Antoine Goujard
OECD
OECD Economic Surveys: Portugal 2026
Abstract
Labour shortages and population ageing are expected to weigh on Portugal’s economic growth, despite recent high inflows of foreign workers. Improving the quality and governance of adult education and vocational training should be a priority. Establishing national quality standards for lifelong training courses and enhancing coordination in the lifelong learning system would support take up and better alignment of skills with labour market needs. Strengthening training for older workers, improving working conditions, through more flexible work arrangements and stronger occupational health policies would help extend working lives. Reducing the still high use of temporary contracts would also raise incentives for training. Easing the labour market integration of migrants, women and older workers would support higher employment rates and reduce income inequalities.
Portugal’s labour market has recovered strongly from the COVID-19 shock with employment reaching record highs and unemployment near historical lows (Chapter 1). These gains reflect the economy’s resilience, but signs of structural strains are emerging. Labour shortages have increased across key sectors, notably in the manufacturing, construction and health sectors, as well as in seasonal sectors (GEP, 2024[1]) and many firms report difficulties finding suitable skilled workers, leading to sizeable skill gaps within firms’ workforce (OECD, 2024[2]). The steep slope of the Beveridge curve points at structural mismatches between vacancies and available labour (Figure 2.1, Panel A).
Note: Panel B: Data correspond to the percentage of working age population in the same subgroup, calendar and seasonally adjusted. The employment rate gaps of the 20-29 and 55-64 years old are relative to prime-age workers (25-54 years old). Women’s employment rate gap is the difference with respect to men for the 15-64 years old. The best performers average the five best performing OECD countries. Panel D: The EU - OECD aggregate corresponds to the OECD countries members of the European Union.
Source: Eurostat Labour Market Statistics (2025), EC (2024), The 2024 Ageing Report: Economic and Budgetary Projections for the EU Member States (2022-2070), OECD Employment indicators (database).
At the same time, long-standing labour market segmentation persists. Employment rates are comparatively low for some disadvantaged groups, particularly youth and older workers, and, despite high women’s employment, there is also some room to raise further their employment rate (Figure 2.1, Panel B). Temporary and non-standard contracts remain widespread, particularly among youth and less skilled workers, limiting job stability, training opportunities and productivity. Looking ahead, Portugal faces profound demographic headwinds: the share of the population aged 65 and over is projected to increase from 25%, to close to 34% by the late 2040s (Panels C and D). This demographic shift will weigh on labour supply and put pressure on public finances, unless offset by higher participation among underutilised groups and migrants, as well as better activation of the long term unemployed and improved workforce skills.
Sustaining growth and fiscal stability in the face of these challenges will require a comprehensive strategy to strengthen labour market resilience. Policy action will need to balance urgent responses to current shortages with longer term strategies. Priorities include reducing labour market segmentation and easing the integration of youth in the labour market, strengthening adult learning, lifelong learning and vocational education, reducing long-term unemployment and making better use of the skills of migrant workers, and further increasing women’s employment from its relatively high level.
While overall employment rates are high and unemployment is low, persistent challenges remain in mobilising all segments of the workforce. Youth employment rates are low and the employment rate declines with age (Figure 2.2, Panel A). Although the youth employment rate (for those age 20-29) has partly recovered since the financial and euro area crises, it was also negatively affected by the COVID-19 pandemic. Moreover, the youth labour market integration is affected by the high incidence of temporary contracts and a difficult school-to-work transition, despite the decrease in the share of young people (aged 15-29) neither in employment nor in education and training (NEET) from 16.5% in 2013 to 8.7% in 2024 (Eurostat, 2025[3]). Over the past two decades, most job gains have come from prime-age workers and the 50-59 years old, whereas youth employment has weakened and employment for those aged 60 and over has been concentrated among the 60-64 years old, despite increasing life expectancy. At the same time, long-term unemployment remains elevated. Older workers above 55 years old and less educated jobseekers are particularly likely to remain in unemployment for more than a year (Panel B), pointing to barriers to re-entry and skills obsolescence.
These structural issues are reinforced by significant mismatches between education and labour market needs. Many workers are employed in fields unrelated to their qualifications, with Portugal showing relatively high rates of field-to-study mismatches (Figure 2.2, Panel C) (Cedefop, 2025[4]). Basic and digital skills are also low, especially among older workers undermining their employability (Panel D) (OECD, 2024[2]) and, despite the recent significant increase in educational attainment, a significant share of young workers still has low levels of education, for instance close to 20% of the 30-34 have lower secondary education, according to Eurostat. In addition, a large share of small and medium-sized firms is run by managers with limited or low educational attainment, which may hinder the adoption of productivity enhancing technologies and effective organisational practices.
Note: Panel A & B: The EU corresponds to the composition of European Union as of 2020. Panel B&C: The OECD aggregate corresponds to the simple average of the OECD countries. Panel B: Unemployment duration corresponds to 1 year or over. Panel C: Excluding self-employed workers. Field-of-study mismatched workers have their highest qualification not in the field that is most relevant to their job. Panel D: Peers is the unweighted average of France, Germany, Italy and Spain. Adults age group covers 16-65 years old. The category includes adults who were only administered the doorstep interview due to a language barrier. Caution is required in interpreting results due to the high share of respondents with unusual response patterns.
Source: Eurostat Labour Market Statistics (2025); OECD Labour Market Statistics (2025); OECD PIAAC (2023).
2.2.1. Equipping workers with digital and foundational skills
Participation in lifelong learning remains low in Portugal, especially among older, unemployed and inactive workers, despite significant improvements in the past decade, driven by strong political willingness to upskill the adult population (Figure 2.3). Structural barriers often prevent those in need from accessing training. According to the 2022 Eurostat Adult Education Survey, the lack of suitable training offer, the lack of support from employers and the Public Employment services related to training, and incompatible work schedule, are the most salient constraints to participate in lifelong learning in Portugal. These barriers appear relatively stronger than in other European Union countries, notably for those with lower educational attainment and older workers (Eurostat, 2025[5]).
The provision of lifelong learning relies on a wide range of actors. The Portuguese Public Employment Service (IEFP) operates a network of both employment centres and vocational training centres and manages some training programmes for employed workers, as well as Active Labour Market Policies. In December 2024, the specialised adult qualification centres’ (Centros Qualifica) network was made up of 309 centres (Eurydice, 2025[6]). In addition, other bodies provide adult education and training courses (Cursos de educação e formação de adultos - EFA Courses) and modular training included in the National Qualifications Catalogue (Catálogo Nacional de Qualificações). The main adult education programmes are funded by the state budget and European Funds. Social partners participate in advisory and social coordination bodies (tripartite composition). However, there is no single budget for adult learning which would allow a more complete tracking and evaluation of this policy (OECD, 2018[7]). In addition, many certifying entities are responsible for providing different certifications to adult education and training providers or specific courses and their monitoring remains perfectible. For example, the main instrument to monitor the quality of private providers is an audit, which is constrained by the large number of certified private providers and limited public human resources (OECD, 2021[8]).
Note: The EU corresponds to the composition of European Union as of 2020. Panel A: Adults aged between 25 and 64 enrolled in education or training over the last twelve months. Panel B, C & D: Participation rate of adults who are 55-64 years old or 55-69 years old (unemployed or inactive in Panels C and D) compared to the participation rate of all adults.
Source: Eurostat (2025), "Adult Education Survey", Eurostat database.
Enhancing information and quality control of training programmes would improve their targeting and effectiveness. In the Recovery and Resilience Plan, the planned design of additional VET programmes that focus on adult literacy and the upscaling of the National Plan for Adult Literacy, including more projects and financial support for equipment, staff and participants, worth EUR 225 million are helping to support lifelong learning. Vocational and higher education institutions could play a greater role by offering more diversified and flexible study opportunities and programmes aligned with current and future skill needs (OECD, 2022[9]). Improving the certification system could increase quality and help employers and employees better assess the quality of training providers. The standards should be easily operationalised through well-defined quality guidelines helping providers interpret them. For example, Austria’s quality framework for adult education providers (Ö-Cert) outlines five basic certification requirements, while Switzerland’s quality label (eduQua) defines six common certification criteria for adult education providers (OECD, 2021[10]).
To strengthen lifelong learning, programmes should also be more closely tailored to labour market needs, for instance by improving existing skills forecasting tool and the system’s responsiveness to forecasting information. Better targeted toward disadvantaged groups, including through active labour market policies and targeting smaller firms that may lack capacity to effectively managed their human resources, would also help (see below). In particular, further efforts should target older workers whose take up of training is 50% to 60% lower than the whole population (Figure 2.3, Panel B). In Portugal, older workers report that the lack of employer support and engagement from the Public Employment Services limit their access to lifelong learning (Eurostat, 2025[5]).
2.2.2. Strengthening active labour market policies
Portugal continues to struggle with rates of long-term unemployment above the European average, particularly among older and less-educated workers. Strengthening activation policies is essential to bring these groups back into the labour force and reduce structural unemployment. This should go hand in hand with a simplification of social benefits, as discussed in Chapter 1, which would help to ensure more consistent work incentives for those receiving these benefits, notably long-term unemployed workers (OECD, forthcoming[11]; forthcoming[12]).
As Portugal expands its training and labour market policies, ensuring quality and effectiveness is crucial. Though many active labour market policies are planned to be evaluated (ADC, 2023[13]), an evidence-based approach has long lagged, despite relatively high spending, notably on training (Figure 2.4, Panel A). A recent OECD (2024[14]) evaluation shows that the ATIVAR.PT internship programme targeted at young workers in response to the COVID-19 pandemic has been successful in terms of employment and earnings. Rich administrative data from the Public Employment Services (IEFP) and the Social Security Institute (ISS) could support more systematic evaluation. Publishing training providers and courses performance scores for public and private training centres, as done in countries like Denmark, France and the Netherlands would promote transparency. Over time, Portugal could also consider linking funding to outcomes to incentivise high-quality, results driven training provision.
Spending on active labour market policies is partly skewed towards less effective spending (Figure 2.4). Expenditures, notably on training, have been highly volatile: between 2017 and 2023, training expenditure averaged 0.18% of GDP compared to 0.29% between 2004 and 2016. Spending on Public Employment Services and administration, often considered to be the most cost-effective intervention, is also 0.03 percentage points below the OECD average of 0.11% of GDP in 2023 (OECD, 2024[14]). As a result, counsellors face relatively high caseloads, making it hard to meet jobseekers’ needs, provide tailored support and to implement job-search requirements. By contrast, support for direct job creation (public works) still accounted for 0.02% of GDP in 2023, while international evidence shows that such support is generally not effective in bringing participants back to the open labour market (Card, Kluve and Weber, 2017[15]). Portugal should therefore rebalance this spending towards counselling and training.
Strengthening incentives for longer active life is crucial and encouraging firms to hire and retain older workers, and to improve their employability through skills, health and job quality. Early retirement schemes should be carefully evaluated, the minimum early retirement age progressively raised in line with life expectancy and the special scheme for the long-term unemployment above 62 years old or 57 years old, depending on contribution history, should be reconsidered (Chapter 1). OECD experience shows that, in general, entitlement criteria to non-pension welfare benefits that are explicitly based on age may be detrimental, as these rules can reinforce damaging stereotypes and social norms about older workers and do not reflect the diversity of labour market situations that they face (OECD, 2019[16]). By contrast, a more effective mobilisation of ALMP measures for older workers would help raise their labour market integration. In Portugal, priority access to a range of employment and training measures is given to socially disadvantaged groups, including the unemployed aged 45 and over. Measures include enhanced opportunities for work placements, support hiring the unemployed and integration into social work. However, many measures had a low take up by older workers (OECD, 2018[17]) and, as in many other OECD countries, specific Active Labour Market Policies targeted at older workers are partly lacking. A more specific approach to older workers has been shown to be positive in Germany (Box 2.1).
% of GDP, 2023
Note: The OECD aggregate corresponds to the simple average of the OECD countries.
Source: OECD Labour Market Policy (database).
Management training programmes could also help to increase the take up of training among Portugal’s numerous small firms. Frictions in information sharing appear to prevent small firms from accessing relevant active labour market policies (Custodio, Hansman and Mendes, 2021[18]). Public employment services could therefore increasingly target its efforts at small and medium-sized enterprises, notably by raising awareness about their employment services. Moreover, addressing the current high costs of recruiting staff, for example by developing free targeted recruitment services for SMEs, could lead to increasing job offers (Algan, Crepon and Glover, 2020[19]). More ambitiously, the establishment of local one-stop shops including public employment services for businesses combining training, recruitment and human resources services would provide better guidance to businesses in search of information and support. For example, public employment centres and vocational training centres are already often co-located, but these are often not fully integrated from the employer’s perspective.
In 2005, the Federal Ministry of Labour and Social Affairs launched and financed the Perspektive 50 Plus - Employment Pacts for Older Workers. The programme ran from 2005 to 2015 and aimed to re-activate and integrate older workers (50+), predominantly those who are low- or semi-skilled and long-term unemployed, into employment.
The programme included coaching, profiling, training in communication skills and job application training, job training, internships, and wage subsidies. The evaluation of the first phase conducted in 2007 showed that the success of the programme rested on the combination of individualised counselling and coaching as well as on proactive outreach to employers. The most recent evaluation showed that placement results were better than in the case of more traditional approaches.
Source: OECD (2024), Promoting Better Career Mobility for Longer Working Lives in the United Kingdom, Ageing and Employment Policies, OECD Publishing, Paris; OECD (2019), Working Better with Age, Ageing and Employment Policies, OECD Publishing, Paris.
2.2.3. Reducing labour market segmentation to ease workers’ transitions
Portugal’s continued high reliance on fixed term contracts not only weakens job quality by causing potentially excessive job turnover across multiple fixed-term contracts but may also lower productivity by undermining incentives for investment in firm-specific human capital. Temporary workers often receive less training and face unstable employment trajectories, making it harder to accumulate the skills and experience needed in a tight labour market. Despite recent declines, temporary employment remains widespread particularly among younger workers (Figure 2.5, Panels A and B), in seasonal sectors, such as tourism and accommodation, but also in sectors without seasonal demand fluctuations, such as manufacturing and information and communication. A shift-share decomposition suggests that this pattern is not explained by Portugal’s industrial structure, but rather by a higher within sector use of temporary employment (Panels C and D).
Recent reforms, including a cap on successive temporary contracts and increased termination costs (Box 2.2), aim to reduce reliance on temporary work. While such steps may help to reduce the reliance on temporary contracts, it must be accompanied by reforms that make permanent hiring less risky and more attractive for employers. Dismissal costs for permanent contracts remain high by OECD standards: compensations granted for unfair dismissals averages 20 monthly salaries, and reinstatement is still frequently granted in court decisions. These features create a strong disincentive for firms to offer a permanent position. Reducing legal uncertainty and aligning the compensation for dismissal that are deemed unfair more closely with OECD peers, such as France (around 12 monthly wages), the Netherlands (7 months) or Norway (12 months), could help narrow the gap between contract types. Making receipt of severance pay conditional on the renunciation of litigation rights, as in other countries, could also help. In addition, simplifying dismissal procedures that remain cumbersome, would help to narrow the gap with temporary contracts, where no such requirements are set. However, these reforms should be designed carefully to avoid deterring hiring altogether.
Note: Panel A & B: The OECD aggregate corresponds to the simple average of the OECD countries. Panel C: The shift-share decomposition of the incidence of temporary contracts in Portugal with respect to two benchmark aggregates is based on the NACE industrial structure in 22 sectors. It refers to the 16-65 years old employed population. The industrial structure term assumes that Portugal would have the same use of temporary contract than the EU or the peer country average (France, Germany, Greece, Italy and Spain) in each industry. The within sector incidence term assumes that Portugal has the same industrial structure than the EU or the peer country average in each industry. Panel B, C & D: The EU corresponds to the composition of European Union as of 2020.
Source: OECD Employment indicators (database), Eurostat Labour Market Statistics (2025) and OECD calculations.
The Portuguese Government launched in 2023 a Decent Work Agenda (Agenda do Trabalho Digno), containing around 70 measures to improve working conditions. The main measures aim at continuing to reduce labour market segmentation and the share of precarious jobs, extending parents’ and caregivers’ rights and the reconciliation of work with family life, improving participation in collective bargaining and updating the legal framework for platform workers. The key measures include:
Limiting the successive use of temporary contracts, increasing compensation in the event of termination and reinforcing the responsibilities around the use of temporary contracts.
Defining the sharing of parental leave between mothers and fathers.
Granting support and incentives to companies with recently concluded or revised collective agreements.
Presuming the existence of an employment contract for work developed in digital platforms to help increase the labour rights and access to social protection of platform workers.
Source: Governo da República Portuguesa (2021), Principais medidas da Agenda do Trabalho Digno e de Valorização dos Jovens no Mercado de Trabalho; Government of Portugal (2023), Agenda do Trabalho Digno – saiba tudo o que vai mudar.
2.2.4. Ensuring sustainable minimum-wage developments
Portugal’s sustained minimum wage increases, rising by 7.8% in 2023, 7.9% in 2024 and most recently by 6.1% in 2025 to EUR 870 have significantly bolstered low-income household earnings. The authorities plan further annual increases to reach EUR 1020 by 2028. Minimum wages can be an important tool to protect the standard of living of low-paid workers, but they also risk disincentivising the hiring of low-skill or other vulnerable workers, notably when the minimum wage is relatively high compared to the median wage. At the level set in most OECD countries, minimum wage increases, even large ones, have had positive effects on low incomes but no or limited negative effects on employment (Dube, 2019[20]). The available evidence for Portugal also did not find significant detrimental effects of minimum wage hikes on aggregate employment (Oliveira, 2023[21]; Alexandre et al., 2022[22]). Yet, at around 59% of the gross median wage in 2024, Portugal’s minimum wage and relative labour costs at the minimum wage appear relatively high (OECD, 2023[23]; 2025[24]). Moreover, around 23% of employees earn the minimum wage (Banco de Portugal, 2024[25]), while SMEs employed around 72% of the labour force in 2019 in Portugal and typically have low profit margins.
In the less favourable macroeconomic context of the coming years (Chapter 1), attention should be paid to ensuring that increases in labour costs do not deter employers from hiring low-wage workers or encourage them to use more precarious forms of employment, such as temporary contracts or self-employment. As recommended in previous Surveys, a thorough analysis and regular evaluation of the minimum-wage policy would help to minimise these risks. This could be completed by a revision of the process of setting minimum wages to include a permanent and independent Commission, mandated to evaluate its potential impact and publish recommendations. As labour costs at the minimum wage are elevated, the authorities could also consider reducing employer social security contributions for low-wage workers to mitigate the impact of the minimum wage increases on labour costs. This could build on the evaluation of the current policy framework that offers 50% temporary reduction on the employer social security contribution, for a maximum period of 5 years (in case of young people looking for a first job) or 3 years (in the case of hiring of long-term unemployed people) irrespective of the level of wages and the available international evidence which points at significant employment effects of such policy around the minimum-wage levels (Bozio and Wasmer, 2023[26]).
2.3.1. Improving the school to work transition
Portugal has made significant progress in increasing educational attainment, with upper secondary and tertiary education completion rates approaching OECD averages and youth employment rates are now above the European average. However, many young graduates continue to face difficulties in finding jobs matching their qualifications (Figure 2.6). Skill mismatches remain high, the employment rates of young graduates, even with tertiary education, lags the EU average in their first years after graduation (OECD, 2023[23]; Goulart and Peralta, 2024[27]) and temporary employment is widespread among youth (see above). Vocational education and training (VET) programmes have expanded, notably with the launch of short-cycle vocational oriented tertiary courses (CTeSPs) in 2014, but quality and relevance to labour market needs remain uneven. Work-based learning opportunities are often short in duration, and employer involvement in curriculum development is limited. Strengthening partnerships between schools and firms, expanding dual training models and improving career guidance during school could help align education with labour market needs and improve school to work transitions.
On-going reforms under the RRP aim to modernise VET programmes and the school to work transition. They aim at aligning programmes with forward looking labour market forecasts, with a new skills anticipation system being developed with the OECD. Investments worth EUR 710 million are upgrading facilities across secondary schools with professional courses, vocational schools and training centres (Cedefop, 2024[28]). Planned reforms to better distribute the offering of VET programmes across regions are also welcome. However, students still face difficulties accessing clear and comparative information about the academic requirements and labour market prospects of programmes. While online tools such as the InfoCursos, ofertaformativa.gov.pt and the Brighter Future web portals have improved data availability (DGEEC, 2022[29]), their visibility, data quality and user-friendliness could be improved. Enhanced career guidance in secondary schools and further development of digital portals, linking programmes with employment outcomes and career pathways, would help inform student choices and reduce mismatches.
Note: Panel B: The EU corresponds to the composition of European Union as of 2020. The OECD aggregate corresponds to the simple average of the OECD countries.
Source: Eurostat Labour Market Statistics (2025), OECD Education at a Glance (2025).
The duration and structure of work-based components in VET programmes also needs improvement. In Portugal, most recent VET graduates report work experience of less than seven months, often unpaid (Cedefop, 2025[30]). By contrast, countries like Germany and Switzerland offer longer, paid apprenticeships as part of dual education systems, with apprenticeship contracts of an average of 24 to 36 months and close coordination between schools and employers (OECD, 2023[31]; 2020[32]). These models facilitate smoother transitions into the labour market. Expanding dual training programmes, strengthening partnerships with firms and aligning VET offerings regionally with economic needs can help Portugal better integrate young people into the workforce.
2.3.2. Creating enabling work environments for older workers
While the statutory retirement age in Portugal is linked to life expectancy and the effective retirement age is above the OECD average, employment rates drop sharply after age 55 (Figure 2.2). This appears mostly due to the low employment opportunities of older workers as a low share of the 50-74 and 60-74 years old already receive an old-age pension (Eurostat, 2024[33]). Poor health, limited opportunities for reskilling and lack of flexible work conditions contribute to early labour market exits. Moreover, as in other OECD countries, job mobility typically declines with age, yet with longer working lives, the green and digital transitions, strengthening training opportunities and supporting mobility and career adaptability among mid-to-late career workers will be crucial (OECD, 2024[34]). Supporting longer and healthier working lives will also require adapting workplaces to older workers’ needs and promoting flexible work. Increasing incentives for later retirement (Chapter 1), could also mitigate the demographic drag on labour supply.
Improving working conditions and health at work
Adapting work conditions to older workers is essential. Flexible work arrangements, better job quality are key to retain older workers (Göbel and Zwick, 2013[35]). In principle, the Portuguese pension system allows flexible retirement and the combination of part-time activity with a pension (OECD, 2017[36]). However, the uptake of part-time work among older workers in Portugal is well below the EU average, and only those with caregiving responsibilities have the right to request reduce hours (Figure 2.7). Extending the right to request part-time or flexible working hours to all employees in larger firms, as in France, Germany, the Netherlands and the United Kingdom, would provide workers with greater bargaining power and reduce the risk of discrimination against certain groups (OECD, 2016[37]). In a context of rising legal retirement age and with the need to reduce further early retirement schemes (Chapter 1), more flexible employment conditions could allow to increase labour market participation as workers age, however, it could also encourage some workers to shift from full-time to part-time work.
Chronic health conditions are widespread: in 2024, 42% aged 16 and over reported a longstanding illness or health problem – above the EU average (Eurostat, 2025[38]). These health issues, along with limited flexibility and reskilling options, restrict older workers ability to stay in employment. Occupational risks at work are a leading cause of early labour market exit. Despite progress, Portugal continues to report a relatively high incidence of work-related accidents, particularly among micro and small firms (Figure 2.8). Self-reported exposure to physical health risks is also high. Strengthening health and safety measures, especially in SMEs, will be critical.
Better targeting and monitoring of prevention programmes could lower occupational risks, while supporting workers to return to work as soon as possible is key to avoid they become detached from the labour market. In Portugal, all employers must provide Occupational Safety and Health (OSH) services and subscribe to insurance for work-related and commuting accidents. Occupational diseases are covered by a public insurance scheme. Yet preventive efforts are often minimal, especially in small firms that rely on external OSH services (Monjardino T. et al., 2016[39]). Many firms treat training as a compliance formality, limiting its effectiveness (Franklin, P. et al, 2021[40]; OECD, 2018[7]). The 2015-20 Occupational Health Plan introduced targeted prevention for SMEs, notably through information campaigns, but implementation has lagged due to limited resources (ACT, 2015[41]; 2016[42]; DGS, 2022[43]). Further progress requires promoting a prevention culture, supported by high-quality OSH services for SMEs, risk based inspections and financial incentives, such as insurer driven prevention schemes like in Germany and France (Box 2.1) and (OECD, 2022[44]).
Additional resources for the Authority for Working Conditions (ACT) would help scale up preventive actions While inspection activity and hiring of labour inspectors increased substantially over 2020-21, preventive services remain underdeveloped (ACT, 2022[45]). Reviving workplace health promotion campaigns and supporting healthy lifestyles, through initiatives to address sedentary behaviour and poor diet, can improve work ability and reduce sickness related absences (OECD, 2019[46]; 2022[44]).
50-74 years old, %
Note: The EU corresponds to the composition of European Union as of 2020. Panel B: Peers is the unweighted average of France, Germany, Italy and Spain.
Source: Eurostat Labour Market Statistics (2025), OECD Education at a Glance (2023).
Note: EU corresponds to the European Union composition as from 2020. Panel A, B and C: Data covers the NACE rev 2. activity A, C-N, corresponding to agriculture; industry and construction (except mining), and services of the business economy; data age class corresponds to 15-74 years old. Panel B & C: Non-fatal accidents are defined with a severity of 4 or more workdays lost. Panel D: Data age class corresponds to 15-64 years old.
Source: Eurostat Accidents at work statistics (2025).
In Germany, prevention of work-related accidents and health hazards is embedded as the key objective of accident insurance institutions by government regulation. The 2015 Prevention Act requires health insurance funds to spend a minimum amount per insured person on prevention. The introduction of this act coincided with a more than three-fold increase in expenditure per insured person on workplace health promotion between 2015 and 2019 by health insurance funds (Gerlinger, 2021). Health insurance funds have been required to spend a minimum of EUR 7 (USD 8.28) per insured person per year on prevention measures, of which at least EUR 2 (USD 2.37) have to be spent on workplace measures (OECD, 2022). Insurance institutions typically offer prizes, awards and recognition of high-performing companies, as well as services, such as counselling and training, and even subsidies for employers implementing prevention measures to fulfil their obligations.
In France, public accident insurance has subsidies for SMEs with fewer than 50 employees that are investing in equipment or actions to avoid work-related accidents. SMEs with fewer than 200 employees in France can also apply for a prevention contract. Under this contract employers are able to receive an advance on expenditure relating to preventing accidents and ill-health, which is converted into a grant if employers meet the agreed objectives.
Source: OECD (2022), Promoting Health and Well-being at Work: Policy and Practices, OECD Health Policy Studies, OECD Publishing, Paris; Gerlinger, T. (2021), Prevention Act [Präventionsgesetz], Federal Centre for Health Education (BZgA).
2.3.3. Maximizing the labour market contribution of foreign workers
Immigration has become a key driver of labour supply in Portugal, with the foreign-born share of the population rising to 16% in 2024 (Figure 2.9), concentrated among working-age groups. However, despite high employment rates, migrants’ skills are often underutilised (Figure 2.10). A high share of foreign-born workers, especially those with tertiary education, are in low or medium skilled jobs, resulting in one of the highest rates of overqualification for migrants in the OECD (2024[2]).
Portugal has regularly taken steps to strengthen its integration policy and attract skilled migrants. The authorities created a new Agency for Integration, Migration and Asylum (AIMA) in 2023 and launched a new Action Plan for Migration in 2024 with the aim to better regulate migration, attract foreign talent, strengthen integration, and reorganise institutional services. Portugal’s current system of work-related migration is relatively open. It allows entry either through a valid job offer, subject to minimum wage requirements, or through a job-seeking visa. Nationals of the Community of Portuguese Language Countries (CPLP) are exempt from the requirement to prove sufficient means of subsistence, provided they submit a sponsorship letter from a Portuguese citizen or legal resident. Portugal has also seen a sharp rise in the number of international students enrolling in its higher education institutions over the past five years. This trend has been supported by a streamlined study visa process, which includes a fast-track channel for international student applications. Nonetheless, until recently, administrative bottlenecks, particularly for visa issuance, student permits and qualifications recognition, continue to delay labour market entry and reduce efficiency of the migration system.
To attract and retain skilled workers, notably in areas of skill shortages, Portugal should build on its 2024 Action Plan for Migration to simplify further administrative procedures, digitalise visa systems and ensure coherence across agencies. Specific improvements are needed in the student visa track, which could be expanded to serve as a pathway to long term retention (OECD, 2024[47]). Recognition of professional qualifications also remains a bottleneck, particularly in regulated professions, despite broad reforms in recent years (Chapter 1). For example, obtaining a license to practice as an engineer remains subject to a nationality requirement, with exemptions accorded to third-country nationals based on reciprocity (OECD, 2025[48]). Some prioritisations of work visa could also help. For example, Germany has extended the EU Blue Card to shortage occupations beyond ICT, and Canada and Sweden use of shortage occupation lists to prioritise visa processing. Portugal has already used targeted partnerships in the health sector, such as cooperation agreements with Lusophone countries and foreign associations to mitigate shortages. This experience could inform the development of fast-track channels for other sectors. Integrating the fast-track channels with a national shortage occupation list, could enable a more proactive migration strategy.
Making better use of foreign-trained professionals also requires more effective anti-discrimination policies in both the workplace and broader society. While self-reported discrimination rates are low (OECD, 2025[49]), discrimination persists, concerning immigrants and on the grounds of racial or ethnic origin at work, as well as age (OECD/EC, 2023[50]; INE, 2025[51]) and complaints have increased. Moreover, institutional responses remain fragmented and weak and few cases reach the courts (EC, 2024[52]). The Commission for equality and against racial discrimination (CICDR) was made independent in 2024 and its budget is now dependent of the parliament. However, the foreseen 2023 and 2024 annual reports have not yet been published. Several equality bodies are responsible for other forms of discrimination and this fragmentation may limit access to information and the effective handling of multiple discrimination cases (EC, 2024[52]). Consolidating anti-discrimination mandates across institutions and expanding data collection, including through field testing would support fairer labour market outcomes. This could build on the Statistical Institute’s (INE) work that directly collects data on ethnicity through the Survey on Living Conditions, Origins and Trajectories.
Further strengthening ties with the large Portuguese expatriate community, and helping return migration, notably for high-skilled youth, may be another way to enhance firms’ access to skills. Returning emigrants could bring skills, networks and financial capital. Since 2019, Portugal has introduced the return scheme (Regressar), which includes return incentives such as tax cuts, in-cash benefits for relocation and labour market reintegration assistance. In addition, the tax incentive for scientific research and innovation (IFICI) introduced in 2024 offers PIT tax cuts to highly qualified professionals, entrepreneurs, innovators, directors of approved start-ups, and academic researchers who become Portuguese taxpayers. The 2024 Action Plan for Migration also foresees further measures to ease the recognition of foreign skills and experience which will facilitate the entry of foreign talent into Portugal and the return of emigrants who have obtained an education or experience abroad.
% of total population
Source: Eurostat (2025), Population on 1 January by age group, sex and country of birth; International migration statistics.
Percentage points
Note: The OECD aggregate corresponds to the simple average of the OECD countries. Panel A: Differences in percentage points between foreign and native-born, 15 to 64 years old not in education. Panel B: Employed adults aged 25-65 who are not self-employed; does not include adults who were only administered the doorstep interview due to a language barrier. A worker is classified as over-qualified when the level of their highest qualification is above the qualification level required for their job. The figure shows the estimated change in likelihood of over-qualification relative to the reference category. Estimates account for years of education, numeracy proficiency, age, the interaction of gender and partner, immigrant status, firm size, contract type, full- or part-time status, and occupation. Darker blue colour denotes differences that are statistically significant at the 5% level. Caution is required in interpreting results due to the high share of respondents with unusual response patterns.
Source: OECD-EC (2023), Indicators of Immigrant Integration 2023: Settling In, OECD Publishing, Paris; PIAAC OECD (2024).
2.3.4. Strengthening the labour market participation of women
Employment rates for women are high, but there remains some scope to further improve women’s labour market outcomes. Although gender gaps in employment, wages and hours worked are moderate compared to OECD standards (Figure 2.11) and the mother penalty appears contained in international comparison (Kleven, Landais and Leite-Mariante, 2024[53]), further progress could bring economic gains. OECD simulations suggest that closing remaining gender gaps in labour force participation and working hours could raise GDP per capita by approximately 5% in 2060 (Fluchtmann, Keese and Adema, 2024[54]). In particular, expanding access to high-quality and affordable childcare could help reduce further the motherhood penalty in the labour market and support employment. Similarly, increasing the supply of formal long-term care services could ease the burden of informal caregiving, which disproportionally falls on women (Chapter 1).
The family support system is fragmented and provides limited support for low-income households with young children, with comparatively weak family and child benefits (Figure 2.12). As part of a broad family policy framework of parental leave policies, family cash benefits, early childhood education and care provisions, as well as out-of-school-hours support, such policies could support families’ choices to have (more) children and a greater gender balance (OECD, 2011[55]). Although enrolment in pre-school childcare in Portugal stood at around 94% for the 3-5 years-old and offer long average weekly hours in 2023, around half of it occurs in private institutions and the enrolment rate in early childhood education and care services for 0-2-year-olds remains much lower, at close to 50%, with a large enrolment gap between the first and second family income tertiles and the third one where it reaches 70% (OECD, 2024[56]; 2025[57]).
Continuing to broaden access to early free childhood education and care provision, as planned, could help low-income parents combine a return to full- or part-time work with ensuring care for their child. The authorities have been rolling out free access for children born after September 2021 and, as of May 2025, a total of 127 022 children are benefiting from free daycare. Since 2022, 30% of vacancies in the non-profit day care centres are being prioritised for low-income beneficiaries and vouchers for accessing for-profit private centres also help prioritise low-income households. In the longer term, consolidating the existing cash benefits that amounted to two thirds of public spending on family and children benefits in 2022 and extend up to age 24 and refocusing this spending on early childhood and low-income households through a unique household benefit integrating the numerous other housing and social assistance benefits would raise awareness and lower upfront costs (OECD, forthcoming[12]).
Note: Panel A: Difference between median earnings of men and women relative to median earnings of men. The OECD unweighted average does not include data for Luxembourg and Türkiye. EU corresponds to the European Union composition as from 2020. Panel B: Working age population corresponds to the 16-64 years old and the OECD average for 2006 corresponds to 2007.
Source: OECD Gender wage gap (database), OECD Employment and Labour Market Statistics (database).
In addition, there is scope to encourage a more balanced take up of parental leave. Through the combination of the different types of paid leave around childbirth available in Portugal, 23.3 weeks of leave is earmarked exclusively for mothers, which is relatively close to the OECD average of 24.6 weeks. With 22.3 weeks, fathers have a noticeably longer period of earmarked leave than the OECD average (10.4 weeks). The remaining 6.9 weeks of fully shareable leave is below the OECD average of 25.4 weeks (Adema et al., 2023[58]). Though the take-up among fathers remains low (CES, 2022[59]), it is significantly higher than the OECD average (OECD, 2025[57]). Existing measures, such as an electronic platform to complete administrative arrangements and additional bonus leave days when both parents participate, are welcome but further steps could strengthen incentives and help shift persistent social norms, as average payment rates across paid father-specific leave remain relatively low as a share of earnings (OECD, 2025[60]; 2025[57]).
Tackling gender wage inequality requires continued strengthening of the antidiscrimination framework. While Portugal’s gender-wage gap stood at around 10% in 2023, near the OECD average (Figure 2.11), recent policy efforts have increased transparency. Mandatory gender-disaggregated pay reporting and comprehensive equal pay audits for firms over 50 employees have improved transparency, in part linked to the mandatory follow-ups on the causes and possible remedies to gender gaps. Public awareness campaigns and award schemes to promote best practices across companies (the Equal Pay Seal) are supporting awareness and compliance. However, limited resources at the Authority for Working Conditions (ACT) (see above) may constrain enforcement. Full transposition of the European Pay Transparency Directive by 2026 will also be key to promote further gender-neutral job classifications and job evaluations and address gender pay gaps driven by unequal pay for work of equal value (OECD, 2023[61]).
Note: The EU corresponds to the composition of European Union as of 2020. Panel B: Total in-kind benefits are not necessarily targeted at 0-3-years old. In-kind benefits include child day care, accommodation, home help and other benefits in kind such as leisure centres and price reductions for children.
Source: Eurostat (2025), Social protection statistics - family and children's benefits.
As in other OECD countries, a substantial part of the gender pay gap stems from women overrepresentation in lower paying firms and occupations. Women are more likely to work in firms that pay lower wages, and firms with high rates of part time work tend to offer lower pay (Bertheau et al., 2025[62]). To reduce these disparities, Portugal should promote more widespread use of flexible work arrangements, including telework and part-time work, across sectors and employee groups, not only those with caregiving responsibilities. Portugal has already made good progress on the representativeness of women in corporate boards with gender quotas on boards for listed companies in place since 2018 and a share of women on the board of the largest companies reaching 36.6% in early 2025 (EIGE, 2025[63]). However, strengthening the target as foreseen in the 2022 European Gender Balance Directive and encouraging a broader set of firms to set voluntary gender-balanced targets and good management practices that make managers accountable for diversity in leadership of private companies could help to further promote women access to better paying jobs, while at the same time fostering social norms that support gender equality (OECD, 2022[64]).
References
[45] ACT (2022), Atividade de Inspeção do Trabalho Relatório 2021, Autoridade para as Condições do Trabalho (ACT).
[42] ACT (2016), Atividade de Promoção de Segurança e Saúde no Trabalho Relatório 2016, Autoridade para as Condições do Trabalho (ACT).
[41] ACT (2015), Estratégia nacional para segurança e saúde no trabalho 2015-2020, Autoridade para as Condições do Trabalho (ACT).
[13] ADC (2023), Plano Global de Avaliação do Portugal 2030, Agência para o Desenvolvimento e Coesão.
[58] Adema, W. et al. (2023), Paid parental leave: Big differences for mothers and fathers, OECD Statistics Blog, https://oecdstatistics.blog/2023/01/12/paid-parental-leave-big-differences-for-mothers-and-fathers/.
[22] Alexandre, F. et al. (2022), “Minimum wage and financially distressed firms: Another one bites the dust”, Labour Economics, Vol. 74, p. 102088, https://doi.org/10.1016/j.labeco.2021.102088.
[19] Algan, Y., B. Crepon and D. Glover (2020), Are Active Labor Market Policies Directed at Firms Effective? Evidence from a Randomized Evaluation with Local Employment Agencies.
[25] Banco de Portugal (2024), Economic Bulletin - December 2024.
[62] Bertheau, A. et al. (2025), The Unequal Impact of Firms on the Gender Wage Gap, Banque de France.
[26] Bozio, A. and E. Wasmer (2023), Les politiques d’exonérations de cotisations sociales : une inflexion nécessaire, Rapport au Premier Ministre.
[15] Card, D., J. Kluve and A. Weber (2017), “What Works? A Meta Analysis of Recent Active Labor Market Program Evaluations”, Journal of the European Economic Association, Vol. 16/3, pp. 894-931, https://doi.org/10.1093/jeea/jvx028.
[4] Cedefop (2025), European skills index 2024.
[30] Cedefop (2025), What is new in IVET? Key pointers from statistics, European Centre for the Development of Vocational Training (Cedefop).
[28] Cedefop (2024), Vocational education and training policy briefs 2023 – Portugal, Cedefop monitoring and analysis of vocational education and training policies.
[59] CES (2022), A Natalidade em Portugal: uma questào política, económica e social, Conselho Económico e Social, https://ces.pt/wp-content/uploads/2022/01/ces_parecer_natalidadeportugal.pdf.
[18] Custodio, C., C. Hansman and D. Mendes (2021), “Information Frictions and Firm Take up of Government Support: A Randomised Controlled Experiment”, SSRN Electronic Journal, https://doi.org/10.2139/ssrn.3857851.
[29] DGEEC (2022), Dados e Estatísticas de Cursos Superiores (Higher Education Course Data and Statistics), https://infocursos.pt/bds.asp.
[43] DGS (2022), Relatorio Final - Programa Nacional de Saúde Ocupacional (PNSOC) Extensão: 2018/2020, Ministério da Saúde. Direção-Geral da Saúde.
[20] Dube, A. (2019), Impacts of minimum wages: review of the international evidence, https://www.gov.uk/government/publications/impacts-of-minimum-wages-review-of-the-international-evidence.
[52] EC (2024), Country report Non Discrimination - Portugal, European Commission Directorate-General for Justice and Consumers.
[63] EIGE (2025), Gender Statistics Database, European Institute for Gender Equality (EIGE).
[5] Eurostat (2025), Participation rate in education and training 2022.
[38] Eurostat (2025), People having a long-standing illness or health problem, by sex, age and labour status.
[3] Eurostat (2025), Young people neither in employment nor in education and training by sex, age and country of birth (NEET rates).
[33] Eurostat (2024), Pensions and labour market participation - main characteristics - November 2024, Eurostat.
[6] Eurydice (2025), Adult education and training - Main Providers - Portugal, Eurydice.
[54] Fluchtmann, J., M. Keese and W. Adema (2024), “Gender equality and economic growth: Past progress and future potential”, OECD Social, Employment and Migration Working Papers, No. 304, OECD Publishing, Paris, https://doi.org/10.1787/fb0a0a93-en.
[40] Franklin, P. et al (2021), Occupational health and safety inequalities in the EU, https://www.etui.org/sites/default/files/2021-12/01-ETU%20BM2021-Chap5-Occupational%20health%20and%20safety%20inequalities%20in%20the%20EU_1.pdf.
[1] GEP (2024), Escassez de Mão-de-Obra em Portugal | 2024, Gabinete de Estratégia e Planeamento (GEP) do Ministério do Trabalho, Solidariedade e Segurança Social (MTSSS).
[35] Göbel, C. and T. Zwick (2013), “Are personnel measures effective in increasing productivity of old workers?”, Labour Economics, Vol. 22, pp. 80-93, https://doi.org/10.1016/j.labeco.2012.11.005.
[27] Goulart, N. and S. Peralta (2024), Evolução do mercado de trabalho em Portugal e implicações para o sistema de pensões, LIVRO VERDE | Grupo de trabalho | Adequação.
[51] INE (2025), More than 1.2 million people have already been discriminated against in Portugal - 2023, Statistics Portugal.
[53] Kleven, H., C. Landais and G. Leite-Mariante (2024), “The Child Penalty Atlas”, Review of Economic Studies.
[39] Monjardino T. et al. (2016), Trabalho e Saúde em Portugal 2016, Instituto de Saúde Pública da Universidade do Porto (ISPUP).
[49] OECD (2025), Combatting Discrimination in the European Union, OECD Publishing, Paris, https://doi.org/10.1787/29c2c36a-en.
[24] OECD (2025), Earnings and wage database, OECD Publishing, Paris.
[57] OECD (2025), “Family Indicators”, OECD Social and Welfare Statistics (database), https://doi.org/10.1787/efd30a09-en (accessed on 14 April 2025).
[60] OECD (2025), Gender Equality in a Changing World: Taking Stock and Moving Forward, OECD Publishing, Paris.
[48] OECD (2025), OECD Services Trade Restrictiveness Index: Policy Trends up to 2025, OECD Publishing, Paris, https://doi.org/10.1787/9953845b-en.
[2] OECD (2024), Do Adults Have the Skills They Need to Thrive in a Changing World?: Survey of Adult Skills 2023, OECD Skills Studies, OECD Publishing, Paris, https://doi.org/10.1787/b263dc5d-en.
[56] OECD (2024), Education at a Glance - Country note Portugal, OECD Publishing, Paris.
[14] OECD (2024), Impact Evaluation of Active Labour Market Policies in Portugal, Connecting People with Jobs, OECD Publishing, Paris, https://doi.org/10.1787/c4b2ca21-en.
[47] OECD (2024), International Migration Outlook 2024, OECD Publishing, Paris, https://doi.org/10.1787/50b0353e-en.
[34] OECD (2024), Promoting Better Career Choices for Longer Working Lives: Stepping Up Not Stepping Out, Ageing and Employment Policies, OECD Publishing, Paris, https://doi.org/10.1787/1ef9a0d0-en.
[31] OECD (2023), Education at a Glance - Country Note Germany, OECD Publishing, Paris, https://gpseducation.oecd.org/Content/EAGCountryNotes/EAG2023_CN_DEU_pdf.pdf.
[65] OECD (2023), Health at a Glance 2023: OECD Indicators, OECD Publishing, Paris, https://doi.org/10.1787/7a7afb35-en.
[23] OECD (2023), OECD Economic Surveys: Portugal 2023, OECD Publishing, Paris, https://doi.org/10.1787/2b8ee40a-en.
[61] OECD (2023), Reporting Gender Pay Gaps in OECD Countries: Guidance for Pay Transparency Implementation, Monitoring and Reform, Gender Equality at Work, OECD Publishing, Paris, https://doi.org/10.1787/ea13aa68-en.
[9] OECD (2022), “Enhancing labour market relevance and outcomes of higher education: Country note Portugal”, OECD Education Policy Perspectives, No. 59, OECD Publishing, Paris, https://doi.org/10.1787/bcf4a8e3-en.
[44] OECD (2022), Promoting Health and Well-being at Work: Policy and Practices, OECD Health Policy Studies, OECD Publishing, Paris, https://doi.org/10.1787/e179b2a5-en.
[64] OECD (2022), Same skills, different pay: Tackling Gender Inequalities at firm level, OECD Publishing, Paris.
[8] OECD (2021), Strengthening Quality Assurance in Adult Education and Training in Portugal: Implementation Guidance, OECD, Paris, https://www.oecd.org/skills/centre-for-skills/Strengthening-Quality-Assurance-in-Adult-Education-and-Training-in-Portugal-Implementation-Guidance.pdf.
[10] OECD (2021), Strengthening Quality Assurance in Adult Education and Training in Portugal: Implementation Guidance, OECD Skills Studies, OECD Publishing, Paris, https://doi.org/10.1787/c09243f3-en.
[32] OECD (2020), Education at a Glance 2020: OECD Indicators, OECD Publishing, Paris, https://doi.org/10.1787/69096873-en.
[46] OECD (2019), The Heavy Burden of Obesity: The Economics of Prevention, OECD Health Policy Studies, OECD Publishing, Paris, https://doi.org/10.1787/67450d67-en.
[16] OECD (2019), Working Better with Age, Ageing and Employment Policies, OECD Publishing, Paris, https://doi.org/10.1787/c4d4f66a-en.
[17] OECD (2018), Key policies to promote longer - Country Note Portugal, OECD Publishing, Paris.
[7] OECD (2018), Skills Strategy Implementation Guidance for Portugal: Strengthening the Adult-Learning System, OECD Skills Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264298705-en.
[36] OECD (2017), Pensions at a Glance 2017: OECD and G20 Indicators, OECD Publishing, Paris, https://doi.org/10.1787/pension_glance-2017-en.
[37] OECD (2016), Be Flexible! Background brief on how workplace flexibility can help European employees to balance work and family, OECD Publishing, Paris, https://www.oecd.org/els/family/Be-Flexible-Backgrounder-Workplace-Flexibility.pdf.
[55] OECD (2011), Doing Better for Families, OECD Publishing, Paris, https://doi.org/10.1787/9789264098732-en.
[11] OECD (forthcoming), Assessment of the existing system of social benefits in Portugal, OECD publishing, Paris.
[12] OECD (forthcoming), Social benefits in Portugal: single solidarity benefit reform proposals, OECD Publishing, Paris.
[50] OECD/EC (2023), Indicators of Immigrant Integration 2023: Settling In, OECD Publishing, Paris, https://doi.org/10.1787/1d5020a6-en.
[21] Oliveira, C. (2023), “The minimum wage and the wage distribution in Portugal”, Labour Economics, Vol. 85, p. 102459, https://doi.org/10.1016/j.labeco.2023.102459.