Portugal to cut thousands of government jobs

Portugal is planning to cut 30,000 civil service jobs and to raise the retirement age by one year to 66 as it tries to meet the terms of a bailout.

Prime Minister Pedro Passos Coelho said civil servants would also be required to work 40 hours a week instead of 35.

The proposals, which would be applied mostly from next year, would save €4.8 billion over three years, he said.

Pedro Passos Coelho announced the proposals on Friday in a prime-time televised address to the nation. Portugal received a $102bn euro rescue in 2011 after overspending, heavy debts and weak growth left it close to bankruptcy amid the eurozone's financial crisis.

Passos Coelho warned the country couldn't expect the rest of Europe to throw it another financial lifeline and said Portugal must honour the terms of the three-year bailout agreement, which demands deep cuts in spending.

Some wealthier northern European countries have shown signs of bailout fatigue as the continent's southern nations, like Portugal, Spain and Greece, have gone to them for help.

With the eurozone financial crisis appearing far from over amid a broad European economic slowdown, asking for more money could aggravate political problems.

"The idea that Europe will always come to our aid is wrong,'' Passos Coelho said.

He added Portugal must show "our European partners that they have no reason to doubt our commitment'' to repairing the country's public finances.

The center-right coalition government will likely have a hard time, however, selling its latest austerity measures to a disgruntled public.

Passos Coelho said he wants to give a full state pension to workers only when they reach 66, negotiate early retirement deals with government workers to get his target of 30,000 fewer staff, and increase the working hours of government employees to 40 hours from 35, the same as the private sector.

Many people blame the government's spending cuts and tax hikes for a recession that is forecast to continue for a third straight year in 2013.

Unemployment is at 17.5 percent, and the government predicts it will reach 18.5 percent next year.

Passos Coelho appealed for understanding. "People of Portugal, I know you are asking whether all the sacrifices will be worthwhile. I can assure you, they are,'' he said.

"The benefits [of austerity] will come,'' he said. "We cannot give up.''

Austerity measures in Portugal have proved deeply unpopular and have triggered large protests.