and the male unemployment rate rose from 4.2% to 5.4%. Young people presented the highest unemployment rate in 2003, 14.6%, followed by the individuals aged between 25 and 34 (7.5%).

Enrolled unemployment According to the Institute of Employment and Vocational Training (IEFP), in February of 2004 there were 467,540 unemployed. This means an increase of 13.3% in relation to the same month of 2003 (+55,043 unemployed), and an increase of 0.7% in relation to January.

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Graph 3 – Enrolled unemployment
600,000 400,000 200,000 0,000 January March May July September November

2002

2003

2004

Source: IEFP

The search for a new job was responsible for 92.9% of the total registrations. The male share of unemployment increased, representing 43.3% in February of 2004, against 43.1% in January. In February of 2004, all education levels registered unemployment increases in compared to the same period last year. The higher education levels registered the greatest increase (+29.9%), in spite of the decline in relation to the previous month (2.3%).

3. News

It is foreseen that the new unemployment benefit scheme, due to be implemented soon, will bring an end to the distinction between voluntary and involuntary unemployment. Indeed, according to the Minister of Social Security and of Labour, in both cases the individuals will receive unemployment benefit, contrasting to the current scheme where the individuals considered voluntary unemployed have no such entitlement. One of the reasons pointed out by the Minister is that enterprises, in the great majority of the cases, cooperate with the worker in order to give him the status of involuntary unemployed. Another change, within the new unemployment benefit scheme, will be the introduction of a deduction in their unemployment benefit if they have been dismissed by their employer.

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