"State sector raises salaries, private sector is forced to follow." ... my god man, no, that's not how it works.
More like: "Already inefficient state bureaucracies raise salaries, attracting workers from private sector who cannot afford to pay higher wages, requiring massive budgetary increase from government i.e. 'more taxes' just as economy goes into tailspin due to private sector layoffs.
Probably the EU needs to re-think the fact that it's designed to send all young workers to Germany or at least out of Portugual/Spain/S. Italy and Greece and leave them as octegenarian tourist centres with illegal Turkish workers doing the actual work.
Either 1) the EU starts massive transfer payments or 2) get rid of the Euro and have some limits on mobility, or it will just limp along. #1 might require political and fiscal integration which would probably just exasperate the problem.
In the short term, they should probably raise taxes on foreign home ownership.
But yes, Europe needs a genuine Hamiltonian Moment (share the debt burden) and also a genuine New Deal, instead of the current beggar-thy-neighbor EU order where Germany & friends benefit all.
In a country with a TFR of ~1.4 and a median age of ~47. What could possibly go wrong? It's not like Portugal is seeing a declining population or anything. Oh, wait.
What? This makes no sense. You basically leave out a large chunk of the induced demand. There you have your prices lowering.
What's wrong with large industrial projects?
It's exactly what we need at this moment - in fact, both Portugal and EU-scale.
This would cost a small fraction of the Quantitative Easing program from the European Central Bank.
(and these Massive Real Estate buildouts must include the lessons in Urbanism learned from past such projects)
2. (y)
3. State sector raises salaries, private sector is forced to follow. Just raising minimum wage is positive, but not enough. This tends to compress people to the bottom salary tier and promote even more brain drain.