Q: What have you done to prioritise business continuity across the economy?
A: We have taken a number of measures since the very beginning. We understood that the pandemic would hit us, and we had to move fast as a country. We determined very early on that all the work that could be done remotely had to be carried out at distance. That meant that 70% of the workforce started working remotely in Lisbon alone, which reduced significantly their commuting needs. We also decided to close schools and universities. At the same time, we had to pass measures to protect businesses and families.
Q: Can you provide details about those measures?
A: We decided that parents with kids below 12 years of age would receive two thirds of their salaries, half of that paid by the employer, the other half by the social security system. That allowed those that could not work remotely to stay home. Also, very early on we introduced support for the self-employed with no access to unemployment benefits. At the same time, we extended guaranteed loans to SMEs so that, even when they had to shut down, they could meet their commitment. We also passed a legislation allowing loan repayments to our banks to be postponed, initially by six, then 12 months. Finally, we approved the right for employers affected by the downturn to leave people at home with salaries paid by the social security system.
Now that we are lifting the lockdown, we are moving on to a new stage of support to allow business to start operating again even in the current market uncertainties.
Q: How are your policies going to adjust to the changes triggered by Covid-19?
A: We will accelerate the country’s digital transition. During the crisis, we established a team that coordinated digital support activities to the government and businesses and provided a number of data and tech-driven solutions that were extremely successful. A survey by the OECD [the Innovative Response Tracker] puts Portugal well ahead of other countries with regards to its capacity to come up with innovative solutions to tackle the crisis. And we showed great ability to reinforce mobile and physical networks to support the huge increase in data traffic they had to withstand.
One element of our original digital transition plan was digital schooling, but we realised during this crisis that a number of children don’t have quality access to the internet or sufficient equipment, it’s really an issue of digital inclusiveness. We decided to accelerate that programme, and from next year everyone will be provided with the equipment to work from home. We have no time to lose.
Q: Will Portugal benefit from the push to nearshore operations by international manufacturers?
A: I’m quite certain of that. In the last couple of years a number of international companies selected Portugal for their development and engineering centres, as well as industrial operations. We have a highly skilled, well educated young workforce at the fraction of the cost of central Europe. We have already been targeting foreign investment in this area; we have seen a number of international groups reconsidering their value chains because of geopolitical tensions, or the high costs of managing extended operations or extreme dependency on a single supplier. This process will accelerate and Portugal can be a net beneficiary.
Q: What are your economic expectations this year?
A: We expect a recession of 6.9%, and a fiscal deficit at about 7%. The impact will be significant, but hopefully our measures mean that firms will be able to bounce back rapidly and drive recovery towards the end of 2020 and into 2021.