Its my Friday lay day blog and I am on the austerity trail. I have been in Porto, Portugal for the last few days, ostensibly taking a short break by the beach. There has been no swell at all. The beach area to the south of the Douro River is like beach areas everywhere. They give little hint of what austerity has done to this country. Porto is the northern capital of Portugal and a town of around 240 thousand people (in 2012) with the wider region containing around 1.4 million people. It is considered one of “the major urban areas of Southwestern Europe.” But it is also disintegrating as an urban centre with an extraordinary number of derelict buildings and many shops closed as austerity ate into incomes and spending. There are decaying buildings everywhere some with for sale signs on the front. The urban infrastructure is falling apart – the main market is being held up with scaffolding and weeds overtake sporting arenas. In many respects, it looks like a city in the poorest nations rather than being part of Europe. Around a third of the inner city population has left. A large number of people in the greater urban area have left. The mobile are dominated by the young and the educated with the skills leaving behind an elderly population. There is little hope for the city under the current policy structures. A nation and its cities destroyed by austerity. There is no exaggeration here. I invite people to see for themselves. An extraordinary outcome of an out of control recession cult ideology reinforced by neo-liberal Groupthink ruining the prosperity of a people. I had quite a day yesterday as I went on a field trip around Porto organised by the – The Worst Tours.



The Worst Tours are provided by a group of Porto architects who are largely unemployed because of the austerity who eke out livings handing out advertising pamphlets or working casually for little wages in call centres but who refused to leave their town and nation in search of work that would befit their education and training.

The Tours have achieved considerable international exposure since the austerity was imposed on Portugal. There was a BBC news story on January 2, 2014 – Tour guides in Portugal show off austerity hit city – which indicated that “three unemployed architects in Porto, the regional capital of Northern Portugal have set up an unusual walking tours agency” which “instead of taking visitors to the famous wine lodges and historic tourist sites, they’ll take you to all the worst places in town”.

At the time of writing there were already “70,000 buildings … derelict in Porto and entire shopping centres have had to close”.

It is now worse and I wanted to explore not only the urban dimension of austerity but how people have adjusted and made some sense of it. This is a brief report of my “worst tour”, which the organisers assured me in advance would be “the greatest worst tour”. It was an experience.

If you want to support these activists who are committed to opposing austerity and opening the eyes of visitors to what the Troika is capable of then I recommend you take your next holiday in Porto and take a Tour. You will learn a lot about the history of the region, its rise and now its Troika-led demise.

It is a very sad story but there are elements of human determination that provide a spark for the future – some hope that this madness will be stopped.

This type of frontage in inner Porto is very common as you walk around the inner city of Porto.

Similarly, there are many industrial buildings vacant now. In both cases, the owners have little incentive to do anything about the buildings. They are waiting for the inevitable entry of Russians, Chinese and even people from say London, who will move in an gentrify the city by buying up these places.

There is a great need for cheap housing in the city but the owners prefer to leave them derelict.

It could be so easily changed if the government imposed a tax on unoccupied and derelict buildings which forced the owners to fix them up and offer them for use.

In one case, an entire multi-storey shopping centre went broke and the owners realising it was better to get something rather than nothing until they could off-load the property and didn’t want it falling into a state of disrepair has started renting the abandoned shops to bands as rehearsal and recording spaces. Most of the leading Porto musicians (metal, rock, reggae etc) have rehearsal spaces there.

It is a very innovative use of the spaces although it is quite eerie walking through the relatively darkened mall with all the shop windows blacked out.

This ‘shop’ is now a reggae recording area within the abandoned centre. This is what I mean by some ‘hope’ – that people can pressure property owners to use their derelict or vacant assets for public good.

There has also been privatisation madness. The bailout program imposed on Portugal by the EU and the IMF included a number of forced privatisations.

The – CTT Correios de Portugal – (the postal service), was privatised in two-stages in December 2013 (70 per cent) and September 2014 (the final 30 per cent). It was a rushed sale in a weak market and the Government simply said the sale price was “the most advantageous given the current market conditions”.

The privatisation was forced on the Government by the EU and IMF as part of the bail-out package.

In the first round, some 100 local post offices were closed and the workforce was cut by around 8 per cent.

According to CTT’s – Company Presentation – June 2014 – its EBITDA margin (earnings before interest, tax, depreciation and amortization) divided by total revenue, which is thought to signal the most reliable measure of a company’s profitability was 17.3 per cent.

The average across other European postal services was 9.2 per cent.

CTTs staff costs as a percentage of revenue was 45 per cent in 2012, well below the European average of 49.7 per cent.

The publicly-owned postal service had previously been delivering a large fiscal return to the Government.

There was no justification in selling it off to the ‘institutional investors’ for a song.

We went past this building (see next photo), which was the old main postal building in Porto. The building was sold to a hotel chain.

Moreover, the hotel owners were given millions from the bailout funds to turn the building into a hotel. They kept the front of the building intact but completely demolished the historic interior and built a new concrete shell inside which is the hotel.

Further, several other hotels were given bailout funds and they now compete for custom in the local area for the tourist trade.

The workers are not on ‘contracts’ which would require them to be paid at least the minimum wage of (currently) 589.17 euros per month – see Eurostat’s National minimum wages in the EU.

Instead, they are considered to be independent contractors and some of them are paid around 2.80 euros per hour, well below the minimum wage.

So the elites claim that austerity hasn’t led to a sharp cut in the minimum wage in Portugal, as it did, for example in Greece, but forget to mention the shift in legal status of the workforce off ‘contract’ or permanent status onto independent contractor status.

Other notable privatisations were of the electricity generator EDP, the national grid operator (REN), the airport management cmopany (ANA) along with a number of other publicly-owned companies.

The upshot is that workers face higher power charges but receive much lower real wage rates now – a double squeeze.

The government is also pressuring other citizens to leave certain areas so that private developers can reap huge profits.

For example, the next photo is of the historic market, which was once a beautiful structure. It is now in a state of disrepair and is being held up by scaffolding and supports. The derelict shops are increasing in the complex.

The government is squeezing the tenants of the stalls to leave because it wants to privatise the resource.

Another related and insidious trend is the urban clearances of the low income and poor residents to make way for large hotel developments, which are heavily subsidised from the bailout money.

There are a number of low income houses along the river banks, which rise sharply on either side. On the side of the old city (North), a number of houses are being cleared and hotels built.

The government in some cases pushes the roofing in so that the buildings become uninhabitable. There is little solution offered to the previous residents who are poor and often without work.

The following photo shows an abandoned housing area on the river bank (high up) which is just near a new hotel development. Just to the west of this property were bulldozers clearing out the remains of workers’ cottages to clear space for the area around the new hotel.

In the last decade, the city centre has lost around 30 per cent of its population as jobs vanish, business shift their operations back to Lisbon, shops close and people seek survival elsewhere.

Portugal has seen a sharp decline in its overall population. The following graph shows the movement in the total population (in thousands) since the June-quarter 2005 to the June-quarter 2015.

The people leaving are the young and educated with high skill. In part, they are reversing the colonial pattern by moving to Angola (construction boom), Mozambique and Brazil. But they are also going to places within Europe to escape the joblessness and rising poverty.

Porto, which is representative of what is happening throughout Portugal, is a town that is no longer providing opportunities for its generations. The old are being screwed by the housing and pension cuts. The young are being offered no reason to stay.

While the Brussels elites and their puppets in Portugal’s government claim that real GDP growth and employment growth is now returning, the reality is very different on the ground.

Sure enough employment has started to grow again, albeit very slowly. The following graph shows the trends in the unemployment rates in the major regional areas of Portugal. Porto is the major centre in the Norte region.

While there has been some relief the reality is that it remains persistently high with little hope of returning to the pre-crisis levels.

But we have to be careful to understand the reasons behind the small decline. The population exit is a major reason. If those workers had have remained behind the unemployment rates would be much higher with little sign of a drop.

Further, the quality of a vast majority of the new jobs added is now very poor – low wages, no job security, no pension/superannuation entitlements, no holiday pay, no sickness protection etc.

This is a nation that is racing to the bottom of the lowest wages.

In one of the main shopping streets – Rua de Santa Caterina – where, prior to the austerity, businesses would queue to rent space, you see one empty shop after another, especially up the northern end.

The stores that are coming in to the street are the so-called 1-euro shops – selling imported junk. These products are now within the purchasing power of a workforce that has undergone deflated wages.

So in the grand global division of labour, austerity is forcing workers from rich nations to take massive pay cuts which then means they can only afford to purchase the junk that comes from workers on wages that are even lower (in China for example).

A race to the bottom.

Conclusion

The several hours I spent with the Tour guide today was really disturbing. Yes, it was interesting because I learned a lot about the urban structure of the city, the way it developed historically, and a lot about its shifting occupational structure and more.

But it highlighted the disastrous consequences of the austerity on people – not only the most disadvantaged but also the young and educated.

It highlights how austerity results in the massive waste of resources – human and the built infrastructure.

The policies imposed on Portugal are killing the nation. Porto, with its derelict streets and abandoned shops and exiting population is dying and only a radical policy shift will save it.

It was quite a day.

Many thanks to Gui from the Worst Tours.

Fado Music from Porto

This video shows the Portuguese singer and actress Carla Pires singing Meu Amor, Meu Amor (My Love, My Love).

It was recorded by Dutch television at the Bimhuis, Amsterdam in 2014.

It is an example of – Fado – which is one of Portugal’s music traditions dating back to the 1820s.

It is dominated by “mournful tunes and lyrics, often about the sea or the life of the poor”.

There are regional varieties of the music which alter the composition of the instruments and voices, the gender of the singers and musicians and other nuances such as tuning of the instruments.

The distinctive – Portuguese guitar – features in the music. It is a 12-string instrument – with the strings arranged in 6-two string “courses”. There are also different types, which are linked to the type of Fado (Lisbon or Coimbra), the major variation being the length of the free string, the size of the soundboard and the neck profile.

It is played with the thumb and index finger. The tuning is quite different to the natural tuning (in E) of a modern guitar.

There are Fado halls and cafes spread all around Porto.

Saturday Quiz

The Saturday Quiz will be back again tomorrow. It will be of an appropriate order of difficulty (-:

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That is enough for today!

(c) Copyright 2015 William Mitchell. All Rights Reserved.