Portugal “transforming into country of minimum wages”

Announcing an increase in Portugal’s minimum wage to €705 today, PM António Costa is gunning for election victory.

But once the fanfare is over (which will be very soon), the truth is that almost no-one can survive on €705 per month.

Much worse, ‘minimum salary’ is not a line in the sand for workers to look back at (to see how well they are doing), it is more a snare that has almost 70% of the country’s workforce shackled to a form of working poverty.

Bleats that ‘labour is hard to find these days’ have to be set against the fact that since the PS Socialist government seized power in 2015, average wages in this country have increased by only 10.1%. The minimum salary however has increased by 39.6% (thus it is seen as a winning election campaign foil)… but it is still only €705 a month.

As RTP reported on the prime minister’s announcement today, the confederation of Portuguese workers is far from impressed.

The increase from the current €665 per month is “insufficient”, said an official source. 

Anyone who will have tried living on €705 per month will almost certainly agree.

Economist Eugénio Rosa is an advisor to the CGTP, and he doesn’t mince his words: Portugal is transforming into a country of minimum salaries. The ‘salarial distortion’ is seeing to it that the national minimum wage “represents an increasingly high proportion of the average salary”.

In short, there are more and more people receiving no more than the national minimum wage.

As Mr Rosa explains: “There has been enormous political concern in recent year in increasing the national minimum wage, neglecting to update the wages of more qualified workers. This is causing strong distortions in the country and transforming Portugal into a place in which ever more workers receive only the minimum wage, or a salary very close to it”.

Dinheiro Vivo proves the point: IEFP (the institute of employment and professional training) has a list of over 150 job vacancies on its site at the moment, aimed at civil engineers, electrotechnicians, mechanics, agronomists “and others”. Yet the “crushing majority of salaries offered” vary between €750 and €1,000.

“How can the country hope to retain qualified people”, Eugénio Rosa queries – stressing that “without qualified workers, economic growth and the development of the country will be unrealistic”.

Bizarrely, a totally different ‘argument’ was presented by SOL over the weekend.

SOL suggested that the country’s economic growth was being stymied by a “lack of manpower”, listing businesses across almost every sector ‘crying out’ for workers, and severely hampered in the meantime.

Almost certainly these workers would be paid ‘typical Portuguese wages’. Very possibly, the Portuguese minimum wage (due to increase to €705 only in January).

Bearing in mind most people need to pay accommodation costs – and rental prices have little correlation to salaries – it is hardly surprising there is a lack of manpower: anyone with any gumption will be trying to find a way of earning more than the national minimum wage, or seek State support to avoid a job that pays it. 

This is the reality the country has arrived at on a day when government glory seems to be being overshadowed by business confederations.

The various confederations of industry, agriculture, commerce and tourism had been due to meet with minister for planning Nelson de Souza at 11am this morning to “debate lines of orientation for €24 billion in Portugal 2030 funding”. 

None of them showed up. 

Says Expresso, they are preparing a joint statement “to explain the situation”. This will very possibly come later today.

The government’s ‘plan’ (remember it is fighting an election campaign) is to decide Portugal 2030 funding at the Council of Ministers on Thursday, and then put the strategy out for citizens’ public consultation next week. 

The executive has been steamrolling ahead with its strategy, which may be why business confederations have decided to take a step back.

According to Expresso, they are still smarting by the way they were dealt with pre-voting on the State Budget (click here), and had set a date to sit down with the government to discuss the national minimum wage on November 16.

Yet here we are a week earlier, and the national minimum wage increase has already been announced.

Nelson de Souza meantime is said to be “banking on closing meetings with representatives of Bloco de Esquerda, the PSD, the PCP communists, CDS-PP, PAN and PEV today”, while tomorrow he is scheduled to “conclude the programme for presenting the guidelines of the Portugal 2030 Partnership Agreement” to other political parties.

It is looking more and more a case of a government ploughing forwards with strategies but failing to take key sectors along with it.

More to come.

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