Key Challenges

To begin, we must note two challenges common to many other European democracies that are not a problem in Portugal.
Immigration not
a divisive issue
First, regarding immigration and refugees, Portugal remains outside the routes taken by large populations of migrants and refugees leaving North Africa, the Middle East and South Asia. Therefore, unlike many other European countries, immigration is not a salient or extremely divisive political issue in Portugal. In a survey conducted in June 2019, only 4% of respondents in Portugal considered immigration to be among the two most important issues faced by the country. This was the lowest proportion in the European Union, well below the EU-28 average of 17%. As immigration is one of, if not THE main reason for right-wing populism in Europe and the United States, right-wing populism is less of a threat in Portugal.
Islamist terror
not a problem
Second, Portugal does not have the same problem with Islamic terrorist radicalization (jihadists) that has been experienced by several other EU member states. Its (small) Islamic community is generally well integrated and participates in the country’s dynamic interfaith dialogue. Indeed, President Marcelo’s inauguration in March 2016 included an interfaith ceremony held at the Central Mosque of Lisbon.
The country nonetheless faces six challenges:
Budgetary risks
remain a concern
A first challenge involves ensuring the continuation of budgetary consolidation. The country had its most recent EU excessive deficit procedure closed in 2017, the third such procedure for the country since 2002. This challenge is compounded by the high level of public debt (122.2% of GDP in 2018), which is the third-highest ratio within the European Union. Bringing public debt under control will require an unprecedented, sustained effort over many years and future governments. The government’s latest Stability Program for 2019 – 2023, released in April 2019, forecasts that debt will drop below 60% of GDP in the mid-2030s. This will require sustaining budgetary consolidation over more than a decade, and across international and domestic economic and political cycles.
Public expectations
must be managed
A second and related challenge over the short to medium term will involve the reconciliation of the need for budgetary consolidation with citizens’ expectations that austerity policies will be reversed. The first Costa government managed to square this circle reasonably well. However, the second Costa government, which took office on 26 October 2019, will face more not less pressure, especially as budgetary consolidation strengthens.
Governance capacity remains a weakness
The third challenge is the need to improve governance capacity. During the current and previous review periods, Portugal scored poorly in a number of areas related to governance capacity, including the use of evidence-based instruments in policymaking, the degree of strategic planning and input into policymaking, societal consultation, policy implementation and the degree to which institutional governance arrangements are subjected to considered reform. Inevitably, weaknesses in these areas impinge on the quality of policymaking, both in terms of conception and implementation. This governance capacity pertains not only to decision-making arrangements, but also to broader oversight mechanisms.
Youth unemployment persistently high
The fourth challenge has to do with youth unemployment. Youth unemployment rates have not followed the downward trend of unemployment in general, remaining fairly stable during the current review period – above the EU and euro area averages. Labor-market policies will need to tackle this issue in order to avoid wasting the significant educational investment that has been made over the past decade.
High debt places huge pressure on resources
The fifth challenge, which becomes obvious in the discussion of education, healthcare and poverty reduction policies, is the huge pressure on resources due to the need to reduce public debt, noted in challenge one above, from 122.2% of GDP. This pressure has resulted in strikes, a decline in the number of teachers and healthcare professionals, and a general public malaise since so much was promised under the previous government’s “contraption,” yet little has been delivered expect for an increase in pension payments.
Skills shortages
developing in economy
The sixth challenge is the lack of sufficient workers for the economy as austerity policies are relaxed. This is due to several reasons, including population aging, emigration of young and educated people (which we identified as a challenge in the 2015 SGI report), youth unemployment as noted in the fourth challenge above, and the lack of resources due to the need to reduce public debt highlighted in challenges one and five above. While there is a “regressor” return program, it has not been very effective.
Eurobarometer 91 (Data Annex), June 2019. Available online at: https://ec.europa.eu/commfrontoffice/publicopinion/index.cfm/Survey/getSurveyDetail/instruments/STANDARD/surveyKy/2253

Party Polarization

Stable party system
Comparatively speaking, Portugal’s party system is very stable. Since the October 1999 legislative elections, the party system has been almost entirely monopolized by five political forces: the PSD, PS, CDS, the PCP and its ally PEV, and BE. Overall, Portugal has had seven legislatures since the beginning of the new millennium. Out of a total of 1,610 members of parliament elected to these six legislatures, 1,602 have been members of these five political parties.
Low level of
This stability contributes to a low level of party polarization, as evidenced by the lack of ideological polarization. Portugal had the eighth lowest level of ideological polarization between parties out of the countries assessed in the 2018 ParlGov database and is well below the average for all countries.
Alliances possible
between parties
On 6 October 2019, Portugal went to the polls to elect a new parliament. The elections inevitably increased tensions between parties. Nevertheless, substantive party polarization maintained the relatively low levels that prevailed throughout the legislature of 2015 – 2019. This was facilitated by the hitherto unprecedented agreements (termed “joint positions”) between the PS, and the Portuguese Communist Party (PCP) and BE. In the joint positions, the parties agreed to a set of common policies and the formation of a Socialist-led government. These agreements meant that the PCP and BE had a greater role in government and policymaking than ever before, mitigating overall polarization in the party system.
Left parties
approving budgets
The greater role of the PCP and BE in policymaking was evidenced by their approach to the state budgets, the central policy plank of Portuguese governments, throughout the 2015 – 2019 legislature. The 2019 budget followed the pattern of previous budgets, and was approved with the support of the BE and PCP on 20 November 2018.
As noted in the previous SGI report, this constituted a profound modification vis-à-vis the past. Previously, the BE and PCP systematically voted against all budgets, with the BE voting against every state budget since first entering parliament in 1999 and the PCP voting against every state budget since 1977.
Small parties gaining ground; new parties still have little impact
Finally, it should be noted that the stable pattern noted previously did fray somewhat during the recent October 2019 legislative elections. Of the eight members of parliament that do not belong to the five main parties elected since 1999, seven were elected in the October 2019 election. The 2019 elections resulted in the strengthening of the environmental and pro-animal party PAN (People-Animals-Nature), which saw their 2015 seat share of one increase to four. The 2019 elections also saw three new parties enter parliament, each with one seat. These new parties mark a widening of the ideological spectrum represented in parliament. One of the parties that has now entered parliament is generally considered to be in the populist radical right camp (Chega, which translates as Enough). Another is avowedly liberal in economic terms (Iniciativa Liberal, Liberal Initiative). The third party is a left-libertarian, pro-European Union, green party (Livre, Free). The new parliament began on 25 October 2019, as such there has not been enough time to assess the impact of these new parties on party polarization. Though it is fair to expect that polarization will increase, the impact of these new parties should not be overstated: the five main parties still account for 97% of all seats in the current legislature. (Score: 8)
Back to Top