Moderate income is outdated from reality: “Almost provocative” concept

Dand all the measures announced a year ago, moderate income – between 400 and 2,300 euros – “is perhaps the most shocking [...], because really [...] is almost provocative”, says Sandra Marques Pereira, researcher at the Center for Studies on Socioeconomic Change and the Territory of the Iscte (DINAMIA’CET).

The government, “saying that a moderate income can go up to 2,300 euros in a country like Portugal” is not attuned to reality, he points out.

Elísio Estánque, researcher at the Centre for Social Studies (CES) of the University of Coimbra, agrees: “To meet the low wage and income levels in Portugal, [...] is to distort reality a lot”, because, “in fact, an income of around 1,200 or 1,000 and few euros can hardly be included within a minimally sustained middle class”.

The sociologist even considers that “the measures that have been taken are somehow favorable” in order for landlords to benefit from “a reduced rate of VAT when it comes to buildings for houses with regulated incomes”.

However, he distrusts the “real impact on the intermediate sectors of society, which are those that, in some way, feed consumption and, therefore, also feed the Portuguese economy”.

Sandra Marques Pereira argues that moderate income should not “be read in isolation”, but as an indicator of “a housing policy that has as its main focus [...] the creation of incentives for real estate promotion and the construction sector”, namely an emerging sector of the ‘build to rent’ (build to rent).

“ The public policy of this Government on housing is based on the initial assumption that the crisis is resolved, firstly, by a strengthening of supply, particularly private and, in this sense, to open the conditions for private investment in construction and real estate”, he observes.

In other words, moderate income is part of a more generic package, with a diverse set of measures, and “it was not originally intended for the traditional rental sector”, aiming at those “who invest in housing with a high number of fires” and who are currently “the biggest supporters of the measures of this government”.

And why the maximum ceiling of 2,300 euros? “I don’t say that [...] there were concrete demands on the part of builders and promoters and investors [...], but this is probably a calculation of the minimum threshold that would be accepted by them [...] or that would be considered viable from a financial point of view”, he says.

This is because the contracts offered have tax benefits valid for 25 years, thus responding to “a very dominant narrative in the sector, which is the permanent instability of the legislation”, he recalls.

Sandra Marques Pereira does not believe in the “miracle solution, which is a positive sum game for everyone, for the cameras, for the investors, for the people”.

This is because – it justifies – “the issue [of housing] is much more complicated” and this approach has already been tested, unsuccessfully, by the Lisbon City Council, which launched a public-private partnership model from 2016.

“ Several projects were still launched, but they had no economic or financial viability, because promoters have demands. I mean, they are in their right, now they are not in the right to, with public support and public benefits, namely land concessions, concessions of buildings for rehabilitation, winning and not putting housing at affordable costs ", recalls.

“ The values that are practiced are, of course, completely depleted relatively and above average incomes, regardless of the area, whether in Lisbon or in other areas,” he says.

Specialist in economic and social inequalities, Elysium She recalls that the concept of the middle class complies with quantitative criteria defined by the OECD – Organization for Economic Cooperation and Development – which put about 60% of Portuguese people in this broad category – but also through subjective perceptions.

In this regard, it emphasises that, on the basis of the European Union surveys, only about 30% of people in Portugal consider themselves middle class, which, in addition to purchasing power, presupposes a certain lifestyle and a capital access to education and culture.

“ The scarcity of economic growth, galloping inflation and all this crisis situation reach the bulk of the middle class, that middle class somehow with expectations of social rise and that, therefore, can be indebted and feed the consumption and the Portuguese economy ", stresses.

However, he warns, it should be stressed that the middle class category “is very ambivalent” and “is constantly changing” as the social structure in general.

However, public policies that have been adopted “in general do not take into account the nature of the category “or, if they have, go very far behind, go [...], as it is said in the football slang, chasing the damage, that is, taking action when the problems are already well developed”.

And in times of accelerated and unpredictable change, “taking medium or long-term measures is more difficult than 20 or 30 years ago,” he acknowledges.