Portugal, a low-wage country threatened by inflation

Lisbon, May 8 (Latest).- The refusal of the Portuguese socialist government to promote wage increases to “not feed the inflationary spiral”, with a CPI that exceeds 7%, once again brings to the fore one of the structural problems that the local economy fails to overcome: Portugal is a low-wage country.

With the largest increase in prices since 1993 (7.2% in April), António Costa has been clear: “We are not going to embark on the illusion that purchasing power is increased and inflation is combated only with increases in income”.

The socialist has found an ally in Mário Centeno, who was his finance minister and now holds the position of governor of the Bank of Portugal, and who this week called for “caution” with wage increases.

But the experts consulted by Latest agree that this policy will lead to a real loss of purchasing power for the Portuguese in a country, they say, where wages are already low.

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The average monthly gross remuneration per worker amounted to 1,361 euros in 2021, according to data from the Portuguese National Institute of Statistics (INE).

In Europe, Portugal is moving away from its neighbors on the western flank and is increasingly aligned with the East: it is the sixth country of the Twenty-seven with the lowest average monthly salary, only ahead of Latvia, Poland, Lithuania, Hungary, Romania and Bulgaria, notes Eurostat.

“In Ireland you earn twice as much and in Spain 50% more,” the Portuguese banker António Horta Osório recently complained at a conference, in which he described the situation as “dramatic.”

INCREASINGLY WEIGHT OF THE MINIMUM WAGE

Portugal should be closer to countries like Spain given the level of interconnection between the two economies, economist José Reis, from the University of Coimbra, tells Latest, explaining that “average wages are low compared to other countries and have been getting closer and closer to the minimum wage.

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Since they took office, the Socialists have opted for a policy of improving the minimum wage, which has gone from 505 to 705 euros between 2015 and 2022, almost a 40% increase.

But this increase has not been transferred to the rest of remuneration and, according to a recent report by the INE, in the last seven years the average salary barely grew by 16%.

“The Government has been very successful in raising the minimum wage, but a growing imbalance is created with the average wage,” agrees economist Pedro Martins, from Nova SBE, who considers it a “very incomplete” strategy and it is necessary to increase productivity and improve public services.

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