Page last updated at 00:00 GMT, Saturday, 13 March 2010

Portuguese industry struggles to cope

By Caroline Locher
BBC News, Porto, Portugal

Wine production
Portugal's wine exports have been hit by the strong euro and the global recession

These are tough economic times, even if, like Paul Symington, you are the 14th generation of a Porto-based family of winemakers.

Paul Symington is the managing director of Symington's
It's tough, because we export so much outside the eurozone
Paul Symington, vintner

Mr Symington runs a company that owns, amongst other brands, Graham's Port.

Born in Porto, he is well qualified to distil the challenges facing the manufacturers in this part of Northern Portugal.

Speaking in a cavernous room, packed with rows of huge oak barrels, each containing up to 20,000 litres of maturing port, he says that in spite of the single currency's undeniable benefits - being in the eurozone, at a time of recession, is constraining.

"It's tough, because we export so much outside the eurozone," he says.

"We can no longer adjust our domestic currency downwards to make ourselves more competitive. The result is unemployment and a lot of pain."

Leaving Portugal

Others here in Portugal speak of a perfect storm, undermining the competitiveness of an economy that relies heavily on exports.

Pedro Almeida
They said that there was a huge international crisis, so we had to work harder for the same money
Pedro Almeida

A strong euro, higher interest rates due to the high levels of public debt and the lower wages being paid in the new European Union member states of Eastern Europe all make life harder for the Portuguese, they say.

And it is not just unskilled labourers who are being affected.

Pedro Almeida, 28, geography graduate, used to work for a company that does electronic mapping.

He is now unemployed after the company he worked for recently made him redundant.

"They said that there was a huge international crisis, so we had to work harder for the same money," Mr Almeida recalls.

"And then, six months later, we found out that the company was going to close and they were moving to Romania"

Global job search

Rui Moreira
They're asking themselves whether we're Greece or Italy
President of the Porto Commercial Association, Rui Moreira

Not long ago, the boot was on the other foot.

Mr Almeida recognises that he only got the job in the first place because the company, Tele Atlas, moved from Belgium to Portugal to take advantage of its cheap labour during the pre-euro period.

Instead of protesting, Mr Almeida says, many of his friends are thinking about moving abroad to find work, as previous generations of Portuguese have done with great success.

Austerity measures

Like many here, Mr Almeida seems more pragmatic than militant.

Even the regional head of the communist trade union - the CGTP - says he is not yet sure whether his members would take up their cudgels and go on strike to oppose the austerity measures the government has introduced to reduce the ballooning public debt.

The public debt crisis, which has gained the country membership of the so-called group of European PIIGS, together with Ireland, Italy, Greece and Spain.

Among those measures were freezing civil servants' pay, putting on ice major infrastructure projects - such as the Porto-Lisbon high speed rail link - and increasing taxes.

Psychological burden

It is all very worrying for the President of the Porto Commercial Association, Rui Moreira.

In a sumptuous, glass-ceilinged building that used to house the city's Stock Exchange, he says the Socialist government in Lisbon has been pushing the wrong buttons and favoured projects in the south of the country, where a higher proportion of their supporters can be found.

He also complains about the psychological burden of being the P in PIIGS.

"Our partners in Germany have always seen us as completely reliable, but now they're asking themselves whether we're Greece or Italy," he says.

"This is the new fact that we have to face."



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