Household Income Instability: Portuguese Welfare State Meets the Eurozone Crisis

Abstract

This article approaches welfare state evolution in terms of protection against household income volatility. It maintains wage earner household income instability emerges from firm routines, household habits, and welfare state provisions. It considers the impact of austerity measures in the context of a longer trend of labor market institutional evolution. Prior to austerity-driven measures, labor market developments shifted risk from firms to state and households. Austerity measures amplified previous trends and left household incomes exceedingly exposed to effective demand risk.

Keywords:

• welfare state
• institutionalism
• social insurance
• employment protection
• Portugal

JEL Classification Codes:

• A120
• B520
• I380
• N340

Notes

1 These severe cuts were accompanied by some additions, as the system was marginally extended to those with weak contributory careers and to the self-employed who are economically dependent on a single contracting entity and increasing unemployment benefits for unemployed couples with dependent children and to lone parents by 10 percent.

2 Particularly, while the original monthly minimum income threshold for a family consisting of two adults and two children was EUR 568, by 2013 only households with income below EUR 398 could qualify for RSI (Farinha Rodrigues 2013).

3 Unable to hire new public servants (fiscal austerity obliges), the state hired people on the task; their number almost doubled between December 2011 and December 2013 (from 13,804 to 23,236) (boletim estatístico do emprego público). Curiously, most of these (20,749) were working for the Ministry of Employment and Social Security.

4 By 2017, a quarter of the Portuguese own-account workers (some of them fake self-employed) complained of having periods without work or assignments, whereas 15 percent complained about delayed payments (Eurostat). Both shares were higher than in other EU countries.

Additional information

Notes on contributors

Cristina Soeiro Matos

Cristina Soeiro Matos is in the Department of Economics, School of Economics and Management, University of Minho, Braga, Portugal