Jose Socrates, the Portuguese prime minister and Socialist Party leader, shakes hands with electoral officials in Lisbon on Sunday during parliamentary elections. (Victor R. Caivano/Associated Press)Portuguese voters returned the centre-left Socialist Party to power in elections Sunday, despite the country's highest jobless rate in 20 years.

Results from more than 98 per cent of votes counted showed the Socialists with 36.5 per cent of Sunday's ballot, compared with 29 per cent for the centre-right opposition Social Democratic Party.

The Social Democrats conceded defeat. Three smaller parties — the socialist Left Bloc, the Communist/Green coalition and the conservative Popular Party — shared the remaining votes.

The Socialists have blamed the global meltdown for Portugal's economic crisis and promised big-ticket public works projects to stimulate growth.

Socialist Prime Minister Jose Socrates has vowed to stick with a social and economic reform program that has antagonized many, especially trade unions.

The Social Democratic Party, the main opposition, said public works will saddle future generations with debt. It wants to use tax breaks and other measures to encourage more private enterprise.

Filipa Pinto, a 47-year-old housewife voting on a sunny day in a Lisbon suburb, said she backed the Socialist reforms.

"I don't agree with everything they've done but [Socrates] was brave and has changed things that others daren't touch," she said.

The Portuguese economy contracted 3.7 per cent in the second quarter compared with the same period last year. About 500,000 people — just over nine per cent of the work force — are unemployed.

Retirement age pushed back

During his past four years in power, Socrates has imposed reforms that have included raising the civil service retirement age to 65 from 60 and introducing an evaluation system for teachers.

Reforms are needed because Portugal has become one of the European Union's laggards — despite receiving billions in EU development aid since joining the bloc in 1986. Though it was one of the founding members of the euro currency now used by 16 countries, it has mostly failed to move with the times.

Productivity and education levels in Portugal are among western Europe's lowest. The country remains shackled by labour laws introduced by radical leftist governments in the years after the 1974 Carnation Revolution ended a four-decade dictatorship.

Portugal is western Europe's poorest country, and about a third of workers take home less than $960 Cdn a month after taxes, according to the National Statistics Institute.

Socrates's attempts at an economic makeover have placed Portugal among the continent's pioneers in the development of clean energy and electric cars. He has also put hundreds of thousands of computers in schools.

Social Democrat Leader Manuela Ferreira Leite, who is seeking to become Portugal's first elected female prime minister, also proposes reforms but said they must go deeper and involve broader consensus.

Manuel Vasques, a Lisbon pensioner, said the two main parties were short of ideas on how to improve the notoriously slow legal system and the bloated civil service. He said he was "sick of the squabbling" between those parties and intended to vote for a smaller fringe party.

With neither of the main parties expected to secure more than half the seats in the 230-seat parliament, the winner may rule as a minority government or seek an alliance or a coalition with a smaller rival — the conservative Popular Party, the Communist Party/Green Party coalition or the Left Bloc.

Only one minority government has survived its full term since democracy was introduced 33 years ago. Before the 2005 Socialist win, Portugal had three governments in three years.