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Striking Down Austerity Measures: Crisis Jurisprudence in Europe

Christina M. Akrivopoulou, Adjunct Lecturer, Democritus University of Thrace

Due to the socialist ‘Carnation Revolution’ that led the country to its democratization after 1974, Portugal has inherited one of the most powerful Constitutions of Europe regarding the protection of social rights. Although Portugal’s introduction to the European Union in 1986 has gradually diminished the strong state interventionist character of the Portuguese economy, the constitutional order guarantees social state, equality, labor and social security as its core rights and freedoms. Such a powerful constitutional social state enhances the ability of a constitutional court to protect citizens’ social autonomy. In its recent case law the Tribunal Constitucional de Portugal has produced a gradually empowered jurisprudence regarding the austerity measures put in place since Portugal adopted the European Financial Stability Mechanism and the Memorandum and its six reviews (the agreement between the International Monetary Fund and the European Union that defines the county’s general economic policy with the aim of reducing the public debt and deficit).

In its first after the Memorandum ruling, the Constitutional Court of Portugal (case 396/2011) held constitutional the first austerity measures taken regarding reductions in public servants salaries and taxation, justifying them in the pressing framework of the Portuguese economic crisis and the grave repercussions of the state’s inability to acquire new loans for the citizens’ general welfare. Nevertheless, the Constitutional Court expressed its reservations about the measures, noting that in the absence of crisis the measures would violate the principle of equality by discriminating against those employed in the public sector.

This reservation served as the foundation for the reasoning of the second after the Memorandum ruling of the Court (case 353/2013). In this judgment, the Portuguese Constitutional Court declared unconstitutional two provisions (Articles 21 and 25) of the 2012 budget law (N 64-V/2011), under which the legislator suspended for three years the payment of Christmas gifts and holiday benefits corresponding to the 13th and 14th salary payments for the employees and retirees of the public sector. The Constitutional Court founded this decision on Article 13 of the Portuguese Constitution, which safeguards the principle of equality in the distribution of public burdens, arguing that the introduction of this measure is in fact introducing a form of tax and produces an unjustified discrimination against the employees and retirees of the public sector versus the private sector employees and retirees.

Nevertheless, showing its “self-restraint” towards the legislature and taking account of the urgency and severity of the Portuguese economic crisis, the Portuguese Constitutional Court reduced the impact that the declaration of unconstitutionality had for the national budget law, permitting the enforcement of the measures for the current year (2012) while suspending it for 2013 and 2014. A strong counterargument was offered by the dissenting judge Maria Lúcia Amaral, who underlined that the Court’s decision increased the public debt and deficit and thus failed to take into account the principle of solidarity between generations, transferring and burdening the future generations with the public debt.

In its third ruling, issued this April (case 187/2013), the Portuguese Constitutional Court went even further by striking down four of the nine austerity measures introduced in the 2013 national budget law. Namely, the Court held unconstitutional measures regarding salary and pension cuts in the public sector as well as reductions on sick leaves and unemployment benefits. The Court again deemed that these cuts violated the principle of equality and the fair distribution of fiscal burdens. The most interesting aspect in this case is the way that the Court drew a clear line around cuts aimed specifically at civil servants. The ruling makes clear that measures specifically aimed at the public sector will be held discriminatory and are going to be held unconstitutional by the Court.

On a very similar legal basis, and in an austerity although not a Memorandum framework, the Italian Corte Costituzionale (Case 223/2012) struck down the reductions in judicial salaries enforced by Law 78/2010. The Italian Constitutional Court adopted the argumentation of the Portuguese Constitutional Court, thus underlining that these measures were discriminatory because they targeted and infringed the principles of equality and of the fair distribution of public burdens. The measures referred to a 5 percent reduction in judge’s salaries that did not exceed the amount of 150,000 euro and a 10 percent reduction in salaries that exceeded this amount. Nevertheless, contrary to the substantial legitimacy of the relevant jurisprudence of the Portuguese Constitutional Court, the case 223/2012 of the Italian Constitutional Court is more striking for its political and corporatist character.

One might for example say that with this judgment the Italian Corte Costituzionale has tried to reaffirm its competence to decide as the last resort on the salaries of the judicial branch even against the legislature’s wishes. The Italian judiciary with this judgment also reaffirmed its constitutional status and institutional power towards the Italian government in the framework of the principle of separation of powers, thus claiming its parity. Nevertheless, the specific judgment lacks some legitimacy since it is targeted to one only relatively privileged set of actors (the judicial branch itself), and that is its main distinct from the more general and less corporatist Portuguese jurisprudence.

In a final recent case, the Italian Court of Cassation (116/2013) on June 5 of 2013 struck down the obligatory solidarity contribution of 5% temporarily (from August 2011 to September 2014) impacting those pensioners of both the public and the private sector whose pensions exceed the amount of 90,000 to 150,000 euros annually. The Court held that this measure, by targeting a specific group of people (the pensioners with high value pensions –pensioni d’ oro) violated the principle of equality and introduced an unlawful discrimination in comparison with those that acquire high incomes by other means.

Suggested citation: Christina M. Akrivopoulou, “Striking Down Austerity Measures:Crisis jurisprudence in Europe,” Int’l J. Const. L. Blog, June 26, 2013, available at: http://www.iconnectblog.com/2013/06/striking-down-austerity-measures-crisis-jurisprudence-in-Europe/.

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Published on June 25, 2013
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