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1. Labour market situation in the country

2. Definitions and concepts

Labour market situation in the country

In the last years, Portugal has undergone profound social and economic changes, which had a strong impact on the patterns and dynamics of the Portuguese labour market.

In June 2017, the country’s performance allowed it to exit the excessive deficit procedure, and in March 2018, in the scope of the European Semester, the European Commission recognised that Portugal had corrected its excessive macroeconomic imbalances. Indeed, in 2017 and 2018 Portugal had the best economic and financial performance in several decades, allowing the country’s labour market to recover most of the jobs lost during the financial crisis and to decrease its unemployment rate to pre-crisis levels. Portugal recorded economic growth of 2.3% in 2023 and 2.2% in the fourth quarter of 2024, making it the fastest growing country in the EU in 2023 (1.9%), ahead of Spain (1.8%) and Belgium (1.5%), which influenced the positive evolution of unemployment, particularly youth unemployment.

This job rich recovery has also brought an improvement of employment quality in Portugal, with most of the employment growth being due to the increase of open-ended employment contracts and with promising trends in wages and collective bargaining.

Labour system

In terms of labour market regulation, the main law in Portugal is the Labour Code, Law no. 7/2009, of 12th February, which was amended several times in recent years to respond adequately to new needs and realities.

In addition to the Labour Code, collective bargaining plays an important role in labour market regulation. The most common collective bargaining instrument in Portugal is the collective agreement, a convention concluded between trade unions and employers' associations, whose purpose is to regulate the activities of production sectors. Given the persisting structural imbalances of the Portuguese labour market and the increasing adaptation challenges at the sectorial and firm levels, collective bargaining plays an increasingly critical role in the equilibrium of labour relations. 

The Law no. 93/2019, of 4th September, introduced a comprehensive set of changes to the Labour Code to limit the legal framework of temporary contracts, to ensure higher protection of temporary workers, to reduce the excessive use of temporary contracts and to promote open- ended based employment. The Law also amended the Labour Code to discourage informal or under-declared work and to promote open-ended hiring in seasonal economic sectors and to ensure greater protection to temporary agency workers. In the scope of collective bargaining, measures changes to labour law are meant to decrease the excessive individualisation of labour relations and to promote the collective dimension of labour regulation, while preventing the emergence of legal vacuums in event of expiry of collective agreements.

Apart from changes to the Labour Code, the Action Programme to Combat Precariousness and to Promote Collective Bargaining also comprises a set of policy actions to strengthen the means and instruments of labour market regulation, including labour inspectorate, having the Authority for Working Conditions currently the highest number of inspectors in office since its establishment in 2006.

Main trends in the Portuguese labour market

The employment rate in Portugal (15-64 years) reached its highest value in 2008, with 68%, and then declined until 2013, when it was 60.6%, increasing to 67.8% in 2017 and – exceeding 2008 - to 69.7% in 2018. The employment rate reached 76.1% in 2019, above the European average of 73.9%. In the first quarter of 2024, the employed population increased 0.8% compared to the previous quarter.

Regarding the labour market, the last few years have been characterised by a continuous decline of the unemployment rate since 2013, from 16,4% (2013) to 6.5% in 2019 approaching the rates of the European Union (EU28) – 6.3% in 2019. Portugal had an unemployment rate of 6.5% in May 2024 compared to 6.4% in May 2023. Unemployment particularly affects young people and low-skilled workers.

Long-term unemployment (12 or more months) increased significantly until in 2014 (59.6%) and, since then, long-term unemployment has been consistently decreasing, representing 55.4%, 49.9% and 43.7% of the total unemployment in 2016, 2017 and 2018, respectively. In March 2024, the long-term unemployment rate stood at 6.5% and equalled the figure recorded in 2023.

Young people and the labour market

Unemployment particularly affects young and older workers. In 2023, the unemployment rate of young people from 15 to 24 years stood at 13.8% in the EU27, reaching, in Portugal, a value of 20,3%. 

The conditions for the insertion of young people into the labour market have been characterised by precariousness, particularly by the increase of part-time and temporary work. The coronavirus pandemic has emphasised the difficult start in the labour market of young people and Portugal is aligned with the EU recovery plan for young people – A Bridge to Jobs: Reinforcing the Youth Guarantee.

Despite the difficulty of integration into the labour market, Portugal has made an appreciable improvement since 2013 regarding the percentage of young people who are not working, studying, or training (NEET). In 2023, 8.5% young people aged between 15 and 29 years were in a NEET situation in Portugal, below the average percentage in the EU27 – 11.2%.

IEFP's internship programmes have recently been restructured, leading to the creation of the “Programa +Talento – Estágios +Talento “. This programme is aimed at young unemployed individuals registered with the IEFP or those who have emigrated permanently for at least 12 months, aged 35 or younger, and holding a qualification at level 6 or higher of the National Qualifications Framework.

There are also the “Estágios Iniciar”, which are intended for young people aged between 18 and 35 who hold a level 4 or 5 qualification in the National Qualifications Framework.

In both programmes, young people with disabilities are always eligible beneficiaries.

As part of employment hiring support initiatives, the “AVANÇAR” programme” has also been replaced by the “Emprego +Talento” measure (also under the +Talento program, Ordinance No. 221/2024/1, of September 23). This measure provides financial support to employers for hiring young unemployed individuals—registered with IEFP or who have emigrated permanently for at least 12 months—on a full-time, permanent contract. Eligible candidates must hold a higher education qualification, and the salary established in the contract must be equal to or higher than the entry-level remuneration of a graduate in the general career of a senior technician in Public Administration.

Future trends

The Programme of the XXIV Constitutional Government (2024-2027) includes various measures aimed at young people in employment:

• Reformulate the eligibility criteria for supported professional internships.

• Young technicians for industry programme.

• Young doctorate programme for industry.

• Creation of a national plan to support all young people with disabilities in the transition from school to the labour market.

.Definitions and concepts 

The legal and minimum working age is 16 years: young people under 16 years that had completed compulsory education or who are enrolled and attending upper-secondary education may provide light work consisting of simple and defined tasks which, by their nature, by the required physical or mental specific conditions under which they are carried out, are not liable to harm them as regards physical integrity, safety and health, attendance at school, participation in orientation or training programmes, ability to benefit from the instruction given or their physical, psychic, moral, intellectual and cultural development (Labour Code – number 3 of article 68).

The normal age for access to old-age pension: the minimum age, under the general social security system in 2024 is 66 years and 4 months. In 2025 it will be 66 years and 7 months. This age is adjusted annually by the Government, depending on the sustainability factor based on the evolution of the average life expectancy.

Compulsory education ends at the age of 18 years old: compulsory education ends when the student gets his/her diploma graduating from high school (upper-secondary education) or at the time of the school year when he/she reaches 18 years old, regardless of the cycle or level of education.

Major Options of the Plan ("Grandes Opções do Plano" - GOP) – are government economic policy instruments that set out the grounds for the strategic guidelines for economic and social development policy.

Social support index (IAS) – this is the basic amount that serves as reference to calculate and update contributions, pensions and other social benefits given by Social Security. For 2025, the value of the IAS was set at €552,50.

Labour regulation:

Fixed-term contract: the duration and regime of the fixed-term employment contract. From October 2019 on, the maximum duration of fixed-term contracts is two years, including renewals (with the maximum of 6), and the maximum accumulated duration of renewals cannot exceed the initial contract period.

Minimum wage: the Portuguese Constitution defines the establishment of a monthly minimum wage, which is regulated by the Labour Code. The updating of the minimum wage is made by the government, after consulting the social partners in the Standing Committee on Social Dialogue (CPCS). For 2025, the monthly minimum wage was updated to € 870.

Part-time work: part-time work corresponds to a normal weekly working period lower than the full-time work provided in similar conditions.