What issues will shape the Portuguese political agenda in 2023?

2023 stands out as a year in which Portuguese life and political agenda face a scenario in which the government’s absolute majority, in its second year in office, must address many challenges and some crises in order to maintain its political, legislative and social legitimacy

Andrés Gumiel | Consultant at VINCES

The National Health System, macroeconomic forecasts, digitalisation, decentralisation, alleged cases of corruption and the erosion of the government are some of the issues that will mark the Portuguese political course in 2023.  At the same time, the new year begins with serious difficulties for the Executive, after ending 2022 with the resignation of the Minister of Infrastructure and Housing and his Secretary of State and the appointment of the Secretaries of State for the energy and environment portfolios, as well as the new Secretary of State for Agriculture, dismissed less than 26 hours after taking office as a result of the absence of ex ante control of the candidates proposed for political office.

2023 stands out as a year in which Portuguese life and political agenda face a scenario in which the government’s absolute majority, in its second year in office, must address many challenges and some crises in order to maintain its political, legislative and social legitimacy, making a prudent exercise of managing its absolute majority, something that the Portuguese people very exceptionally grant.

The TAP Issue

Few issues in Portugal are capable of making such a mark on the political agenda as the labyrinthine path of Portugal’s leading airline, TAP. After successive reprivatization and renationalisations, management scandals and exorbitant economic agreements and injections of public money into the airline, 2022 ended with the controversial departure of the member of the board of directors, Alexandra Reis, and with the approval of a new capital increase approved by the government on the eve of the end of the year.

The coming year will determine whether the airline’s turmoil will also affect other senior officials involved in the controversial compensation of Alexandra Reis, and whether this has wider political repercussions for a government eager to keep TAP afloat as a national champion while seeking to contain worker’s strikes and find a way out of the company’s reprivatisation.

Wage Competitiveness and Economic Forecasts Against a Volatile Scenario

December ended with the approval of the increase of the National Minimum Wage (SMN) to 760 euros as of 1 January 2023, to reach 900 euros in 2026. However, the Portuguese government will have to continue to emphasise the lack of wage competitiveness of its nationals concerning their European neighbours, in a complex macroeconomic context, in which the Finance Minister, Fernando Medina, maintains that a positive growth of 1.3% is expected for the Portuguese economy by 2023. A wage increase that may not solve the collective conflicts that the Executive has had to face as a result of the demands for wage revaluation of numerous bodies of the Portuguese civil service, which in November alone called eleven strikes. [1]

On the other hand, in terms of debt, the European Commission’s Director General for Economic Affairs, Maarten Verwey, declared that although “additional budgetary effort will be needed to ensure that debt is on a plausible and sustained reduction path” and that “it will take time to reach 60%”, “Portugal will eventually get there”.

In this sense, in the General State Budget for 2023, the government foresees a decrease in public debt of 4.2 percentage points, to 110.8% of GDP next year.

Digitalisation as Change Driver 

Tax incentives, visas and a political commitment to internal cohesion and the international positioning of Portugal, through a profound reconversion of the country into a technological hub to meet the demands of the market in the coming years. A change that, at times, clashes with a public opinion that sees a premium on attracting talent and encouraging foreign investment through tax advantages that the Portuguese themselves do not enjoy.

Portugal’s digital transformation is based on three pillars: (I) Training and digital inclusion of people; (II) Digital transformation of the business fabric; (III) Digitalisation of the State. All of these are accompanied by an arsenal of sectoral measures to drive a technological change that will mark investment opportunities in the coming years in the digital sphere.

Tourism Sustainability

In a report published last June, the World Travel and Tourism Council (WTTC) predicted that the travel and tourism sector would drive Portugal’s economic recovery, surpassing pre-pandemic levels by 2023, but warned that the overall positive outlook is threatened by exogenous risks to economic recovery. Similarly, growing social unrest in Portugal’s main tourist cities as a result of the current model of investment and management of accommodation, together with political and legislative developments in this area, mean that, in 2023, the authorities and the private sector must reach a consensus on the sustainability of the tourism model if the country’s economic-tourist miracle is to continue to be sustained.

Decentralisation Process

The Portuguese government has initiated a decentralisation process to be completed by 2024, towards the Regional Coordination and Development Commissions (CCDR), which interact with the municipalities and which until now only implemented and coordinated central government programmes.

In this sense, the Resolution of the Council of Ministers no. 123/2022, which determines the transfer, distribution and articulation of the attributions of the peripheral services of the direct and indirect administration of the State in the Regional Coordination and Development Commissions (CCDR), represents the beginning of a process that has been contested both at the social level – for example, by the main farmers’ associations – and at the political level, by the main opposition parties.

Decentralisation and the regionalisation process will mark next year’s political course and are seen as one of the main issues on Prime Minister Antonio Costa’s agenda.

The Eighth Constitutional Revision

The reform of the Portuguese Manga Charter is undoubtedly one of the main issues to be discussed in the country during the next political year. Initially launched by the right-wing political party “Chega”, it has been welcomed by the two main parties – the Socialist Party and the Social Democratic Party – but rejected by one of the main actors during the first drafting of the constitutional text, the Communist Party.

The new proposals to adapt the Constitution to today’s Portuguese society range from making voting compulsory and lowering the minimum legal age, to the inclusion of environmental issues and rights, chemical castration, the reform of electoral constituencies, the use and storage of metadata and restrictions on fundamental rights in cases of health emergencies, the latter being the issue that precipitated the start of this revision process.

Health as an Unresolved Issue

Health is and will continue to be one of the most important structural problems facing Portugal. 2023 will test its restructuring after a 2022 year marked by successive criticisms of the functioning of the National Health System (SNS), by serious deficiencies in hospital emergency services – which even the Prime Minister described as unacceptable -, by the resignation of the Minister of Health, Marta Temido, by the creation of the office of CEO of the SNS, with Fernando Araújo at its head, and by the appointment of

At a time of extreme international uncertainty, the 23/24 political year looks set to be a turning point for Antonio Costa’s government and his project for the country. As some veteran politicians in Portugal have pointed out – and some citizens too – absolute majorities do not sit well in Portugal. Contrary to what some have wanted to interpret from the various statements made by the opposition parties and the President of the Republic himself, Marcelo Rebelo de Sousa, there will be no anticipated elections.[2]

Similarly, the resignation of the Infrastructure Minister and his retirement from politics as a result of the controversy of the former Secretary of State for the Treasury in TAP, forces the Socialist Party to rethink the succession in the party’s leadership when Costa leaves the party’s General Secretariat at the end of his term of office.

Despite this scenario of uncertainty on the Portuguese landscape, one thing of which we can be sure is that, as in previous years, TAP will continue to be a regular item on the Portuguese agenda.

[1] As a consequence of the loss of purchasing power and demanding the revaluation and updating of professional careers, pre-hospital emergency technicians, nurses, pharmacists, Metro Sul do Tejo workers, civil servants of the General State Administration, doctors, diagnostic technicians, prison officers, TAP crew members, military personnel and teachers called strikes and strike days that lasted throughout the month of November.

[2] Both the President of the Republic and the leader of the PSD, Luís Montenegro, have declared that this is not the time for a new general election, arguing for the same reasons, namely that the elections held at the beginning of 2022 are still very recent, so the Portuguese citizens should not be asked to express their will again so recently, and that the commitments of the government and with the European Union, commitments critical to overcoming the country’s socio-economic challenge, still need to be implemented.