The Portuguese government plans to cut 30,000 civil service jobs and to raise the retirement age by one year to 66 as it tries to meet the terms of a bailout.
Prime minister Pedro Passos Coelho says civil servants will also be required to work 40 hours a week instead of 35.
He says the proposals, which would take effect mostly from next year, would save $7.4 billion over three years.
Austerity measures have already proved deeply unpopular, triggering big protests.
Unemployment now stands at nearly 18% - a record high - and the economy is expected to shrink for a third consecutive year in 2013.
Portugal got a $120 billion bailout from the European Union, the European Central Bank and the International Monetary Fund in 2011.