Minimum wage in Portugal

The Portuguese Constitution (art. 59, paragraph 2 a)) establishes the obligation of the state to set and update a mandatory national minimum wage. The general law applicable since 2009 is the Labour Code 2009 (Law 7/2009, arts. 273, 274 and 275) and the most recent update of the minimum wage was set by Decree Law 112/2024 of 19 December 2024. During the last 10 years there were no substantial changes in the minimum wage regulation. The government presented a draft regulation concerning the transposition of the Directive into the national law in November 2024 in view to alter the Labour Code and the General Law of Public Functions that will be discussed by the parliament in January 2025.

• Portuguese parliament: Constituição da República Portuguesa

• Portuguese government: Labour Code - Law 7/2009, 12 February 2009

• Portuguese government: Decree-Law 107/2023 of 17 November 2023

• Portuguese government: Decree Law no. 112/2024 of 19 December

According to the Law 7/2009 (art. 273, paragraph 1), the amount of the minimum wage is determined by the government by Decree-Law, after consultation of the Permanent Commission of Social Concertation (CPCS). This tripartite institution includes the government and the following social partners: the four employer confederations –Entrepreneurial Confederation of Portugal (CIP), Confederation of Commerce and Services of Portugal (CCP), Confederation of Farmers of Portugal (CAP), and Confederation of Portuguese Tourism (CTP); and the two trade union confederations –General Confederation of Portuguese Workers (CGTP) and General Union of Workers (UGT).

• Permanent Commission of Social Concertation (CPCS)

The process of setting the statutory minimum wage follows the standard procedure established by the Labour Code (Law 7/2009, art. 273, paragraph 1), according to which the minimum wage level is set by the government by Decree-Law after consulting the tripartite Commission of Social Concertation (CPCS). The outcome of such consultation is not strictly legally binding for the government, although in practice it is not likely that the government would substantially deviate from the results of the consultation.

After the exceptional freezing of mandatory minimum wage, in line with Troika Memorandum, in the years 2012, 2013 and 2014, by government unilateral decision, the process of consultation and annual update of the minimum wage level was restored. In the last 10 years, the consultation process within the CPCS led to tripartite agreements with specific focus on mandatory minimum wage increase (for the years 2015 and 2016) and led also to wider range tripartite agreements including the update of minimum wage (for 2017, 2023 and 2024) in the framework of the wider range tripartite agreements (CES, 2014, 2016, 2017, 2022, 2023). On the other hand, the tripartite agreement 2016 (CES, 2016) established the goal of regular monitoring and evaluating the impact of minimum wage increase for the in the following years (GEP/MTSSS, 2016; 2017; 2018; 2019; 2021).

Since 2022, the tripartite commitments include both the references for the increase of average wage guiding collective bargaining and for the increase of the minimum wage, which means that the increase of the minimum wage takes into account the general wage increase. Moreover, the trajectories of average wage and minimum wages recovery foreseen in the tripartite agreements have been justified, since the tripartite agreement 2022, with the purpose of reducing poverty, combating inequality and increasing labour share, to reach the European average.

• CES [Conselho Económico e Social] (2014), Acordo relativo à atualização da Retribuição Mínima Mensal Garantida, competitividade e promoção do emprego, Conselho Económico e Social, 24 September 2014.

• CES [Conselho Económico e Social] (2016), Acordo relativo à atualização da Retribuição Mínima Mensal Garantida para 2016, Conselho Económico e Social, 22 January 2016.

• CES [Conselho Económico e Social] (2017), Compromisso Tripartido para um Acordo de Concertação de Médio Prazo, 17 January 2017.

• CES [Conselho Económico e Social] (2022), Acordo de Médio Prazo de Melhoria dos Rendimentos, dos Salários e da Competitividade, Conselho Económico e Social, 9 October 2022.

• CES [Conselho Económico e Social] (2023), Reforço do Acordo de Médio Prazo, dos Salários e da Competitividade, Conselho Económico e Social, 7 October 2023.

• CES [Conselho Económico e Social] (2024), Acordo Tripartido sobre Valorização Salarial e Crescimento Económico 2025-2028, Conselho Económico e Social, 1 October 2024.

The Portuguese Constitution (art. 59, paragraph 2 a)) establishes the obligation of the state to set and update a mandatory national minimum wage considering, among other factors, the needs of workers, the increase in the cost of living, the level of development of production capacities, the requirements of economic and financial stability and accumulation for the development. According to the Labour Code (art. 273) the determination of the minimum wage must consider the needs of workers, the increase in the cost of living and the evolution of productivity, with a view to adapting to income and prices policy criteria.

The tripartite agreement 2016, and the following minimum wage annual updates also considered the impact of minimum wage concerning the evolution of competitiveness, economic growth, and employment, as well as the aim to combat poverty and social exclusion and reduce wage inequality (GEP/MTSSS, 2016, 2017, 2018, 2021). Since 2019 the increase of the labour share, in line to converge with the EU average, became a concern of the government wage setting policy – an issue postponed by the pandemic crisis – which was addressed by the tripartite agreement 2022 (Caldas, 2019).

The mandatory minimum wage is generally applicable. There are no exemptions. Workers cannot be paid lower than the minimum wage. Non-compliance with minimum wages is considered a very serious offence, and a fine can be imposed.

According to the Labour Code (Law 7/2009, art. 275) the mandatory minimum wage is reduced  in the following cases: for assistants, apprentices and trainees in certified training, the amount is reduced by 20%, for a maximum period of one year; and workers with reduced work capacity (due to disability) have a reduction corresponding to the difference between full capacity for work and the coefficient of effective capacity for the work the worker was hired for, if the difference is above 10% up to a maximum limit of 50%. The certification of the effective capacity coefficient is carried out, at the request of the worker, job seeker or employer, by the public employment service or health services.

On the other hand, the workers in the Autonomous Region of Madeira and of the Autonomous Region of the Azores are entitled to regional supplements adding to the national minimum wage, a right resulting from the adaptations of the Labour Code 2009 by the legislative assemblies of these two regions, which determine annually its level having into consideration the costs of insularity of these territories (Assembleia da República, 2020).

• Assembleia da República (2020), Salário Mínimo Nacional – Enquadramento Nacional, Assembleia da República/Divisão de Informação Legislativa Parlamentar.

The minimum wage rate is defined monthly and updated annually. According to the law, the monthly minimum wage is due for 14 monthly payments, as all employees are entitled to the Christmas bonus (a 13th monthly payment) and to the Holiday bonus (a 14th monthly payment, which is paid in addition to the remuneration for the holiday period).

According to the Labour Code (Law 7/2009, art. 274, paragraph 1) the amount of the mandatory minimum wage includes: the value of the benefit in kind, namely food or accommodation, owed to the workers in return for their normal work; the commissions concerning sales or productivity premium; and the regular bonus classified as remuneration (in accordance with Article 260). The value of the benefit in kind is calculated according to current prices in the region and cannot exceed the following amounts or percentages of the value of the monthly minimum wage (Article 274, paragraph 2): 35% for complete meals; 15% for food consisting of a main meal; 12% for worker accommodation; €27.36 per room for housing the worker and his family; 50% for total benefits in kind. The amount considered per room is updated by applying the housing rent update coefficient, whenever the value of the minimum wage is increased.

The amount of the minimum monthly wage does not include subsidies, premiums, bonus, or other benefits granted occasionally or for a period exceeding one month.

Since 2016, the Strategy and Planning Office of the Ministry of Labour, Solidarity and Social Security has been publishing regular reports monitoring and evaluating the impact of the minimum wage. These have been fundamental to provide detailed information and analysis to the social partners represented at the CPCS to support the annual debate concerning minimum wage updates.

• GEP/MTSSS (2021), Retribuição Mínima Mensal Garantida 2021, Strategy and Planning Office of the Ministry of Labour, Solidarity and Social Security, November 2021.

• GEP/MTSSS (2019), Salário Mínimo Nacional 45 anos depois, Strategy and Planning Office of the Ministry of Labour, Solidarity and Social Security, November 2019.

• GEP/MTSSS (2018), Retribuição Mínima Mensal Garantida 2018 – Acompanhamento do Acordo sobre a Retribuição Mínima Mensal Garantida, Strategy and Planning Office of the Ministry of Labour, Solidarity and Social Security, November 2018.

• GEP/MTSSS (2017), Retribuição Mínima Mensal Garantida 2017 – Acompanhamento do Acordo sobre a Retribuição Mínima Mensal Garantida, Strategy and Planning Office of the Ministry of Labour, Solidarity and Social Security, December 2017.

• GEP/MTSSS (2016), Retribuição Mínima Mensal Garantida 2016 – Acompanhamento do Acordo sobre a Retribuição Mínima Mensal Garantida, Strategy and Planning Office of the Ministry of Labour, Solidarity and Social Security, December 2016.

• The General Directorate of Employment and Labour Relations (DGERT) of the Ministry of Labour, Solidarity and Social Security (MTSSS) has a link to information about mandatory minimum wage.

• The Strategy and Planning Office (GEP) of the Ministry of Labour, Solidarity and Social Security (MTSSS), has a link to reports about mandatory minimum wage.

• Alexandre, F., Bação, P., Cerejeira, J., Costa, H. and Portela, M. (2022), ‘Minimum wage and financially distressed firms: Another one bites the dust’, Labour Economics 74 (2022) 102088.

• Caldas, J. C. (2019), ‘Negociação salarial: o que está em jogo?’ Barómetro das crises/20. Coimbra: Observatório sobre as Crises e alternativas.

• Campos Lima, M. P., Martins, D., Costa, A.C., Velez, A. (2021), ‘Internal devaluation and economic inequality in Portugal: challenges to industrial relations in times of crisis and recovery’, Transfer: European Review of Labour and Research, Volume 27 (1) 47–73.

• Cantante, F. (coord.) (2024), Trabalho, emprego e proteção social 2024. CoLABOR.

• Cantante, F., and Estêvão, P. (2022), ‘Os salários em Portugal: padrões de evolução, inflação e desigualdades’, Estudos CoLABOR, N.º 5. CoLABOR.

• CES (2023b), Parecer de Iniciativa sobre a Produtividade e Qualidade do Emprego, Conselho Económico e Social, 13 October 2023.

• ILO (2018), Decent Work in Portugal 2008-2018: from crisis to recovery, International Labour Office, Geneve, pp 124-127.

• Lagoa, S.  and Campos Lima, M. P. (2023), ‘Crise, recuperação económica e mudança institucional: a reconfiguração das práticas salariais e das relações laborais ao nível sectorial’ in Campos Lima, M. P. and Caldas J. C. (coord.) A persistência da desvalorização do trabalho e a urgência da sua Revalorização. Almedina, (pp.  121-166).

• Martins, D. (2019), ‘Quando a decisão pública molda o mercado: a relevância do salário mínimo em tempos de estagnação salarial’, Cadernos do Observatório # 14, October 2019, Observatório sobre as Crises e as Alternativas.

• Oliveira, C. (2023), ‘The minimum wage and the wage distribution in Portugal’, Labour Economics, Volume 85, December 2023, 102459.

• ONLCP (2022), Pobreza e Exclusão Social em Portugal- Relatório 2022, Observatório Nacional de Luta contra a Pobreza, Lisboa, October de 2022.

• Peralta, S., Carvalho, B. P. and Esteves, M. (2022), Portugal, Balanço Social 2021, Nova School of Business and Economics.

• Peralta, S., Carvalho, B. P., Esteves, M. and Fonseca, M. (2022), Pobreza no trabalho: O papel dos rendimentos e da situação familiar, Nova School of Business and Economics.

• Pereirinha, J., Pereira, E., Branco, F., Amaro, I., and Costa, D. (2020), Rendimento Adequado em Portugal - um estudo sobre o rendimento suficiente para viver com Dignidade em Portugal, Edições Almedina, Coimbra.

• Pereirinha, J. A. Branco, F., Pereira, E. and Amaro, M. I.  (2020), The guaranteed minimum income in Portugal: A universal safety net under political and financial pressure, Social Policy & Administration 54 (2020): 574-586.

• Pereirinha, J.A. and Pereira, E. (2023), ‘Living wages in Portugal: In search of dignity in a polarised labour market’, Social Policy & Administration 57 (2023): 481-496.

• Tavares, I. and Carmo, R. M. (2023), Análise da Pobreza, Privação e Desigualdades em Portugal: Tendências recentes num país persistentemente desigual, Observatório das Desigualdades, CIES-Iscte.