Reducing inequality and poverty in Portugal

Portugal has one of the most unequal income distributions in Europe and poverty levels are high. The economic crisis has halted a long-term gradual decline in both inequality and poverty and the number of poor households is rising, with children and youths being particularly affected. Unemployment is one of the principal reasons why household incomes declined. The tax and benefit system alleviates both inequality and poverty significantly. The tax system is markedly progressive, and recent tax reforms have likely increased this progressivity. Transfer payments, especially non-pension benefits, are reducing inequality and poverty in a fairly efficient way. Nonetheless, a number of adjustments could strengthen the equalising role of the benefit system, which is generally biased towards benefits for elderly people, while families with children should receive more support. The education system should provide more support to students at risk of falling behind to reduce grade-repetition and drop-out rates, while further increasing class sizes would be a reasonable way to generate savings without affecting learning progress much. Scaling up vocational courses and adult education, including in the context of active labour market policies, could improve the capacity of many households to generate income and lead to a more equitable income distribution.Le Portugal est l'un des pays d'Europe ou Ia distribution des revenus est Ia plus inegalitaire, et les niveaux de pauvrete y sont eleves. La crise economique a mis fin a une baisse progressive de longue duree a Ia fois des inegalites et de la pauvrete, et le nombre de menages pauvres s' accroit, les enfants et les jeunes etant particulierement touches. Le chOmage est l'une des principales raisons du recul des revenus des menages. Le systeme de pnSlevements et de transferts contribue a soulager fortement les inegalites et Ia pauvrete. Le systeme fiscal est fortement progressif, et il est probable que les reformes recentes l'ont rendu encore plus progressif. Les transferts, en particulier les prestations autres que les pensions, reussissent assez bien a reduire les inegalites et Ia pauvrete. Le systeme educatif devrait mieux soutenir les etudiants en risque de decrochage afin de reduire les taux de redoublement et d' abandon, tandis que l' augmentation des effectifs dans les classes serait un moyen raisonnable de generer des economies sans compromettre trop les apprentissages. En developpant I' enseignement professionnel et La formation des adultes, notamment dans le contexte de politiques actives du marche du travail, on pourrait offrir a de nombreux menages Ia possibilite d'acceder a de meilleurs revenus, ce qui aboutirait a une distribution des revenus plus equitable.