Traces of Decay in the Portuguese Labor Market: Low Wages and Illicit Agreements

The Employment Outlook report published this year by the Organisation for Economic Co-operation and Development (OECD) has brought to light findings that raise serious concerns regarding the Portuguese labor market. According to the report, many companies in the country are making illegal agreements to prevent their employees from transitioning to rival firms. In this context, abusive and unfair competition rules, ranging from non-solicitation decisions to confidentiality agreements, are used at a rate higher than the OECD average in Portugal. Furthermore, there are strong indications that different companies are agreeing with each other to halt personnel recruitment and cartel wages. Such illegal practices restrict workers' freedoms while severely suppressing their earning potential.

It is known that Portugal has a highly rigid labor market, and within this structure, the low wage problem stands out as one of the main chronic issues. Due to the difficulty of achieving career progression in the country, it is frequently stated that it has become almost impossible for employees to experience salary increases. Therefore, the only way to earn a higher income is now seen as the employee transitioning to a different company. Eurostat data reveals that the average annual gross wage in Portugal is around 24.800 euro. Considering that the European Union average approaches 39.800 euro, the approximately 15.000 euro difference exposes the income inequality in the country and the fact that personnel earn 38% less.

At the same time, Portugal currently holds the position of having the highest rate of unskilled personnel in the labor market, and this rate has reached a remarkable level of 29%. Despite this, contrary to the claims of some sectors, the country is experiencing great difficulty in attracting qualified workers from other EU member countries. The main reason for this is that Portugal is not perceived as an attractive destination for these professionals due to its low wage policies and labor market conditions that lack flexibility. On the other hand, the country stands slightly above the European average in the employment of migrant workers from non-EU countries. These workers are generally employed in precarious and demanding jobs, such as restaurant workers, digital ride-hailing drivers, or construction workers, that everyone complains about but from which society benefits.

Employment issues are not limited to just wages and immigration policies; the country's overall labor productivity also stands out as one of the lowest in Europe. In connection with this, the rate of employees experiencing stress and burnout syndrome in Portugal has reached worrying proportions. According to STADA Health Report 2025 data, more than half of Portuguese workers report intense work stress and symptoms of psychological burnout. While this rate goes on record as one of the highest levels on the continent, employees also state that they have great difficulty in establishing a balance between their private lives and working hours.

All these challenges clearly reveal that Portugal cannot provide the flexibility and vision required by today's dynamic and volatile working conditions. Although the country has the best-educated and equipped young generation in its history, it cannot transform this accumulation into productivity, wealth, and social welfare. On the contrary, while the talented young population emigrates en masse, the difficulties facing those who are obliged to stay in the country are increasing day by day. As confirmed by OECD data, the restrictive practices preferred by employers feed a culture of mediocrity and restriction that has settled over the last ten years and is strangling the country. In summary, the existence of a structural and deep decay in the Portuguese labor market now stands before us as an indisputable reality.