The Floor

Essay · economics · October 2026

Portugal’s minimum wage has risen faster than almost any in Europe over the past decade: about 40 per cent above inflation since 2015. It now sits closer to the typical wage than in any other EU country, and one worker in five is paid exactly the minimum. The rise has lifted the lowest pay and compressed everything above it, while the typical Portuguese wage remains about 60 per cent of the European one. Whether the floor can keep rising this fast without costing jobs is a question the evidence can no longer answer.

Reading time ≈ 8 min The floor · the middle · the evidence · the targets

The question

This series has looked at income shares, productivity and taxes, but not at pay itself. The Two-Thirds Country showed that an hour of Portuguese work produces about two-thirds of the European average, and The Salaried Middle how pay is taxed. This essay looks at wages: how the minimum wage has risen, what it has done to the pay of everyone else, what the evidence says about jobs, and where the agreed targets lead.

€920monthly minimum wage in 2026, paid fourteen times; €505 in 2015

20%of employees paid exactly the minimum in 2024, against 15% in 2010

59–91%the minimum as a share of the median wage, depending on the measure

60%of the EU median wage, at Portuguese prices, in 2022

The floor

A decade of fast rises

The Portuguese minimum wage was €306 a month in 2000 and €920 in 2026, paid fourteen times a year (Figure 1). Measured at 2025 prices, it rose by a fifth in the 2000s, stood still during the freeze of 2011 to 2014 under the bailout programme, and has risen by about 40 per cent since 2015, faster than prices, average pay or productivity.[1][2] In euros it is still low by European standards, twelfth of the 22 EU countries with a statutory minimum; adjusted for prices it is about a fifth below Spain’s and Poland’s.[3]

Fig. 1 — Portugal: monthly minimum wage (paid 14 times a year), nominal and at 2025 prices, 2000–2026; years with a change during the year are weighted by months. Data: DGERT, evolution of the minimum wage; INE consumer price index; author’s calculation.

What makes Portugal unusual is not the level but how close the minimum has come to the typical wage. Three measures exist, and they must not be mixed. Against the median full-time wage, the OECD’s measure, the Portuguese minimum rose from 49 per cent in 2000 to a peak of 63 per cent in 2018 and was 59 per cent in 2025, tenth of 32 countries (Figure 2). Against median monthly earnings of all employees, Eurostat’s measure, it is 71 per cent, the highest in the EU. And against the median base wage in the private sector, before bonuses and overtime, the Banco de Portugal puts it at 91 per cent.[4][5]

Fig. 2 — Minimum wage as a share of the median wage of full-time workers, Portugal and selected countries, 2000–2025, per cent; Germany from 2015, when it introduced a minimum. Eurostat’s measure (all employees, monthly earnings) puts Portugal at 71 per cent and the Banco de Portugal’s (private-sector base pay) at 91. Data: OECD, minimum relative to median wages.

The middle

A rising floor, a flattened scale

As the floor rose, more workers ended up standing on it. The share of employees paid exactly the minimum wage was 14 to 15 per cent around 2010; it jumped to 20 per cent in 2014, peaked at 24 per cent in 2020 and was 20 per cent in 2024 (Figure 3). In 2024, 35 per cent earned less than the minimum that applied the following year. Among young workers and immigrants, more than a third are paid the minimum, and nearly one new contract in three starts there.[6][7]

Fig. 3 — Portugal: share of employees paid exactly the minimum wage, October of each year (mainland, employees covered by Quadros de Pessoal; no 2011 edition). Data: GEP/MTSSS, Quadros de Pessoal, Quadro 118.

The rises pushed up pay just above the minimum too, but less, so the whole scale flattened. In the private sector, the base wage of a worker at the 90th percentile was 3.35 times that at the 10th in 2010 and 2.43 times in 2025; the median, which was 38 per cent above the 10th percentile, is now only 13 per cent above it.[8] A Portuguese study attributes nearly all the fall in wage inequality between 2006 and 2019, and about 40 per cent of average wage growth, to the minimum and its spillovers, which reached up to the middle of the distribution.[9] Collective agreements show the same thing from the other side: their lowest grades have been absorbed by the minimum.[10]

Over the long run, pay has kept up with productivity, if not in every period (Figure 4). From 2000 to 2013, real pay per employee fell slightly while output per worker rose by 14 per cent; from 2013 to 2025, pay rose by 21 per cent while output per worker rose by 5. Over the 25 years the two grew about equally, by a fifth.[11] But a fifth over 25 years is little. The typical Portuguese worker earned about €1,070 a month in 2022, about 60 per cent of the EU median once prices are taken into account, a gap that has barely narrowed since 2006; Poland, poorer than Portugal in 2000, now pays more on the OECD’s measure.[12]

Fig. 4 — Portugal: real compensation per employee (including employers’ contributions, deflated by consumer prices) and real GDP per person employed, index 2000 = 100, 2000–2025. Data: Eurostat, national accounts (nama_10_gdp, nama_10_pe); author’s calculation.

The flattening reaches graduates. A degree still pays well in Portugal: graduates earn about 75 per cent more than workers with only secondary education, sixth highest of 31 OECD countries.[13] But at 2025 prices, the average graduate employee earned 9 per cent less in 2024 than in 2010, and the average worker with secondary education 4 per cent less, while the average for all employees rose by 14 per cent (Figure 5). Both are true because many more workers are now graduates: the average rose because people moved into the better-paid groups, while pay within each group stood still or fell.[14] For a young graduate deciding whether to stay, it is the second number that counts.

Fig. 5 — Portugal: average monthly earnings (base pay plus regular supplements) of employees by level of education, October 2010 and 2024, at 2025 prices. Data: GEP/MTSSS, Quadros de Pessoal, Quadro 105; INE consumer price index; author’s calculation.

The evidence

Does it cost jobs?

Employment in Portugal grew strongly from 2015 to 2025, while the minimum wage rose faster than at any time in its history. The government’s own monitoring reports concluded that there had been no negative effects on employment.[15] But aggregate employment rose for many reasons, and those reports compared before and after rather than measuring what would have happened otherwise.

The Portuguese studies that do try are older or narrower, and they lean negative. Data from 2002 to 2010 suggest that each rise made the jobs of the workers it affected less stable: in 2009, a year of a large real increase, a minimum-wage worker’s chance of keeping a job fell by about 2.6 points.[16] For the rises of 2014 to 2017, a study of firms found that job growth slowed by up to a point a year on average, and by up to 4.7 points in firms already in financial difficulty, more of which closed; the authors note that the growing economy offset much of this, and that the closure of weak firms may have raised productivity overall.[17] The Banco de Portugal’s own summary is that the question “remains an open debate”.[18]

The international evidence is the one usually quoted, and it is more reassuring. In 138 rises in American states, the number of low-wage jobs was “essentially unchanged” five years later; Germany’s new minimum in 2015 raised pay without lowering employment, partly because workers moved to better firms; Britain’s Low Pay Commission found no conclusive harm to jobs or hours.[19][20] On the other side, a review of the American literature finds most estimates negative, especially for teenagers and the least educated; Seattle’s rise to $13 cut hours in low-wage jobs by 6 to 7 per cent; and in Hungary, where the minimum rose by about 60 per cent in 2001, few jobs were lost but consumers paid about three-quarters of the cost through higher prices.[21]

The crucial point is that the reassuring studies stop where Portugal now is. The American evidence of no harm covers minimum wages up to about 55 to 59 per cent of the median; its authors call higher levels “an open question”.[19] Portugal is at 59 per cent on the OECD’s measure and well above on the others. The evidence neither shows that the rises have cost jobs nor that further rises at this pace would be safe.

The targets

Where the agreements lead

Wages in Portugal are set by law at the bottom and by collective agreements above it. Agreements cover 83 per cent of employees, mainly because the government extends them to whole sectors, though only about 14 per cent of workers belong to a union.[22] The government and the social partners have signed targets: the 2024 agreement sets the minimum at €970 in 2027 and €1,020 in 2028, with an average wage of €1,890 in 2028; the current government’s programme aims at €1,100 by 2029 and an average wage of €2,000.[23] Unions are asking for more; employers have refused to reopen the agreement.

Public employees earn more on average than private ones, about €1,885 a month in base pay in October 2025 against about €1,310 in the private sector a year earlier, but much of that gap reflects that public employees are far more often graduates: teachers, doctors, technicians. Studies that compare like with like find a smaller premium: about half the raw gap disappears once education and experience are taken into account, and the Banco de Portugal puts the remaining premium at about 11 per cent in 2018–19, three points less than a decade earlier, though still above the euro-area average; it is largest for graduates and has disappeared for young graduates at the start of their careers.[24][25]

The balance

A floor that has done its job, and a ceiling that has not moved

The minimum wage has done what it was meant to do: it has raised the lowest pay much faster than prices and narrowed the gap between the bottom and the middle, at a time when the economy grew and employment rose. The case for caution is that the floor has come so close to the typical wage that the evidence for its safety runs out, that the weakest firms have paid a price, and that more and more workers, young and immigrant above all, start and stay on it.

The deeper problem is above the floor. A minimum wage can lift the bottom of the scale; it cannot raise the middle, which depends on what an hour of work produces. As long as Portuguese productivity stays near two-thirds of Europe’s, a rising minimum mainly squeezes the scale, and the reward for a degree, a skill or experience shrinks: a pattern that helps explain why so many young graduates leave, the subject of The Leavers.

On method and tools

This piece was written collaboratively with Claude Opus 5.5 (Anthropic): human specification, editorial direction and critical review; machine data research, analysis and drafting. The figures are computed by scripts/wages.py. The minimum wage is the monthly amount set by decree, weighted by months in years with a mid-year change, deflated by INE’s consumer price index. The three ratios of the minimum to the median use different definitions (full-time earnings, all employees’ monthly earnings, private-sector base pay) and are not comparable. Quadros de Pessoal covers employees of private firms and public enterprises on the mainland, not civil servants. Real earnings by education compare averages for each level in October 2010 and 2024. Results are in docs/wages-results.json; the downloaded sources, with page or table for each number, are kept with the script’s data.

The cover photograph is Ara Shoes Portuguesa Seia by Hipersyl; CC0, via Wikimedia Commons, cropped.

Authored by: Luis Matos Ferreira — Physicist, Developer, Writer

Related essays on this blog

1. The Two-Thirds Country — Portuguese productivity at two-thirds of Europe’s.
2. The Stalled Hour — why output per hour stopped growing.
3. The Salaried Middle — how salaries are taxed.
4. The Arrivals — immigrants in the Portuguese labour market.
5. The Leavers — who emigrates, and why.
6. What Schooling Bought — the education boom and what it paid.
7. Work, Time and Money — the reading guide to the whole series.

Sources

1. DGERT, Evolução da Retribuição Mínima Mensal Garantida, updated May 2026; Decreto-Lei 139/2025; INE, consumer price index; author’s real values.
2. Banco de Portugal, Boletim Económico, March 2025, “A RMMG em Portugal”, pp. 57–64.
3. Eurostat, monthly minimum wages (earn_mw_cur), first half of 2026, euros and purchasing power standards.
4. OECD, minimum relative to median wages of full-time workers (MIN2AVE), 2000–2025.
5. Eurostat, minimum wage as a proportion of median earnings (earn_mw_avgr2), 2026 provisional; Banco de Portugal, Boletim Económico, June 2026, Caixa 5, p. 34.
6. GEP/MTSSS, Quadros de Pessoal, 2010–2024, Quadros 118–119 (2024: p. 161).
7. Banco de Portugal, Boletim Económico, March 2025, pp. 57–60.
8. Banco de Portugal, Boletim Económico, June 2026, Caixa 5, p. 33 and chart annex C5.3.
9. A. Oliveira, “How is the minimum wage shaping the wage distribution”, Nova SBE, 2021 (MPRA 112534), p. 2; published in Labour Economics, 2023.
10. Centro de Relações Laborais, Relatório sobre a Evolução da Negociação Coletiva em 2025, pp. 48–49.
11. Eurostat, national accounts (nama_10_gdp, nama_10_pe); author’s indices.
12. Eurostat, Structure of Earnings Survey, median monthly earnings (earn_ses_monthly), 2006–2022; OECD, average annual wages, 2000–2025.
13. OECD, Education at a Glance, relative earnings of adults by educational attainment, 2024.
14. GEP/MTSSS, Quadros de Pessoal 2010 and 2024, Quadro 105; author’s real values.
15. GEP/MTSSS, Retribuição Mínima Mensal Garantida: acompanhamento do acordo, 10th report, November 2018, pp. 7, 74 and 78 (PDF).
16. M. Centeno, C. Duarte and Á. Novo, “The impact of the minimum wage on low-wage earners”, Banco de Portugal, Economic Bulletin, Autumn 2011, pp. 107–120.
17. F. Alexandre, P. Bação, J. Cerejeira, H. Costa and M. Portela, “Minimum wage and financially distressed firms: another one bites the dust”, NIPE WP 04/2020, pp. 2, 13–19; Labour Economics, 2022.
18. Banco de Portugal, Boletim Económico, March 2025, p. 64.
19. D. Cengiz, A. Dube, A. Lindner and B. Zipperer, “The Effect of Minimum Wages on Low-Wage Jobs”, Quarterly Journal of Economics 134(3), 2019 (NBER WP 25434, pp. 2–5 and 27); A. Dube, Impacts of minimum wages: review of the international evidence, HM Treasury, 2019, pp. 6–7.
20. C. Dustmann et al., “Reallocation Effects of the Minimum Wage”, Quarterly Journal of Economics 137(1), 2022; Low Pay Commission, National Living Wage Review 2015–2020, 2022, pp. 7–8.
21. D. Neumark and P. Shirley, “Myth or measurement”, Industrial Relations 61(4), 2022; E. Jardim et al., Seattle minimum wage study, NBER WP 23532 (2018); P. Harasztosi and A. Lindner, “Who Pays for the Minimum Wage?”, American Economic Review 109(8), 2019, p. 2693.
22. OECD/AIAS ICTWSS database: collective bargaining coverage (2023) and union density (2020), Portugal; Centro de Relações Laborais, 2025 report, pp. 37–40.
23. Acordo Tripartido sobre Valorização Salarial e Crescimento Económico 2025–2028, October 2024, p. 3; Programa do XXV Governo Constitucional, 2025, p. 201.
24. DGAEP, Emprego Público: Destaques, 4th quarter 2025, February 2026, p. 7; GEP/MTSSS, Quadros de Pessoal 2024; author’s comparison.
25. Banco de Portugal, Economic Bulletin, June 2023, box “Public-private wage differential in Portugal”, pp. 56–58; M. M. Campos et al., “Understanding the public sector pay gap”, Banco de España DT 1539, 2015, Table I.