Portugal adds more austerity to cut debt level

Associated Press + More

LISBON, Portugal (AP) — Bailed-out Portugal is adding more austerity to family budgets as it struggles to cut its debt amid a recession.

Prime Minister Pedro Passos Coelho announced Friday an increase in workers' social security contributions to 18 percent of their monthly salary from 11 percent.

But he also said he is cutting companies' welfare contributions to 18 percent from 23.75 percent to encourage hiring.

The government predicts an economic contraction of 3.3 percent this year. Treasury figures indicate tax receipts will be €2 billion ($2.5 billion) lower than forecast, while a record jobless rate of 15.7 percent is draining state funds.

Portugal received a €78 billion rescue last year. It is aiming for a budget deficit of 4.5 percent this year, but many analysts expect it will be more than 5 percent.

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