Portugal is the poorest country in Western Europe. It is also the least educated, and that has emerged as a painful liability in its gathering economic crisis.
Without the budget cuts, Portugal is almost certain to need an international bailout. It will run out of money this year without fresh cash, and markets are charging punitive rates for borrowing. Two firms downgraded Portugal’s credit rating Thursday.
Its dire situation thrust a possible Portuguese rescue onto the agenda of European Union leaders who gathered in Brussels Thursday for a previously scheduled meeting, where they were agreeing on a new bailout fund. Portugal would be the third country in the euro zone to require a bailout, after Greece and Ireland.
Cheap rote labor that once sustained Portugal’s textile industry has vanished to Asia. The former Eastern Bloc countries that joined the European Union en masse in 2004 offer lower wages and workers with more schooling. They have sucked skilled jobs away.
Just 28% of the Portuguese population between 25 and 64 has completed high school. The figure is 85% in Germany, 91% in the Czech Republic and 89% in the U.S.
“I don’t see how it is going to grow without educating its work force,” says Pedro Carneiro, an economist at University College London who left Portugal to do his postgraduate studies in the U.S.
The education woes in Portugal show the extent of Europe’s challenge as it tries to right itself amid the sovereign-debt crisis.
Portugal’s crisis, by contrast, has come to a boil slowly. For a decade, Portugal’s growth trailed the euro-zone average. Traditional industries like cork harvesting and shoe stitching couldn’t energize the entire country. The tech boom of the mid-2000s largely passed Portugal by.
The Portuguese spent nonetheless. The economy–government and private sector together–has run cumulative deficits with the rest of the world of more than €130 billion over the past decade. The state hasn’t had a balanced budget, let alone a surplus, for more than 30 years.
Portugal has just begun phasing in 12 years of required schooling; now, Portuguese can leave school after ninth grade. Many do. The government says it is racing ahead with reforms. Mr. Sócrates points to an initiative that gives students laptops and to a far-reaching project to rebuild dilapidated schoolhouses. Results last year show students improving on standardized tests.
But it is a long road. “We have accumulated years and years of ignorant people,” says Belmiro de Azevedo, a billionaire industrialist.
He described the system as calcified. The central administration wields tight control. Curricula are simultaneously undemanding and rigid. Dropout rates are high. Schools struggle to accommodate an influx of immigrants from Portugal’s former colonies in Africa, such as Angola and Guinea-Bissau.