The IMF report states that “priority should be given to a greater reduction in civil servants through the greater natural departure of workers [through the non-renewal of contracts] and cuts targeting those areas with too many staff.”
Furthermore, the report called for better terms of redundancy and structural measures capping automatic wage rises and career promotion “in order to generate permanent savings of around 0.1 percent of GDP annually.”
The IMF also pointed to how the state had failed to make the savings expected in this field under the troika due to the decisions handed down by the Constitutional Court with those reforms carried out being ”insufficiently robust” and failing to “deal with the structural weaknesses” of the country.
In effect, the inspection report called into question exactly what the government had done to reform its civil service structure and advised, in particular, that the Single Remunerations Table for the civil service and the Supplementary Table, which specifies particular terms and benefits depending on the respective profession, be “carefully designed in order to avoid additional costs.”
Among the other issues raised by the report were the need for increased civil service pension contributions, the potential for deflation to send national debt levels higher, the need for 40-hour working weeks at the local government level and the general threat posed to state budgetary stability by its exposure to state-owned companies, overspending hospitals and public and private partnerships.
In terms of the economy, the report also dwelt upon the difficulties experienced by the financial sector in returning to profit and the sustainability of export-led growth without further reforms. Furthermore, the IMF recommended that Portugal do better in terms of extracting returns on its investment in education and how the country would be better off tackling poverty through fiscal credits to the lower paid rather than simply raising the minimum salary.