Former governor of Bank of Portugal rejects notion that high level of unemployment is down to rigid labour law
The former governor of the Bank of Portugal, Mário Centeno, has rejected the argument that the country suffers from a high unemployment rate among young people because of Portugal’s inflexible labour law.
In the first quarter of 2026 unemployment among young people stood at 19.1% yet Mário Centeno says that the Czech Republic has more stringent labour laws and only has a youth unemployment rate of 10%.
In an interview on CNN Portugal’s Prime Time, he also pointed to the case of Estonia which had among the most flexible labour laws in Europe yet had a youth unemployment rate of 21.7%, so questioned the relation between unemployment and and pro-worker labour policies.
The former governor of the Bank of Portugal, who has spoken out against the labour law reform proposed by the Government, also argued that “only 16% of young people are unemployed for more than a year.” “This is a truly important indicator and reflects precisely the dynamics of the labour market: it’s how long people are unemployed,” he pointed out.
Mário Centeno also highlighted that the unemployment rate in Portugal is three times the global unemployment rate, “exactly the value of the United States,” and that, on average, since 2011, it has stood at 2.78 times. “That’s not why we identify difficulties in young people entering the labour market; it’s not because of the legislation,” he concluded, adding that the changes proposed by the Government are a “mistake.”
“Our labor market does not have a flexibility deficit,” and legislation does not “prevent productivity improvements.”
The issue, undeniably complex, is not solely down to rigid labour laws or low productivity. Part of the issue lays with low salaries, high taxes and lack of affordable housing which together with a lack of career prospects and small companies lead many young professionals to leave Portugal and seek work in other European countries.
Sources: CNN Portugal/ECO
