3. The crisis and growth in productivity and employment
At the start of the millennium, the Region was marked by robust growth in
domestic product, combining a rise in employment with increased productivity,
with significant and above average values.
However, an adjustment has clearly occurred in the regional economy due to
the crisis affecting Europe. Initially, in 2009, companies managed to sustain the
level of employment, although at the cost of a reduction in productivity. In 2010
and 2011, during a second phase, this adjustment was reflected in layoffs and
the difficult social costs associated with unemployment.
On the other hand, the trends towards a recovery of added value in the Region
in recent years indicate a level of stability, when considering large sectors of
activity.
However, a more detailed analysis reveals a progressive reduction in the
relative weighting of the primary sector as well as, more recently, in the
construction sector. In contrast, the sector which accounted for the largest
share of the regional economy and which has even increased its wealth
generating capacity is that of public activities and public assets.
In terms of forecasts and guidelines for public policies to be adopted in the
future, duly considering the surrounding factors which influence the process of
regional development, the structure and the evolution of wealth formation in the
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economy will thus be oriented more towards the public sector in terms of
generating added value.
Structure of Gross Added Value in the Azores
Source: National Statistics Institute, Regional Accounts (Base 2006)
Image key
PT EN
Públicos e outros serviços Public and Other services
Financeiro, Imobiliário e Técnico Financial, Real Estate and Technical
Comercial Transportes e Turismo Commercial Transport and Tourism
Construção Construction
Industrial e Energia Industrial and Energy
Primário Primary
In other words, this aspect also reveals the need to formulate active policies to
promote private and competitive economic activity, which can generate value
and employment.
In short, the starting point of this vision for the period 2014-2020 is
contextualised by outside threats derived from the crisis in Portugal and the
European Union, which condition the mobilisation of resources for the growth of
economic production and job creation.
The slowdown in the European economy and in Portugal in general, the
limitations of intervention in the financial sector to ensure liquidity, the reduction
in production and employment as well as a reduction in the confidence of
economic agents, also with direct repercussions in the Azores, such as
shrinking domestic demand, among other transversal factors, had a negative
impact on growth and development which was being consolidated.
The great challenge for regional public policies for the 2014-2020 period, albeit
clearly influenced by outside factors, will thus consist of mitigating the negative
effects of the downturn, with a view to resuming previous trends of growth,
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development, job creation and convergence with the EU’s average level of
wealth generation.
4. The main strategic guidelines 2014-2020
Over the course of the years, European Union funds and support have
generally been an essential element in the convergence process and in the
economic and social development of the Autonomous Region of the Azores.
Public investment subsidised by the European Union has been structured along
two main strategic guidelines:
− Providing the necessary investment for basic infrastructure in diverse
areas and in the nine islands of the archipelago, keeping in mind the lack
of such infrastructure, primarily due to the territory being an archipelago
covering a vast expanse and the resulting needs to provide a minimum
level of public infrastructure;
− Economic and social structures which includes promoting private
investment and enhancing human capital.
In the current environment, the process of financial and economic adjustment
currently underway in Portugal has naturally had a negative impact on
economic and social conditions in the Azores, especially in terms of economic
growth and unemployment of the active population, particularly evident among
young people.
On the other hand, obligations in terms of adjusting public expenditure have
required the public sector to accommodate the impact of the external crisis even
though, over the course of the years, regional finances have been strictly
managed. This is reflected in a current deficit of just 0.4% of GDP and public
debt of 19% - figures which are very different from the national situation.
The new period of 2014-2020 will start in the Azores against this backdrop of
difficulties and uncertain prospects in the short and long-term, along with
changes in the economic cycle and the behaviour and confidence of economic
agents, both nationally as well as at a European level. This is a turning point for
progress considering the transition between the infrastructure component –
which is in a very advanced phase but has not yet been completed or closed –
and the progressive and necessary development of public policies aimed
directly at production activities and seeking to ensure a balance and economic
and social cohesion.
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This Action Plan clearly defines guidelines to increase the regional economy’s
level of competitiveness, both in core and specialised areas as well as in terms
of promoting the diversification and robustness of new sectors and areas of
economic production. It also aims to free the potential of these sectors for new
private investors.
At the same time, policies to actively promote private sector employment are a
priority, linking the qualifications of human resources to the needs of
companies, while protecting underprivileged sectors of society and thus
minimising social exclusion and poverty.
The means and tools to be mobilised also have clear objectives and suitable
conditioning factors to achieve equitable and proportional distribution in the
territory, with equal opportunities, environmental sustainability and efficiency
and the preservation of resources.