People's protest

Public sector workers across Portugal went on strike on Wednesday, disrupting transport and other services including healthcare. The day-long strike was called by the country's two biggest unions in protest at the government's planned austerity measures.

Three-quarters of train services and 60 percent of bus services were cancelled, while no flights took off or landed at any airport.

It was the first joint general strike held by the unions since 1988. Together, they represent around 1.5 million workers.

The head of the main UGT union, Joao Proenca said, "It is the biggest strike ever staged."

Making the cuts

The socialist government wants to implement the austerity program in a bid to cut a high national level of debt. Prime Minister Jose Socrates has vowed to stick by his course of wage cuts and tax hikes, hoping to quash speculation that Portugal will be the next European country to need a bailout after Ireland and Greece.

Commenting during the strike, Labor Minister Helena Andre said without the austerity measures, "the consequences for the Portuguese and the economy will be a great deal worse."

The government's austerity budget is due to be finally approved by parliament this week. The measures include cutting public sector wages by five percent, freezing pensions and raising value added tax from 21 to 23 percent.

Portugal has gone through many years of continuous low growth. Its unemployment rate stands at 10.9 percent - the highest since the 1980s - and it could rise further.

Even though the economy has shown some growth this year, economists fear that higher taxes and wage cuts could cause a relapse into recession in 2011 as consumer spending falls.

Author: Timothy Jones, Catherine Bolsover (Reuters, AP)
Editor: Nancy Isenson