Portugal’s minimum wage has climbed for a decade, with nearly a quarter of the workforce now earning the base salary.
Credit : Shutterstock, PhotoSGH
Portugal has seen a steady climb in its minimum wage for ten consecutive years, and a new bulletin from the Bank of Portugal (BdP) indicates that the trend is reshaping the national labour market.
According to the central bank’s latest figures, 23% of Portugal’s workforce now earns the minimum wage—a notable increase that highlights how wage policies are influencing both new hires and existing employees.
Portugal’s new Contracts: How they’re reshaping the workforce
The BdP’s report shows that the share of new employment contracts paying the minimum wage jumped by 1.8 percentage points between 2015 and 2022, reaching 31.4 per cent. This rise is most pronounced among workers with lower levels of education: those with primary education or less saw a jump from 38.8 per cent to 45.3 per cent in seven years, while employees with a university degree actually experienced a slight drop, from 9.1 per cent to 8.3 per cent. The trend is also more evident among foreign workers, with 43% of their new contracts offering only the national base salary, compared to 29 per cent for Portuguese nationals.
Most Read on Euro Weekly News
One reason behind this growth is that the minimum wage has been increasing faster than other salaries, creating what some experts call a ‘compression’ in the wage scale. As the base pay goes up, those who previously earned just above that threshold are effectively absorbed into the minimum wage category when annual adjustments take place.
Portugal’s wage landscape: Education, foreign workers & regional disparities
Beyond education and nationality, geographic location plays a major role in determining who earns the minimum wage. Smaller towns and interior regions are more prone to offering base-level pay: Fornos de Algodres, Crato, Vinhais, and Pedrógão Grande top the charts at around 60%. In contrast, municipalities like Campo Maior (4.5%), Castro Verde (8.2%), Oeiras (9.2%), and Matosinhos (9.6%) boast far lower percentages of minimum wage workers.
For many employees, especially women, younger individuals, and those on fixed-term contracts, the guaranteed minimum wage is becoming the norm rather than the exception. While some welcome this shift as a step towards ensuring fair pay, others worry that the rapid rise in the minimum wage could deter employers from offering higher salaries or investing in professional development.
Bank of Portugal’s caution on wage pressures
In its concluding remarks, the Bank of Portugal stresses that setting the minimum wage should be part of a broader, coherent labour policy—one that takes productivity, inflation, and the overall economic cycle into account. Rapid wage hikes, they warn, can drive up prices and harm competitiveness in a monetary union like the eurozone. The BdP underlines that any increases should be balanced with productivity gains to avoid fuelling inflation or hindering job creation.
With the Portuguese minimum wage now at the heart of a lively debate, it remains to be seen how policymakers will address these challenges. As more and more workers find themselves on the lowest pay rung, the conversation about sustainable wage growth has never been more critical for Portugal’s economic and social future.
Find more news about Portugal