Is it possible to increase young people's salaries? Yes, but "band-aids" are not enough, structural reforms are needed. "For this generation there is nothing left to do"
We asked the question to several experts and their response was quite similar: measures such as IRS Jovem or support for hiring young people have a limited impact and are not enough to prevent the emigration of those who earn salaries three times higher in other countries.
The increase in wages last year was not enough to face the rise in inflation and, in real terms, the income of Portuguese workers decreased. The drop was an average of 4%, but in the case of qualified young people this reduction was even more pronounced, in the order of 6%, concluded the study "State of the Nation on Education, Employment and Skills in Portugal" by the José Neves Foundation, published in June.
The document highlights that the wage gap between young people with higher education and young people who only completed secondary education reached historic lows last year. In 2011, a qualified young person earned 50% more than a young person who had only completed secondary school, but currently this difference is just 27%. Young people with higher education who entered the job market in 2020 earned less than those who entered, under the same conditions, in 2006, another study by Banco de Portugal also showed.
Low youth wages have implications across the economy. Young people live at their parents' house until later in life or work two jobs to make ends meet. And, when they realize that their situation is unlikely to improve, they emigrate . According to a recent study , young people with higher education who leave the country to work earn three times more abroad. This is one of the reasons why the percentage of more qualified emigrants continues to rise year after year.
What can be done to increase young people's wages and prevent them from emigrating?
"Measures, such as those recently announced , aimed at young people, such as IRS Jovem or housing support , are measures that seek to act on the one hand on net salary and, on the other, on reducing living costs and can have some impact on people's disposable income, but not much. Furthermore, they are specific, short-term measures, and therefore are always limited. This is not enough, this is not what stops young people from emigrating", says economist João Cherry tree.
This is also the opinion of economist Pedro Braz Teixeira. "Measures like IRS Jovem are a façade policy, which wants to convey the idea that something is being done but the practical result is not visible", he says. "The problem is that gross salaries are very low and then there are no prospects for the future. If you start with a low salary but have the prospect of being better in 5 or 10 years, that is a stimulus for young people." But what happens with these measures is exactly the opposite: they are temporary measures, which only last a few years, and therefore, when they end, young people are most likely to see their financial conditions regress because salaries have not actually increased: "No It's attractive, that's not what prevents emigration."
"In economic policy there are two types of measures: short-term and long-term. Short-term measures are essentially those that are designed to resolve temporary issues, which have to do with the current situation (for example, the response to a inflation or the stabilization policy necessary to define emergency aid because of the war). The long-term ones are measures that aim to affect the way the Portuguese economy works, its structure - these are the ones we lack", explains the economist Pedro Brinca.
"The only way to solve the next generation's problem is to implement structural reforms now to boost the economy and create wealth that can sustain high wages in the future. But for this generation there is nothing left to do", concludes the economist. What remains are "short-term" policies that are like "band-aids", says Pedro Brinca.
Pedro Braz Teixeira agrees: "There are no short-term solutions. It is impossible to imagine that we will be able to increase salaries by 10% or 20% in the short term, it is an ant job that we have to do. We have to change economic policy and invest with quality, this is decades of work."
Are tax incentives useful or not?
"The big problem for young people when they start working is not the IRS, it's the salary itself", declares Luís Leon, a lawyer who works in the area of tax law. The measures that affect the IRS "only affect those with above-average income". "Many young people earn the national minimum wage and don't even pay taxes. Furthermore, the earnings [with these measures] are miserable, that's not what stops emigration. The problem for young people is finding a job with decent wages corresponding to their effort The problem is that we have a stagnant economy, which is unable to value its graduates."
Luís Leon has no problem stating that the only reason why these measures that affect the IRS are so talked about is because they are "a political gimmick, they are measures that give votes" because most people only think about the short term.
And if we think about incentives for employers, the problem remains. “Incentive means more taxpayer money (or more expenses or less revenue),” she says.
This is also the perspective of economist Pedro Brinca. "We can create temporary benefits, to help people. Portugal has lost a lot of fiscal competitiveness in the last 20 years, mainly in payroll taxes", he says. However, he considers that "it is not serious to talk about tax cuts without saying how these cuts are paid for". "The only way to finance these tax cuts is by compromising the budget balance", he points out, highlighting that at the moment Portugal already has a huge expense with debt interest. Of course, people wanted to pay less taxes, but that money is needed by the State and most people don't think about the consequences that such a drastic measure would entail. "What are we going to sacrifice? The NHS? Social support?" The only solution, he says, it involves "a reform of the State - the State has to do the same with fewer resources". But that won't happen anytime soon.
"What matters to workers is their net salary", highlights Pedro Braz Teixeira. Whether this income is obtained through a tax incentive for the employer to increase the gross salary or through a reduction in income taxes is irrelevant. But, in any case, the economist considers that these types of measures are not the solution. "It's like giving aspirin for cancer, it doesn't change the essentials", he compares. "The gap between salaries in Portugal and other countries is so big that the gains from these measures are not enough to prevent emigration. There is support for young people that is important, but, let's not have any illusions, if we don't resolve the underlying issues we are not going to solve the problem", argues Pedro Braz Teixeira.
Creating wealth and modernizing the economy: the great challenge
"The Portuguese economy has been stagnant for 20 years, it should be converging with the European Union and it is not, unlike what is happening with eastern countries (such as Romania) and Turkey. If the economy does not grow, salaries cannot grow. Salaries represent 45% of GDP", observes Pedro Braz Teixeira.
As economist Pedro Brinca recalls, Portugal in 2000 had an income level that was around 85% of the average community income - today it is 77%. "In other words, Portugal has moved away from the European average. However, there is an aspiration in terms of lifestyle, a social convergence that is only possible if it is based on the ability to create wealth. We have to create more wealth, to be able to distribute", he explains.
Creating wealth is essential to guarantee jobs and better wages for young people, also states Rafael Rocha, general director of CIP - Confederação Empresarial de Portugal in a written response sent to CNN Portugal. "The creation of wealth is a sine qua non. In other words, the need for the country to grow more, create more wealth, be more competitive. Structural bases that will translate into more (and better) jobs available in the labor market", he argues. But this creation of wealth will only be possible "with a set of public policies that encourage, stimulate and promote youth employment". These measures "must act on the fiscal side (IRS Jovem is a good example, although there is still a way to go), on the economic side (fostering an ecosystem favorable to business activity) or on the social side (mitigating, for example, the issue of housing)."
Salaries are low because of the productivity problem, points out Pedro Braz Teixeira. According to the most recent data from Eurostat, Portugal was the 10th worst in the EU in this item, now "we have moved to the 5th worst and are on the way to being the 3rd worst in the EU", he warns. "According to Eurostat, productivity in Portugal fell from 78.4% of the EU average in 2015 to 74.8% in 2022, in clear divergence with our partners", says the economist. "We were overtaken by Latvia, Croatia, Romania, Estonia, Lithuania and Poland, we managed to perform a little better than Slovakia, but they were very close to overtaking us, as did Hungary. If we continue on this trajectory we could become the 3rd least productive country in the EU, only above Greece and Bulgaria."
"We need to think more in the long term about modernizing the Portuguese economy and increasing productivity", argues João Cerejeira. What exactly does this mean?
For example, reducing context costs, say João Cerejeira and Pedro Braz Teixeira. These are the costs incurred by companies due to being in Portugal, such as having a railway network that doesn't work, excessive bureaucracy, inefficient public administration, high taxes or, when it exists, legislative instability.
Then, fill the lack of opportunities, that is, implement "innovation and research policies in Higher Education, encouraging the participation of companies". "We have to create a more dynamic environment in the job market, enabling the emergence of new companies. We have a set of sectors that are protected, closed, where no companies have emerged in recent years, such as telecommunications. And we have other sectors that have even grown but are not supported, such as local accommodation, which is now facing public policies that lead to a setback." When there are new areas, such as in the technology, innovation or tourism sector, it is normal for young people to be interested and want to create companies.
Furthermore, experts say, the overwhelming majority of companies are "mini-nano-companies" that do not earn 100 thousand euros a year. As Pedro Braz Teixeira highlights, 45% of employment is generated by micro-enterprises (with less than ten workers) which, being small companies, have lower wages and less productive specialization.
"In Portugal, investment - whether public or private - is very dependent on European funds and their public financing, which undermines longer-term measures", says economist João Cerejeira.
“We are investing insufficiently”, confirms Pedro Braz Teixeira. "For example, at the moment public investment is below what it was during the troika period - with visible effects on public services."
Finally pay attention to this: in the 1st half of 2023, foreign direct investment fell 57% to 2002 million euros. Portugal is not being able to take advantage of the European reindustrialization movement, greatly reinforced by the pandemic and fears of dependence on China, states the economic note published at the beginning of September by the Forum for Competitiveness.
"We need foreign investment", says João Cerejeira. When branches of foreign companies set up in Portugal, they bring with them not only higher salaries but also a different business culture, which will become attractive to young people and will also stimulate competition. Pedro Braz Teixeira agrees: "We have to make direct investment attractive to bring companies to Portugal with better management methods, with more demands, with a different culture. This can be a great substitute for emigration."
The next step: improving working conditions
More than 70% of jobs lost in 2020 were held by young people under 30, many of them precarious despite higher education qualifications. According to data from the White Paper – More and Better Jobs for Young People, published in December last year, "Portugal has shown levels of youth unemployment higher than the European Union average".
"Youth unemployment must necessarily concern us, it must necessarily lead us to reflect and it necessarily requires very concrete actions, as it is unacceptable to periodically hear that Portugal today is not a country for young people. Our country has a responsibility as nation of, and after training the 'most qualified generation ever', retain this immense talent offering young Portuguese all the conditions to build a life project between doors", says Rafael Rocha, general director of CIP - Confederation Portuguese Business.
Measures to encourage the hiring of young people already exist in the PRR - Recovery and Resilience Plan , recalls economist João Cerejeira. "They are interesting because they allow improving contractual conditions, for example with regard to open-ended contracts. But then the State also has to set an example: in health, education, in other public areas", he says.
In 2021, Pedro Brinca was one of the authors of the study " From made in to created in", from the Francisco Manuel dos Santos Foundation, which looked at the Portuguese economy in a holistic way, diagnosing problems and presenting proposals to solve them. One of the problems identified was, precisely, the retention of young qualified workers in Portugal. Speaking to CNN Portugal, the economist explains that several problems have been identified that "prevent the country from creating value". In the case of employment, and just to give an example, Portugal is the 3rd country in the EU in terms of employment protection measures. employment but it is also the 3rd with the most fixed-term contracts." In other words, we have legislation to protect work but it is inefficient, it does not protect work. We can say that we are paying the price of inefficiency", he concludes.
"The retention of skilled workers and the return of those who migrated during the last crisis is also essential to ensure adequate supply of skills in a country facing an enormous demographic challenge due to the rapid aging of the population," say the authors. "New work models, including teleworking and platform work, combined with the country's natural assets, bring new opportunities to attract qualified foreign professionals and, if managed appropriately, can also help attract workers to so-called jobs. traditional. Migration policy is also decisive — it is necessary to ensure that it is designed to attract (and integrate) people with the qualifications that the economy needs."
"Remuneration is obviously a fundamental element – and it is true that the salaries of younger workers are lower than the average. However, it is important to note that salary increases for young workers have been more pronounced. It is true that currently the younger generations The new ones simultaneously value other issues related to emotional wages, such as teleworking, increased vacation days and other benefits in terms of work flexibility", explains Rafael Rocha, from CIP.
"The last 50 years reflect an extraordinary leap in terms of education in Portugal. Today we have many more doctorates, graduates and people with the 12th year completed. However, it is essential that training seeks to respond in a timely manner to the needs of the economy real so that there is an effective match between supply and demand. CVs have to be reviewed, rethought and restructured – and this work has to be done with the participation of companies that are very interested in being able to collaborate by sharing the valuable capital information they have in this area", says Rafael Rocha. "The country needs graduates, doctorates and masters, yes, but Portugal also lacks trained professionals in other areas. Industry, for example, needs people with the appropriate technical training. Unfortunately, Professional education is, as a rule, undervalued in our country, being seen as a lesser choice. However, when we look at the German example we immediately see its importance for the country's economy, competitiveness and companies. But also to open a path of professional progression to thousands of young people every year, putting them on the path to a different, more valued and better paid profession."
These plates, produced in China for the Dutch market, embody the culture of satire surrounding the South Sea Bubble of 1720, a mania for investment and financial speculation whose burst induced the world’s first international stock market crash, felt keenly in the Netherlands. The bubble’s origin traces to 1711, with the founding of England’s South Sea Company by John Blunt and Robert Harley, who entered their firm into a unique relationship with the British government: the company assumed a portion of government debt, the government acquired a portion of shares and Parliament granted it a monopoly on trade with the Spanish Colonies in South America. As the 1710s progressed, it attained, under England and Spain’s Treaty of Utrecht, the asiento, or contract, from the Spanish government to conduct trade in enslaved Africans within the Spanish Empire, and began a fierce campaign to promote the sale of its shares. Investors from all walks of life were targeted by aggressive 'stock-jobbers', intermediaries between the general public and the brokers operating within the Royal Exchanges, who promised windfall returns and flaunted the firm’s slate of illustrious investors, including King George I himself.
By 1720, a large number of people from all levels of society in England, the Netherlands and France, lured in by the promise of vast profits on trade in South America, had invested significant stakes in the company, many having been encouraged to borrow heavily to buy shares. Share prices began to inflate as demand increased in the first half of the year, reaching a peak of £1050 at the end of June. As investments in the South Sea Company boomed, a ripple effect of speculative fervor took hold of the public, as many more rushed to buy stock in all manner of firms, including outright scams in which stock-jobbers sold 'shares' in hundreds of non-existent companies professing to earn profits in fields as unreal as square-barreled firearms, specialized caretaking for bastard children and even 'the fat’ning of hoggs.' Although some early investors managed to exit with a profit (the South Sea Company, adopting a tactic similar to a modern Ponzi scheme, paid them out them using capital raised from selling stock from other investors), large numbers were made bankrupt when the company's overinflated value abruptly crashed over the summer, its share price sinking to £190 by September and eventually to £124 in December. The crash coincided with a similar financial catastrophe in France, the collapse of John Law’s Mississippi company, which also centered on the promise of great profit in the New World and underwent a similarly swift and catastrophic end.
The crashes of 1720 prompted enormous public outrage and inspired satire in every popular medium, including prints, plays and broadside ballads from writers such as Jonathan Swift, who himself had once championed the South Sea Company. In a memorable 1721 engraving by William Hogarth, a colossal plinth in an urban square is inscribed 'This Monument was Erected in Memory of the Destruction of this City by the South Sea in 1720', while in front of it, allegorical figures of Honor and Honesty are flogged by figures of Self-Interest and Villainy, a puppet-show depicts a devil dismembering Fortune with a scythe, three clerical figures gamble over a small pile of coins, a queue of ladies gathers outside a raffle for 'Husbands with Lottery Fortunes' and a crowd of fools clamor for a chance to ride a merry-go-round powered only by wind. Playing cards were designed featuring verses and satirical illustrations of figures before and after their ruin, poking particular fun at Welsh and Irish investors and depicting women investors as henpecking their husbands for control over their money, or else suffering abandonment by former suitors after their ruin.
Of great international popularity was a large Dutch volume, Het Groote Tafereel der Dwaasheid [The Great Picture (or Scene) of Folly, also known in English as The Great Mirror of Folly], published in Amsterdam at the end of 1720. In the Netherlands, where the French coffeehouse on Amsterdam’s Kalverstraat served as an exchange for stock in English firms, investors had breathlessly bought shares in the South Sea Company as well as in illusory Dutch and English firms which came to be called windhandel, or 'businesses built on air'. The publication of Het Groote Tafereel der Dwaasheid testifies to the great shock and impact of the international crash; the massive book assembled poems, farcical plays, maps, playing cards and more than 70 prints. The volume framed the investment craze as an echo of the previous century’s Tulipmania, and modeled it as a kind of epidemic, spreading between countries and causing in each a terrifying frenzy of gambling, corruption and immorality. The book and a number of its excerpted prints circulated widely in Europe and England, some of the prints with their captions translated from the Dutch.
It was in this climate that Chinese export porcelain plates of the present type appeared, although neither a graphic source or an explicit interpretation for their decoration has yet come to light. Each centers a dancing actor of the commedia dell’arte who has traditionally been identified as Harlequin, although David Howard and John Ayers contend that one plate may depict Scaramouche and that three others may not represent either figure (see D. Howard and J. Ayers, China for the West, London, 1978, vol. I, pp. 234-235, pl. 230 and figs. 230a and 230b). The plates appear to have been produced solely for the Dutch market, as only examples with Dutch captions have been recorded. Despite its narrow market, however, the type appears to have held substantial commercial appeal, as many individual plates and incomplete sets are known to exist. Perhaps consumers found appeal in their satirical bite—each plate presents a scene in which a brash stock-hawking promoter has been replaced by a capering clown—or perhaps, as Howard and Ayers argue, Dutch porcelain vendors feared another destabilizing speculation craze and intended to promote a more sobering and cautionary moral.
The series is sometimes described as 'The Great Scene of Folly’, a direct reference to Het Groote Tafereel der Dwaasheid. At least two versions of its type are known to exist, one represented by the present lot and the other depicting figures in the same six poses but without captions, and in costumes and settings closer to a domestic Chinese style. Similar works in Delft earthenware are also known, some also framing their central figures with captions relating to the 1720 bubble. Examples of these variant types are illustrated in C. Le Corbeiller, China Trade Porcelain: Patterns of Exchange, New York, 1974, pp. 43, figs. 16 and 17, in contrast to a plate of the present type, p. 42, no. 18. Also compare the satirical set of Dutch-decorated Chinese export porcelain plates, one of which depicts Harlequin, lot 110 in the present sale.
Although complete sets of six ‘South Sea Bubble’ plates are scarce, the group of six presented as lot 157 in the current Ann and Gordon Getty Collection auction series, which were previously in the collection of François Hervouët, is one of several sets known to exist. A series of six 'Bubble' plates from the Mottahedeh collection was sold at Sotheby’s, New York, 30 January 1985, lot 140 (three of these plates comprise lot 158 in the present sales). Other complete sets were sold at Christie's, Amsterdam, 23 October 1986, lots 130-135; Christie's, Amsterdam, 15 October 1990, lot 142; Christie's, London, 7 April 1997, lot 89; and the Dr. Anton C.R. Dreesmann sale, Christie's, Amsterdam, 16 April 2002, lot 1308. A set of six of the second, captionless, type was sold at Christie's, New York, 21 January 2009, lot 82; and a set of five was sold at the Collection of Benjamin F. Edwards III sale, Christie's, New York, 26 January 2010, lot 19. A group of three further plates (lot 398) and three pairs of plates (lots 396, 397 and 399), are offered in the online component of the present Ann and Gordon Getty Collection sales.
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