Portugal's labour productivity falls below early-2000s levels despite near-full employment

According to a study by the Business Roundtable Portugal Association, Portugal's hourly labour productivity now stands at 66.9% of the European Union average, a figure that is lower than the 67.6% recorded in 2000. The country has nonetheless achieved near-full employment, with over five million people working and an employment rate of 79.6%, surpassing the EU average of 76.1%. The analysis attributes the productivity gap to four key barriers: persistent under-investment by public and private sectors, a job market dominated by low-value-added, low-wage sectors, the prevalence of small-scale enterprises, and high context costs.

To address these issues, the association recommends stabilising licensing procedures, removing obstacles to business growth, and improving tax treatment for wage progression while promoting skilled technology jobs. It also notes that between 2011 and 2024, more than 680,000 jobs were created across 12 sectors, but over 60% of those jobs generated an average gross value added of only €31,700, limiting productivity gains.