The recovery of economic growth in Portugal after the pandemic has placed the unemployment rate at historical lows. A situation driven in part by the recovery of sectors such as tourism, which is close to the record figures of 2019, and which has been positively valued by the Government, despite the fact that many of the jobs continue to be marked by low wages and precariousness. The country has reached 5.7% unemployment in the second quarter of this year, according to data from the National Institute of Statistics (INE), something that is causing difficulties for companies in sectors such as agriculture or construction to find help. construction site.
The data revealed by the INE are added to those published this week by the Employment and Vocational Training Institute (IEFP), which indicate that the number of unemployed registered in employment centers is the lowest since 2003, the year in which this entity started keeping records. The low percentage of unemployed people in the country, which is well below that registered by other southern European countries such as Spain (12.5%) or Greece (12.3%), hides, however, some negative aspects.
Low wages
Part of Portugal’s good results in terms of employment are explained by wages that are still below the European averagea, despite the recent increases in the minimum wage approved by the socialist government, which has placed it at 705 euros per month in 2022. Low wages have allowed companies in sectors with a high demand for workers to hire more staff , according to the professor at the University of Minho João Cerejeira. “Sectors such as tourism or agriculture employ a significant workforce but with low wages. This allows Portugal to have a low unemployment rate but with lower wages than other countries such as Spain”.
Low pay has encouraged many Portuguese to emigrate to other European countries, such as the United Kingdom, Switzerland or Luxembourg, which has also contributed to reducing the number of workers available in the country and reducing the unemployment rate. “Portuguese emigration was an escape valve in the economic crisis of 2008, and this flight of workers has been noticeable in recent years as economic activity has been recovering,” explains Cerejeira. The Government is trying to offset this negative balance with the new immigration lawwhich aims to facilitate the arrival of workers from third countries to cover the lack of labor in some sectors.
flexible labor law
The low unemployment rate in Portugal is also explained by the validity of some of the measures imposed in the years of the troika in labor matters, such as the reduction in 2013 of compensation for dismissal to 12 days per year workedand which have been maintained until now, facilitating the hiring of workers by companies, with the counterpart of worsening working conditions for employees.
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The socialist government has tried to reverse the situation in recent years, with the support of the left-wing parties, especially in the fight against temporality, which affects about four out of ten workers. Some measures that are positive, according to Pedro Martins, professor at the Universidad Nova de Lisboa, who warns, however, that excessive protection of jobs can cause an increase in the unemployment rate in the country. “In recent years we have had greater restrictions on the creation of temporary contracts. This situation leads some companies to make indefinite contracts, but others give up hiring, especially in an unfavorable economic context. It is important to strike a balance, because if the restrictions are very tight we can notice a negative impact on the employment data”, assures the professor.
Another decisive aspect in the reduction of unemployment in Portugal has been the weakening of the Collective negotiation, according to Martins, which was greatly diminished during the years of the troika. One aspect that the Government is trying to reverse through its decent work agenda, which was approved in Parliament last July, despite the refusal of the employers. “The positive aspect is that greater union power will bring better wages, although, on the other hand, companies will have less flexibility to adapt to possible crisis scenarios,” says Martins. This year’s growth forecast for Portugal is 6.5%, a figure that will be reduced to 1.9% in 2023.