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Government raises minimum salary to €635

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The Portuguese government has increased the minimum salary for 720,000 workers to €635 gross per month despite reservations from business and industry associations.

It means that those on the lowest wages, many working in domestic work and in the public administration, will take home €565.15 after tax.
The new minimum salary, which comes into force on 1 January, also means that Portugal’s department of social security will see an extra €122 million in national insurance contributions in 2020 or 11% of net earnings per month. (€69.85).
But on the other hand employers will have to discount €150.81 monthly for the Sole Social Tax (Taxa Social Única).
In other words, taking into account that there are currently 720,000 workers receiving the minimum salary, this level of contribution will mean an increase of €122.59 million for Social Security coffers.
However this is an estimate since it is not yet known exactly how many workers earn more than €600 and less than €634.
In terms of taxes, the State will not gain revenues from raising the minimum salary. “The minimum annual salary which does not incur taxes is set at €9,150,96. In other words whoever earns up to €654 a month is exempt from IRS.
The Minister of Employment and Social Security, Ana Mendes Godinho said that the increase did not “require any financial offsets since the law foresees that the National Minimum Salary should be set by the Government after being discussed with social partners and this is what has happened.”
“We have in fact managed over the past four years to see some recovery in the national minimum salary but our goal is to continue on the road towards our target set down in the Government Programme to achieve a minimum salary of €750 in 2023.”


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