Firms pay €1K extra with wage hike
Portugal’s largest increase in the national minimum wage, rising from €760 to €820 per month will cost companies an extra €1,000 per employee per annum.
It will also mean an additional €60 on national insurance contributions paid to Portugal’s social security system.
Portugal’s business confederations have asked for a relief on what they have to discount for Social Security, but the government has refused by arguing that the sustainability of the system has to be protected.
“The minimum salary has to be increased by 7.9% which means an increase of €60. This is the largest annual increase ever made” said the Prime Minister António Costa announcing the increase on October 7.
The deal was signed by all of Portugal’s business associations with the exception of the Confederação Empresarial de Portugal (CIP) and the union UGT.
At a parliamentary hearing on Friday over the State Budget 2024, Ana Mendes Godinho again stressed the relevance of the increase, saying that it the largest ever in both absolute and relative terms.
However, Armindo Monteiro, President of the Confederation Empresarial de Portugal (CIP) (Pictured) warned that the increase, on a par with the 5% increase on private sector salaries, could be tough on companies since at the same time measures to help companies be more competitive and productive had not been put in place.
It should be recalled that the majority of funds from the EU €17Bn ‘bazooka’ earmarked to make Portugal more technologically innovative and greener has gone to the public sector rather than the private sector, which has been is a gripe bosses associations have had with the government since the start.
“Of course, people should earn the highest wages possible. The question is what will be the result of each employee’s work and if this will be in line with the salary increases”, he said adding “the (increase) in the minimum salary is decreed by law, but unfortunately growth in the economy is not.”
Photo ICPT: President of CIP, Armindo Monteiro.